Lagging Its Regional Peers, ICE Debuts Its 3G Network in Costa Rica

December 21, 2009

In Costa Rica, state-owned operator ICE launched its 3G network with enhanced services that include multimedia messaging and a faster mobile Internet connection. The 3G migration, behind its Central American peers, is a step forward to prepare itself for upcoming competition. Three new mobile licenses will be auctioned in 2010, and all major regional players will likely bid to enter a market that is still underpenetrated. According to our Costa Rica Q4 2009 mobile forecast, mobile penetration of the population will close 2009 at 52%.

The 3G network is important for ICE because it allows the operator to start increasing its data revenue and may help protect its high-end postpaid base from switching to competitors. Also, it opens the door to new services such as mobile broadband and mobile TV. It is critical for ICE to offer mobile broadband as soon as possible since new mobile competitors will likely use that service to take share from fixed broadband — where ICE/RACSA has quite good urban coverage.

For ICE, the 3G launch offered a few lessons. First, the volatility in customer flow to grab the new lines, shifting from poor sales into long wait lines, showed that it must enhance its distribution channels and streamline the process to sell phones. Ideally, the market should shift from supply driven to demand driven before new competition lands in the market. Based on the outstanding execution of the other mobile operators in Central America, we can anticipate that none of them would show mercy to the state operator.

Second, the launch reinforced the fact that customers are either little aware or don’t really care about 2G or 3G+ labels —it’s all about services. Users want (or believe they need) mobile Internet, MMS and email to communicate or entertain.  3G helps to make it better — or even, to happen — so for ICE, it’s about promoting those services. In addition, the cost of handsets is always a steep barrier to adoption. The operator should consider ways to bring the cost down, such as subsidies with contracts or a partnership with a financial institution to finance the equipment, for example.

— Jose Magana, Analyst

Related resources:

Latin America Mobile Operator KPI Forecasts
Forecasts published quarterly
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Latin America Mobile Demand Forecast
Forecasts published quarterly
Our Mobile Demand Forecast products provide complete pictures of demand trends for 19 geographical markets in Latin America. The Excel output includes five years of historical data and five years of market projections for metrics such as GDP, mobile penetration, subscriptions (by operator, type of package, technology), ARPS and total mobile service revenue (data and voice). The Forecasts are based on extensive field research and use a consistent methodology across all markets, aiming to capture the total spending, from an end-user perspective, on mobile communication services in each market. Data from these Forecasts is available online for subscribers to our DataTracker service.