Tuesday, June 24, 2014

Costa Rican Regulator Proposes Changes to Data Pricing

Costa Rican regulator Superintendencia de Telecomunicaciones (Sutel) has decided to hold a public consultation on the subject of the possible introduction of a flat rate for mobile internet services for postpaid consumers, based on the amount of data used. The scheduled date for the consultation is 1 July 2014, and Sutel will have one month to respond to the issues raised, after which it will make a decision on the proposed tariff plan. The scheme would involve users being charged a rate of CRC 0.0075 (US $0.0001) per KB regardless of transmission speed. Operators will also be obliged to offer a basic plan for CRC 3,750.00 (US $6.61) that would offer a data allowance of 500 MB, with the proposed data billing rate applying for excess usage. This method of pricing for data use has only been applied to the prepaid sector so far and was implemented by carriers as recently as mid-2013.

Since the liberalization of the telecom market in late 2011, Costa Rica has seen substantial growth in terms of subscriber numbers and competition. In a country where fixed broadband penetration is only around 10 percent, mobile devices are the primary source of internet access. A recent report from Sutel indicated that as of the end of June 2013, nearly 88 percent of Costa Rica’s 3.99 million internet users were mobile broadband subscribers. The number of mobile internet users grew by 86 percent from Q1 2012 to Q2 2013. In fact, with the increasing adoption of smartphones, data usage has also risen considerably. Now operators ICE, Claro and Movistar are faced with the same dilemma as other global operators—that of providing and maintaining quality of service while dealing with an increasingly congested network. ICE introduced a throttling threshold of 6 GB on its Kolbi 3G and 4G unlimited postpaid plans earlier in the year.

Operators in other markets around the world have found that an unlimited model is not sustainable in the medium to long term, especially if the operator has 4G. Many operators have used a 4G launch as an opportunity to move to a tiered data pricing structure. While such a model allows users to choose a plan that meets their needs, it also gives the operator the opportunity to upsell users who regularly exceed their data allowances. Many Costa Rican consumers have voiced concerns over this proposal because they are used to relying on unlimited mobile internet. However, if operators offer appropriately structured tiered plans, the average user may benefit from improved services and better cost control.

The above item appeared in a recent issue of The Tarifica Alert, a weekly resource that analyzes noteworthy developments in the telecoms industry from around the world. To access all of the latest articles and issues:

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