Market Trends of Costa Rica Telecom Industry
Rising Demand for 4G and 5G Services
- There is a growing reliance on smartphones for internet access, social media, streaming, and online communication. The increasing consumer expectations for high-speed, uninterrupted internet access for better user experience in streaming, gaming, and other data-intensive activities encourage the government to invest in infrastructure development.
- In January 2023, IDB Invest and Liberty Costa Rica unveiled an international issuance of a sustainability-linked bond (SLB) worth USD 450 million. This initiative aims to bolster digital access and enhance broadband quality in Costa Rica. The funds raised will be used for various purposes, including improving fiber-to-the-home investments, enhancing the HFC network's capabilities and speeds, funding capital expenditures for 4G/5G infrastructure, refinancing existing financial obligations, and supporting general corporate needs.
- Many market players invest in developing 5G infrastructure to support infrastructure growth. In November 2023, Costa Rica's Institute of Electricity (ICE) issued a call for 5G providers. The company aimed to enhance its 4G LTE and 5G services in the upcoming year. The agency anticipated the selection and contract award process to span around four months, with operations slated to commence in February 2024. The major objective was to invest in goods and services that facilitate the implementation of a 5G network and the development and evolution of LTE networks, with their radio frequency elements, 5G mobile core, routers for interconnection, and adaptations of mobile infrastructure.
- Businesses leverage high-speed connectivity for innovation, improving efficiency, and competitive advantage. Improved 4G and 5G connectivity in urban and rural areas can bridge the digital divide and ensure broader access to digital services. As Open Signal, Claro Costa Rica contributed 24.6 Mbps download speed, followed by Kolbi with 19 Mbps download speed in 2023.
- The smart home devices market is witnessing robust growth, propelled by the IoT device surge. This surge has empowered consumers to remotely monitor and manage their homes for enhanced convenience and energy efficiency. Moreover, the market's expansion is fueled by a growing base of internet users, the pervasive adoption of smart devices, and a rising consumer inclination towards video doorbells, voice tech, and security systems. The market's trajectory has been notably influenced by the advent of advanced image sensors and noise reduction capabilities, driving 5G connectivity for better speeds.
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Data Services Hold the Largest Market Share
- Due to the growing demand for internet connectivity, data services contribute significantly to the Costa Rican telecom market. Consumers are increasingly streaming services online, and hybrid work setup is also gaining traction, boosting data consumption. Consumers are opting for data plans over traditional voice services and accessing marketplaces by using data services. According to Speedtest, there is growth in download speed, contributing to 32.36 Mbps speed in mobile in 2024.
- Costa Rica is investing in extending fiber optic infrastructure for faster and more reliable internet connectivity. The country unveiled its telecommunications development plan, outlining public policy goals set for 2024. The plan aims to propel the nation toward digital transformation by emphasizing efficient radio-electric spectrum management and enhancing fixed and mobile telecommunications network accessibility. Notably, two key initiatives have been introduced. The first is 'Connected Communities,' which focuses on extending telecommunications services to various Costa Rican districts, and the second is 'Connected Public Spaces,' aligning closely with the vision of a robust fiber optic network.
- Businesses in the country require robust data services to manage their operations. Market vendors can invest in tailored data service solutions, which include cloud computing, cybersecurity, and enterprise software.
- There is also rising adoption of smart home devices and IoT applications. It increases data consumption and requires a stable internet connection. Thus, government initiatives should invest in building network infrastructure to support modern technological developments.
- Cybersecurity strategy helps in maintaining the integrity of telecom infrastructure. For instance, in August 2023, the United States and Costa Rica unveiled a joint security initiative to bolster Costa Rica's cyber defenses against malicious threats. As part of this collaboration, Costa Rica's Ministry of Public Security is set to establish a Cyber-Security Operations Center by 2026. The initiative encompasses cutting-edge equipment, tailored training, and logistical support, with the United States committing to fund the endeavor through a Foreign Military Financing (FMF) grant.
