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ARTICLE
By Cintia Garza, Market Analyst
Radiografica Costarricense S.A (RACSA), a subsidiary of state-owned Instituto Costarricense de Electricidad (ICE) in Costa Rica, owns a nationwide license in the 3.5GHz frequency band with 100MHz of spectrum. On August 2007, RACSA awarded a contract to Alvarion for the supply of 4MotionTM solution product range to provide extended wireless access services in several major cities in Costa Rica. As of April 2008 they have installed 14 WiMAX base stations in the Greater Metropolitan Areas of Costa Rica, covering the cities of San Jose, Alajuela, Cartago and Heredia, with an initial investment of US$3 million. Commercial service plans are available for 512Kbps (29 dlls) and 2Mbps (144 dlls). The service is offered under the name of Evoluciona. The network will be capable of carrying 20,000 broadband connections. The company expects to reach 75,000 WiMAX Subscribers by 2011. Click to read the interview… Maravedis: What is your current WiMAX network status and development? At this moment we are still in the implementation stage. We are currently installing 14 base stations; we expect to finalize setting up all the infrastructure in one month and a half. We initially bought 1,000 CPEs from Alvarion, because we thought the process of selling the service was going to be slow, however in the first week we sold all the CPEs. There was very good market acceptance of the technology, so we placed a new order and we are expecting to receive 4,000 additional CPEs in a couple of weeks. We have a customer waiting list of approximately 3,500 for the service. We are quite happy since we haven’t invested in marketing campaigns or advertising. The service is selling itself, just from mouth to mouth communication. We started offering the service in urban areas, even where we have competing technologies such as ADSL and Cable. The service has been very well accepted. After this stage is completed, we will decide on whether we will expand our network nationwide, addressing also the underserved and rural areas of Costa Rica, or if we will offer the service in the same coverage area that we have now, but with more base stations that support portability and mobility. We are looking at how the technology will evolve to support mobile services in the 3.5GHz band. At this moment the focus is on fixed services to offer a good Quality of Service (QoS) and also have a larger number of cells. In the next step we will introduce portability; base stations will be installed every 3 - 4Km, and in the last stage (which is mobility) our base stations would be installed every 1 – 1.5km. Our spectrum in the 3.5GHz has a limitation in terms of the distance that can be reached, that’s why we will need a large number of base stations to guarantee the user speeds of 4Mbps, 6Mbps and 8Mbps in the future. Maravedis: What growth do you anticipate by the end of the year 2008 in terms of the number of subscribers? Our current network has a capacity to serve 20,000 users. We expect that by the end of the year we could reach some 8,000 subscribers, or probably more. The main limitation for us is the time required for installation. At RACSA, we have 10 installation teams, each team can install two or three CPEs per day; we will definitely need a larger staff and number of technicians to satisfy a bigger demand. Maravedis: Talking about the CPEs, every operator is adopting a different strategy to deal with the high cost of the CPE. What is the current cost of the CPE and how much do you anticipate this cost could decrease? What strategy are you following to offer the CPE to your clients? Currently the cost of the CPE is around US$500. We expected the cost of the CPE would decrease faster, but the decrease has been slow. We expect the cost of the CPE by the end of this year could reach the US$300 – US$350, but the hope of the CPE at US$100 is something that will not occur in the short term. The final user has the option of buying the CPE or paying a monthly fee for the use of the CPE. We are charging US$6 a month. Maravedis: And in which cities or areas are you commercial with WiMAX? In the Greater Metropolitan Areas of Costa Rica, which consists of 4 provinces: San Jose, Cártago, Alajuela and Heredia. Maravedis: Could you please describe the service plans that RACSA is offering? Yes, we are offering 3 services plans: These prices do not include the rental of the equipment, which is around US$ 6-7 per month, plus installation fee of US$100. Maravedis: Are you planning to partner with other equipment vendors when you offer mobility? Yes, actually the contracts to equipment vendors are awarded by a beauty contest process. In our first stage we awarded the contract to Alvarion, and we recently extended this contract for additional US$1 million to buy new CPEs. Our law allows us to partially extend the contracts with our equipment vendors for up to $US1 million. If we want to sign bigger contracts we need to incur in another beauty contest. We are currently having talks with Alvarion, Aperto, Motorola and other equipment vendors for the next contract to offer mobility. RACSA chose Alvarion solution with TDD (Time Division Duplexing) with the capacity to manage fixed and mobile systems. Through a software upgrade RACSA will be able to migrate the fixed subscribers to mobile. We expect to use this software upgrade during 2009; we are just waiting for the mobile equipment to be available. Maravedis: I was reading the notes of an interview you previously had with Telesemana where you commented you expected to reach some 75,000 WiMAX subscribers in 4 years. What will be your strategy to reach this target and to accelerate the subscriber growth? The strategy is to use a “Fideicomiso”. Under the Fideicomiso we will start an agreement with an International Bank. We will provide them with the network specifications and they will finance the project, they will buy the infrastructure and they will install the network. RACSA will just act as an administrator. The Bank will also select the equipment vendors. Maravedis: Are you addressing the residential segment, the business segment or both? Initially, our idea was to offer the service to the SME and SOHO; however we have experienced a great demand from the residential segment. We still offer the service to both business and residential users; however the split right now is around 95% residential. Maravedis: Besides Internet access, which other applications are you offering or planning to offer in the future? We are currently offering VPN services to SME. We are about to start some trials with voice and we will be eventually offering VoIP…. The complete version of the interview is available to WiMAXCounts™ subscribers only. The details include spectrum info, WiMAX subscriber numbers, subscriber split (residential & enterprise), ARPU, total base stations deployed along with breakdown by vendor and standard type, total CPEs deployed along with breakdown by vendor and standard type, competitive advantage, plus additional information. For more information about this an other WiMAX Operators, please visit www.wimaxcounts.com For more information you can contact the author: cintia@maravedis-bwa.com Copyright © 2007 by Maravedis Inc. All Rights Reserved.
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