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(506) 2223-1327         Published Tuesday, Nov. 16, 2010,  in Vol. 10, No. 226            E-mail us
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U.S. consumer case filed against BBG phone firm
By the A.M. Costa Rica staff

A California law firm has filed a class action suite against BBG Communications, Inc., the company that is known for charging astounding fees for credit card telephone calls.

The law firm, The Consumer Law Group in San Diego, alleges six violations, involving federal consumer law, criminal law and breach of contract.

BBG has telephones in a number of tourist hotels and other sites in Costa Rica as well as around the world. The company, owned by the Galicot family in Tijuana, México, is known for surprising callers when they return home and check their credit card bill for overseas calls. The rates can be $10 or more a minute. The federal court filing claims that the company even charges when no one answers.

BBG has a relationship with the Instituto
Costarricense de Electricidad here. The once national telephone monopoly said it entered into an agreement with the firm because it did not have the capacity to collect for credit card calls.

A.M. Costa Rica published articles on the firm two years ago after a reporter was billed $36 for the first minute of a call to New York City. One article is titled "Pact with ICE allows U.S. phone firm to skin callers." The story said that the firm had telephones in about 400 hotels here and that the hotel got $7 a call. The initial contract was negotiated during the presidency of Miguel Ángel Rodríguez who is now on trial facing unrelated corruption charges involving telephone service.
The firm filed the case based on the experiences of two California men, but John Mattes, a lawyer with the firm, said that a Web site will be unveiled this week that will invite consumers who believe they have been overcharged to join in.

Vision-challenged lottery vendors getting shelters
By the A.M. Costa Rica staff

The voluntary tax on innumeracy, otherwise known as the national lottery, got a boost Monday with the delivery of the first of 20 kiosks as sales outlets for those vendors who have vision problems.

The Municipalidad de San José, Banco Popular and the Cooperativa de Ciegos y Vendedores de Lotería were involved in the project. Until now, the vision-challenged lottery vendors worked in the outdoors. The first person to receive a kiosk, identified as Rolando Salazar, has spent 24 years selling lottery tickets in Parque la Merced.
All of the small structures will be placed in public areas. Not well known to expats is that some of the lottery vendors in the streets have vision problems or may be blind. The small structures also provide some security for the vendors.

By coincidence or not, the mayor, Johnny Araya Monge, who participated in the ceremony Monday, faces a blind opponent in the December municipal elections.  He is Óscar López of the Partido Accesibilidad sin Exclusión. López, a former legislator, almost alway is photographed holding a white cane.
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Two electrical outages
are planned for today

By the A.M. Costa Rica staff

The national electric company plans outages today in Barva and downtown San José.

The downtown outage will be between calles 15 and 21 and from the south sidewalk of Avenida 8 to the north sidewalk of Avenida 14, said the Compañía Nacional de Fuerza y Luz. The outage is to conduct preventative maintenance on the underground electrical system, the company said.

The cut in electricity will affect many businesses and lunch spots in the vicinity of the courts complex and includes the Banco Nacional office across Avenida 10 from the Casa Matute Gómez. The Clinica Santa Rita also is on the list, however, some of these locations have their own generators to prevent power loss.

The downtown outage is from 8 a.m. to 4 p.m.

In San Roque, San Pablo and San Pedro de Barva the outage will be from 7:30 a.m. to 4:30 p.m., the company said. This outage, too is said to be for preventative maintenance. Among the locations affected are Glory Christian School and the Escuela de San Pablo and the Escuela de San Pedro.

Our readers' opinions
Amnet blames bad service
on RACSA and television

Dear A.M. Costa Rica:
I’ve had Amnet for four years. I get both my television and my Internet from them. Since the beginning, the Internet has had numerous slowdowns, outages and interruptions. Every time I inquire with Amnet, the response is the same. “It’s RACSA’s fault”. I’ve just learned to live with substandard Internet service, probably because the idea of getting two companies to provide for my cable and Internet always seemed like a hassle.
Over the last several months, I’ve now had many problems with my TV as well. I have a digital TV box that I rent from Amnet. When I received the first one, I commented to the installer how old and huge the supposedly new equipment appeared. He said it was refurbished. He left before the new service started. When the head office finally turned it on, the picture was terrible. They tried to blame it on my TV, but I insisted that it works without the box so it couldn’t be possible. It took two weeks before they came out to replace the faulty box.
The replacement also didn’t work. Finally, after testing a few (clearly used) boxes they found one that worked. Now, Amnet has shuffled the channel numbers around. One channel, which I watch religiously (CNBC) is supposed to be broadcast on a different channel number. Instead, it is not shown and the Amnet customer help line says it should be fixed soon (they’ve been saying that for three weeks). This is not the first time that promised channels don’t function according to what they advertise.
The service that I pay for is as much as the service in Canada (or the United States). However, the speed, the quality and the service are way way worse. I wished Amnet could deliver what they promised. If they want to charge these prices, they should provide modern equipment and real service. Currently, this is no way to run a business. Unfortunately, this will finally force me to get another service provider.
Gregg Holubitsky

Another Amnet customer
still seeking CNBC channel

Dear A.M. Costa Rica:

What happened to CNBC?
It has been a full three weeks since CNBC, the business information channel, went off the air at Amnet.  The channel went missing several days before Amnet dropped several programs without explanation or warning, including Fox News, under the guise of offering "new channels."  A week went by before Amnet began to explain that "for reasons beyond [its] control" ("por causas fuera nuestro control") CNBC would be off the air "temporarily" and would offer a decidedly inferior program presented by Bloomberg News in the interim.
Amnet has declined  to explain what "reasons" caused it to drop CNBC from its programming or why those reasons are "beyond its control."  Yet, Amnet continues to charge its customers full fare for its programming, even warning customers that they must be sure to pay their subscription on time or face an interruption in service.  As Dean Barbour so aptly advised us in a letter to the editor of this publication several weeks ago, Amnet is yet another example of the kind of service we must endure where the service provider enjoys a monopoly.  Since the customer has no real options, Amnet knows it can do what it damn well pleases, even arrogantly expecting the customer to believe meaningless and empty explanations for its failings such as "causes beyond its control."  Isn't it time for Amnet to explain what it really means by those words?
David Jackson
San José

Find out what the papers
said today in Spanish

By the A.M. Costa Rica staff

Here is the section where you can scan short summaries from the Spanish-language press. If you want to know more, just click on a link and you will see and longer summary and have the opportunity to read the entire news story on the page of the Spanish-language newspaper but translated into English.

Translations may be a bit rough, but software is improving every day.

When you see the Summary in English of news stories not covered today by A.M. Costa Rica, you will have a chance to comment.

This is a new service of A.M. Costa Rica called Costa Rica Report. Editor is Daniel Woodall, and you can contact him HERE!

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San José, Costa Rica, Tuesday, Nov. 16, 2010, Vol. 10, No. 226

Latigo K-9

Small is beautiful, real estate buyers say, but cheap is better!
By Meg Berns
Special to A.M. Costa Rica

Long gone are the halcyon heydays where investors who had no intention of ever living in Costa Rica could come down, purchase properties, hold for a short while and flip them for a fast buck. But something new is now emerging; people are buying lower priced homes, paying with cash and planning to use the homes themselves while also earning vacation rental income.

For buyers who don’t have cash, the marketplace is evolving into something totally different as sellers are still looking to sell, while buyers are now seeking lower cost homes with low down payments in areas with high vacation rental appeal near the beach, lake or other high tourism area to justify the investment. Yet the financing in most cases is coming through private lenders because getting a bank loan today is much more difficult.

“That is the big issue; banks are being very conservative,” said Orlando López, regional director for Central America, Stewart Title Latin America. “The amount of loans granted for housing by the banks in Costa Rica (total figures, including Costa Ricans and foreigners) has dropped around 50 percent from 2008 to 2010. And the approval process usually takes a long time, with 90 days as a best case scenario and 180 days more probably the expected time.”

Even so, buyers today are looking for deals, and sellers are finding ways to facilitate those deals, notes Kenneth Schaafsma, owner/broker of Oceanside Realty in Jacó Beach.

“It is a buyer’s market, and we are seeing a lot of seller financing. If the seller is motivated enough and creative, they can sell. As an example: with 50 percent down and 50 percent seller financing over five years with a good interest rate, they can sell,” said Schaafsma, adding that conventional loans are still available, though more difficult to obtain. “Lenders are lending but with a lot more paperwork and a long time before final approval. So people are coming with cash, buying smaller properties and looking for private financing. The sweet spot seems to be around $250,000 or below, and the biggest draw is on the beach with beachfront condominiums still very popular.”

López agreed. “We are seeing, not only in Costa Rica but across the board in the entire region, Mexico, Central America and the Caribbean, a preference for lower-value properties, not exceeding $250K to $350K for houses and around $100k for lots. There is no appetite for high-end resort product. That is a tough sale right now.”

Deborah Gauthier, sales specialist and president of Resort Realty in Herradura/Jacó concurs, “For Los Sueños [Resort and Marina] and other luxury properties, the $400K to $500K entry level is the most sought after. Properties over the $1 million dollar mark are sitting for 18-plus months with few potential buyers. Pricing properties is difficult as only great deals are selling, reflecting prices of five years ago,” added Ms. Gauthier.

Potential buyer James Bates from central Florida, who has visited Costa Rica at least a half a dozen times over the past few years, said he feels like the time is finally right to buy as prices are down and sellers are willing to make a deal. “I am looking for a property that is in a secure location near the beach or lake that is both safe and affordable at under $150,000 that I can purchase now to enjoy as a vacation home today and later use for my retirement,” said Bates.

Ms. Gauthier credits lowered prices, along with seller or developer financing with a small but noticeable upturn in the market. “We are seeing a turn around, though slight. Up to $300K seems to be the most common price range for buyers.” And perhaps the best news of all, according to Ms. Gauthier: “Clients are actually purchasing now versus speculating about a further declining market. Also more Costa Ricans are looking in the central Pacific for vacation homes. They are looking for exceptional deals, as is everyone else.”

Costa Linda Condominiums near the beach in Jacó reports that more than 70 percent of its sales are now to Costa Rican buyers. And this trend toward more vacation unit
home for sale

sales to Costa Ricans should continue, said Schaasfma, noting that the new San José-Caldera highway is a driving force behind a noticeable rise in Costa Rican buyers of central Pacific vacation properties. “The new highway is having an impact. There is a 3.5 million person market of Ticos now living within one hour of Jacó and the other beaches of the Central Pacific, and they can get financing easier than Gringos at this time,” said Schaafsma, speculating that the market will expand even more once the landslide problems with the new road are finally fixed for good.

Randy Berg of put it more bluntly, referring to North American buyers, “People are fearful, careful and unsure of their own futures, and therefore a house or real estate in Costa Rica is not in the forefront of their thoughts and minds. Buyers are few and far between. It takes far, far more work now than ever before to close a sale. Everyone wants a deal. No one is willing to pay full price unless it is a truly exceptional property, and even then it is rare.” Yet when a good deal is finally agreed upon between buyer and seller, lack of financing can still kill the deal. “Well over half of buyers before used sources of financing that simply are not available any longer; i.e. they tapped into their home equity or they borrowed from their banks. Those sources have dried up,” noted Berg.

Ironically, with such bad news in the world economy, the good news is that private investors are now willing to take the risks bankers have backed away from. “The lack of financing options available in the banking system, the bad situation in the stock market, the poor interest rate bonds and CDs are generating, these have all opened a space for private financing, which has become very popular recently, representing an alternative for borrowers and an opportunity for investors to place money at an attractive interest rate,” reported López. “Of course conditions are very tough, 2-3 years term, 12-15% interest rate, 5% origination fee, 50% LTV [loan to value].”

Yet Berg says short-term loans won’t work for most buyers. “People want financing, not just three year balloons, but longer-term,” remarked Berg, adding that in this down market he happened on a formula that seems to be working and working very well. And that is a small, yet ample two-bedroom home with pool and security, offered between $75K to $85K with 10-year financing and only a small down payment.

“We initially ran a few ads for these smaller casitas on one of our properties — with financing — and we sold them out within three weeks. After refining our offerings and properties, we ran additional ads targeting only the Costa Rican marketplace and with minimal marketing costs, we received well over 800 inquiries in less than a month. Next we targeted specific niches in the States and responses were the same — overwhelming!”

Ms. Chinchilla meets with former presidents on Ortega
By the A.M. Costa Rica staff

President Laura Chinchilla Miranda got multiple votes of confidence Monday from two former presidents and five former foreign minsters. They said they supported her use of diplomacy in trying to turn back the Nicaraguan invasion of a large island in northeast Costa Rica.

Absent from the meeting was former president Óscar Arias Sánchez, who already is on record as being critical of the actions of his protegee.

Attending were Abel Pacheco and Luis Alberto Monge.

The former diplomats and ex-presidents had praise for Ms. Chinchilla's wisdom and adherence to Costa Rican tradition in pacifism and negotiation over the land grab.

Diplomacy has been successful in that the Organization of American States voted 21 to 2 Friday that Nicaragua should remove its troops from the disputed zone. Daniel Ortega, the Nicaraguan president, rejected the decision by the
hemispheric body and said that the vote was promoted by drug trafficking interests.

Meanwhile, reports from Nicaragua say that troops on the Isla Calero are being strengthened to perhaps as much as 200 soldiers from the original 50. In addition, Costa Rican police detained a bus load of Nicaraguans fleeing the country Monday, and some young men said they were leaving because the army was aggressively recruiting.

Ortega has said he wants his country to have access to the Río Colorado, which is completely in Costa Rican territory.

Costa Rica has said it might take the case to the United Nations. Ortega has said he might take the case to the International Court of Justice.

Meanwhile, NIcaraguans have dug a ditch across the disputed island, and locals expect that the Río San Juan will blow out a new mouth along this ditch when the first flood comes. The dispute originally started with dredging, but locals say the force of the river is much greater.

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San José, Costa Rica, Tuesday, Nov. 16, 2010, Vol. 10, No. 226

Workmen are placing a new bailey bridge at Pilas de Canjel in Nandayure, Guanacaste, replacing one destroyed by the storm
new bailey bridge
Ministerio de Obras Públicas y Transportes photo

Rocks close Interamericana Norte adding more damage

By the A.M. Costa Rica staff

Rocks, described as being of big proportions, fell on the Interamericana Norte Monday at Cambronero, and officials closed the vital highway.

They said the situation would be evaluated today. They added that a bailey bridge installed nearby due to another weather-related mishap was not damaged in the fall of rocks. They suggested the Autopista del Sol as an alternate route.

That was the latest in weather-related incidents as the country tried to assess and repair the damage from four days of heavy rains.

The Interamericana Sur remains closed between Palmar Norte and Paso Real due to landslides and the rupture of a water line. The highway has been out of service for two weeks, but now there are alternate routes. The Ministerio de Obras Públicas y Transportes noted that other stretches of the highway would be closed during the week because heavy machinery was clearing landslides. The work today will be at a point called Casa Mata. The route will be closed two hours at a time.

The national emergency commission said that good weather Monday aided in the evaluation of damage. Among areas inspected were agricultural fields near Parrita.

The commission said that 10 shelters with 542 persons remain in use, mainly in Escazú, Tarrazú, Acosta, Aserrí and Corredores. Aircraft still were providing food to at least five isolated communities.
The bulk of those in shelters, some 451, come from Calle Lajas and Bajo Los Anonos in Escazú. Calle Lajas was where a slide killed 21 persons early Nov. 4.

The Instituto Nacional de Acueductos y Alcantarillados said that the Puente de Mulas water treatment facility was back in service and the Escazú, Santa Ana and sections of Desamparados and San José that had been without water were now getting some. Work still was taking place on water lines in Parrita, Acosta and Orotina.

The commission had 120 pieces of equipment at work helping communities clear roads, it said. In the western Nicoya Peninsula, the Consejo Nacional de Vialidad said it installed bailey bridges over the rios Frio and Torito  and that two more were going in over the Río Fruta de Pan and Río Pilas de Canjel. The bridges at that location were taken out by flooding prompted by Tropical Storm Tomas.

In the northern zone another bailey bridge is going up over the Río La Penca between Guatuso and Colonia de Puntarenas. A heavy truck loaded with lumber collapsed a previous bailey bridge at this point in the early days of the storm.

The Instituto Costarricense de Electricidad said that the extent of the damage made repairs slow in Parrita, Acosta, Frailes de Desamparados and Aserrí. Some 400 customers remain without service in Pueblo Nuevo de Parrita, Near Acosta, the company was installing nearly two kilometers of fiber optic cable. In Aserrí even the utility poles were destroyed.

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San José, Costa Rica, Tuesday, Nov. 16, 2010, Vol. 10, No. 226

Medical vacations in Costa Rica

Brazil seeks to produce
higher-quality coffee beans

By the A.M. Costa Rica wire services

Brazil produces more coffee than any other country. Now, some Brazilian farmers want coffee drinkers to see Brazil as a producer of some of the best coffee in the world. The coffee-growing region of Sao Paulo state exemplifies how farmers are working to satisfy the rising expectations of coffee drinkers.

The coffee crop is in at the Serra farm in Garça. Farmer José Renato Serra said, "We are late in the season, and this is the last harvest."

After harvest, Brazilian coffee beans spend about three days drying in the sun, before being processed. Late beans like these are often collected after they've fallen on the ground, so they command the lowest prices.

Serra also grows high-quality beans. Like other farmers, he is looking at producing more of them. "Brazil produces 50 percent of the world's coffee. Half of Brazil's output is very low quality, but that is changing now."

Change begins here, at the nursery. Each year, Serra replaces some of his older coffee plants with new ones that can produce better, more expensive coffee. "A farmer must be ready for rapid changes, to find plants that are resistant to diseases and produce more beans," said Serra.

With demand soaring, global prices for coffee are up this year. Farmers around the world are benefitting from higher prices.

Brazil got an added boost this year, when U.S. financial experts suggested adding it to a select group of coffee-producing nations whose beans are traded on commodity markets. That has opened up lucrative opportunities for Brazilian farmers, as well as challenges.

"Everyone these days wants a gourmet product," said Serra. "They want beans that have been washed, that have not been harvested from the ground. And they want good aroma and flavor."

Paulo Piancastelli and his wife, Juliana, see opportunities, as well. Juliana's father planted his farm a few years ago. Now they are starting their own in nearby Minas Gerais. The couple has taken a risk by leaving promising careers in finance. But they have a plan.

"If we can show our coffee comes from a well-known coffee region and uses environmentally-sustainable methods, then we can sell at higher prices," said Piancastelli

The goal is to use the latest farming technology. Instead of relying on rain water, they plan to install irrigation and fertilization systems. And they are investigating methods of organic farming and conservation.

Although more expensive than a traditional farm, the pay-off could be greater.

"The question is whether prices will stay high until our farm starts producing in three years," said Piancastelli.

Serra said he believes in Brazil's future. He counsels Piancastelli and other Brazilian coffee farmers. "I tell all my clients that the only way to survive in this market is to produce more and more high-quality coffee that customers want to drink."

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San José, Costa Rica, Tuesday, Nov. 16, 2010, Vol. 10, No. 226

Latin American news
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Five firms seek spectrum
in mobil market auction

Special to A.M. Costa Rica

As the deadline for the long-awaited spectrum auction approaches that will end the monopoly of publicly owned Instituto Costarricense de Electricidad in Costa Rica, all five major Latin American operator groups remain in the race to win a new licence. A middle-income country with mobile penetration at only 56.6 percent, Costa Rica is an attractive market for each of the five big regional players: America Movil, Telefonica, Millicom, Digicel and Cable & Wireless.

An analysis of the news

“Costa Rica offers huge potential for growth in terms of subscription count and revenues for new entrants. After market liberalisation, we forecast a 48-percentage-point growth in mobile penetration between 2010 and 2015, to over 100 percent,” said Daniele Tricarico, analyst at Informa Telecoms & Media. “Each of the five operator groups has a different footprint across the Caribbean and Central America and South America region and, if awarded spectrum, is likely to approach the market in a different way. Although GSM growth remains a priority in the short term, in the medium term the potential for 3G is considerable.”
It is likely that at least two of the five major Latin American operator groups will gain a licence in the Costa Rican auction, but ambitious newcomers, such as Russian 4G operator Yota, which is already present in Nicaragua and Peru, may also attempt to enter the market.
If awarded a licence, America Movil and Telefonica are likely to compete heavily on volume and price. The first two objectives of the two largest multinational groups operating in Latin America and the Caribbean, would be to target the large percentage of potential voice growth and lure GSM customers away from ICE through strong promotional activity.

Digicel and Millicom show potential to build more distinctive propositions. As it has done on several occasions in recently liberalised markets, Digicel could target the growing market of lower-spending customers, the youth and immigrant communities with, intense local marketing and sponsorship.

Millicom is in the best position to target higher-spending, urban costumers with attractive 3G and mobile broadband services, and to potentially launch quadruple-play offerings with cable-provider partner Amnet.

Finally, Cable & Wireless can draw upon its experience in neighbouring Panamá, the closest comparable market by size, geography and income levels, and focus on the voice market.
Although for new entrants the combination of Costa Rica’s low mobile penetration and Costa Ricans’ higher-than-regional-average spending power is highly attractive, a newly liberalised market will become competitive in a short time. In a fast-changing market, a clear strategy and service proposition must be supported by an efficient execution of plans.
“New entrants should not underestimate ICE. If the incumbent can overcome its service shortcomings and maintain its low prices, it will not be easy for new entrants to persuade subscribers to churn from ICE,” concludes Ms. Tricarico.

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