Nearshore Americas

Costa Rican Telecom Firms Caught in Huawei Ban Crisis

Costa Rica’s ban on Chinese firms bidding for 5G networks has put the country’s telecom firms in a difficult situation, especially state-run carrier ICE, which has close ties to Huawei.

Opposition parties are pressuring President Rodrigo Chaves to review the ban, asking why Huawei was allowed to participate in the country’s telecom industry in the first place.

ICE has already awarded contracts to build the 5G network to Sonda Systemas and One Way Technologies, both of which rely on Huawei for key telecom equipment. ICE itself has close business ties with Huawei, having purchased nearly US$100 million worth of telecom equipment from the Chinese company in the past 10 years.

Outright severing ties with Huawei is not an option, though; at least not at the moment. Industry observers have stated that the government should conduct an impact analysis of the ban on competition before implementing it. If supplier companies are left out, it could have a negative impact on the supply chain and competition.

One possible solution for telecom firms is to switch to a different supplier for their key telecom gears. However, this could be a costly and time-consuming process.

With the decree still in place, telecom firms are now faced with the difficult task of figuring out how to cut ties with Huawei without disrupting their own operations.

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Industry analysts argue that the decree violates the principle of technological neutrality, which gives operators the opportunity to choose the technologies that best meet their needs.

Some also say that the government did not conduct an impact analysis on the competition before imposing the ban.

Narayan Ammachchi

News Editor for Nearshore Americas, Narayan Ammachchi is a career journalist with a decade of experience in politics and international business. He works out of his base in the Indian Silicon City of Bangalore.

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