In Costa Rica, RACSA Reaches for the Clouds

December 1, 2009

Costa Rica’s state-owned Internet operator, RACSA, announced that it will offer a cloud service that will include common applications (spreadsheets, word processor and email) and target mainly corporate users. The environment will run on Java and will include the open source Open Office suite.  The service aims to attract companies looking to lower maintenance and upgrading costs. Charges will start at $55 per month per user; premium packages will have larger data storage (5GB for the basic version, up to 10GB) and enhanced security.

With new competition around the corner, RACSA needs to strengthen its competitive advantages — such as coverage and scale — while it tries to keep corporate clients that may sign up for several services. A cloud service could help promote its broadband business and reduce churn costs while offering important economies of scale. Also, it could help RACSA to take business away from hardware and software vendors as well as service companies.

As published in our Costa Rica Intelligence Report 2009, broadband penetration of the population will close 2009 at 5%. Business broadband penetration is forecast to reach 74%, providing a large addressable market for RACSA’s pioneer cloud service. However, the anticipated cost offers little incentive for a company to switch to a cloudservice. At an annual expenditure of $660 per user — far exceeding the cost of an installed full-featured application suite, such as Microsoft Office — the service might be too expensive to justify, considering that it basically offers what users can get for free by downloading Open Office themselves. Even with the extra services, such as remote storage and backup, and the advantages of mobility and lower upfront and IT costs, the premium is still high for such a service.

Other important barriers for RACSA may include a natural resistance from corporations to store critical information outside their own computers and servers where they will have little control and oversight. In addition, companies are concerned about their ability to operate if their Internet connection goes down. Last but not least, potential competition exists: Google offers a cloud service in the US for $55 per year with 25GB of storage and could be a formidable challenger if it decides to launch a similar service in Latin America.

RACSA is looking in the right direction preparing itself for upcoming competition by bringing new value-added services that could help its customers. However, cost will always be at the top of the checklist for customers when deciding to adopt any innovative product or service.

— Jose Magana, Analyst

Related resources:

Latin America Mobile Operator KPI Forecasts
Forecasts published quarterly
Our Mobile Operator Key Performance Indicators Forecast products provide a complete picture of wireline voice and data communications in each of 19 Latin American markets. The Excel output includes five years of historical data and five years of market projections for metrics such as subscription totals, market shares, net and gross additions, prepaid and postpaid subscriptions, business subscriptions, data ARPS, aggregate ARPS, prepaid and postpaid MOU, churn and total service revenue — all broken down for the mobile operators in the respective markets. We believe our Mobile Operator KPI Forecasts are superior because they capture granular data gathered through extensive field research and use a thorough methodology consistently applied to all markets.

Latin America Mobile Demand Forecast
Forecasts published quarterly
Our Mobile Demand Forecast products provide complete pictures of demand trends for 19 geographical markets in Latin America. The Excel output includes five years of historical data and five years of market projections for metrics such as GDP, mobile penetration, subscriptions (by operator, type of package, technology), ARPS and total mobile service revenue (data and voice). The Forecasts are based on extensive field research and use a consistent methodology across all markets, aiming to capture the total spending, from an end-user perspective, on mobile communication services in each market. Data from these Forecasts is available online for subscribers to our DataTracker service.