Mexicans revolting against telecom monopoly

Monopoly electricbankingJune 25, 2013

By John Seiler

As I’ve written a couple of times on our site, Mexico’s economy now is growing faster than America’s. The country has enjoyed almost two decades of capitalist reforms, contrasting with the equivalent plunge into socialism of El Norte.

But I also noted there’s one big area where Mexico lags: telecommunications, the life’s blood of modern economies. It still suffers from a government-granted monopoly to mega-billionaire Carlos Slim, who alternates every few months with Bill Gates as the world’s richest man.

The costs for phone, cell and Internet connections are much more than they would with competition. The cost also hurts American businesses selling and buying in Mexico; and Mexicans who call from the U.S. to Mexico, or vice versa.

Now, a revolt against the monopoly is advancing. It’s explained on the Website Dos Paises, Una Voz (Two Countries, One Voice):

———————————
Carlos Slim’s power and fortune is made up primarily from his monopoly on the Mexican telecommunications system with exorbitant prices and inadequate services.
  • Slim’s company, America Movil (comprised of Telmex and Telcel), has nearly 75 percent of the TOTAL Mexican telecommunications system – from telephone landlines to mobile telephone services.2
Mexico has a tremendous poor, rural population that could elevate its socio-economic status if it could end Slim’s monopolistic practices and achieve better access to reliable and affordable telecommunications.
  • According to the January 2012 Organizations for Co-operation and Development (OECD) study “Review of Telecommunications Policy and Regulation in Mexico,” the country has a tremendous poor, rural population that could increase their socio-economic status given access to resources such as broadband.3
  • It has been consistently proven throughout developing countries that access to services like mobile banking provides a route out of poverty.
Carlos Slim’s telecommunications empire has overcharged billions and billions of dollars to the Mexican people, especially to the rural poor. The welfare loss Mexico has endured is estimated at $129 billion.
  • To date, Slim’s telecommunications empire has overcharged billions and billions of dollars to Mexicans, especially to the rural poor. Carlos Slim price gouged Mexican customers a total of$13.4 billion each year from 2005 to 2009 for basic telephone and Internet service according to the OECD study.
  • Slim’s price gouging cost the Mexican economy $129 billion or about 2 percent of the country’s total annual GDP.4
In March 2012, Mexico’s anti-trust agency, the Federal Competition Commission (CFC,) ruled that one of Carlos Slim’s telecommunications companies holds too much power – bringing to light decades of Slim’s monopolistic practices and its impact on Mexicans.
  • The five-member CFC voted unanimously to let regulators proceed with rules to target Telcel’s prices and call quality.
  • This latest action in one in a series beginning in 2011, when the CFC deemed Telcel “too dominant” in the mobile call termination game. The CFC served the phone outfit with an 11,000,000 pesos fine (around $864,000) for monopoly practices. The 2011 ruling allowed the CFC “to cut by more than half the fees Mexico City-based America Movil can charge to complete incoming calls to its users.”5
  • Referencing these monopolistic practices, Mexico’s Central Bank Governor noted “in unusually bold language… that successfully promoting an agenda of economic or ‘structural’ reform could see the country reach growth rates in excess of 5 percent a year – more than double the annual average over the last decade.”6
Carlos Slim’s empire has stopped the economic progress of Mexico and hurt the standard of living for ALL Mexicans.
  • The country’s poorest are disproportionately hurt by the price gouging, coupled with the unreliable and poor services. Carlos Slim’s monopolistic interests resulted in Mexico ranking LASTin public investment in telecommunications (#34 out of #34) whileSlim’s company Telmex had a profit margin of 47 percent – one of the highest of the 34 countries.7
  • According to the OECD report, Mexico loses 2.2% of its gross domestic product each year because of astronomically high cellphone rates, low Internet penetration, and mediocre connectivity.
  • Mexico has 10 percent as many wireless Internet subscribers per 100 inhabitants as Turkey. Its cellular phone rates are by far the most expensive in the OECD. Relative to other OECD countries, Mexico is ranked last in terms of investment in telecommunications per capita; but, says the study, “profit margins of the incumbent nearly double the OECD average.”8

While the recent CFC holding is an important ruling, more must be done to end the crippling effect Slim’s monopoly has on Mexico’s poor and the entire nation’s economic development.


 

3 comments

Write a comment
  1. us citizen
    us citizen 25 June, 2013, 16:37

    And this has what to do with CA?

    Reply this comment
  2. Rex the Wonder Dog!
    Rex the Wonder Dog! 25 June, 2013, 22:39

    Mexico is a third world country and Slim is buying off the gov to gow rich, no different than Amerika today

    Reply this comment
  3. Hondo
    Hondo 26 June, 2013, 09:17

    Carlos Slim is deporting as many of Mexico’s poor into AmeriKa as he can. The richest man in the world is from one of the poorest thurd world countries, Mexico. And one of the most corrupt.
    This is the reason this article applies to us. The crony capitalism, as practiced in Mexico, holds no ability to for the average (or even the above average) Mexican to reach the middle class, let alone become rich.
    Hondo……

    Reply this comment

Write a Comment

Leave a Reply


Tags assigned to this article:
Carlos SlimjJohn SeilerMexicomonopoly

Related Articles

Government’s tyrannical grip tightens

If it weren’t for the nice cars we drive instead of Trabis, I’d swear we were living in East Germany

Scott Baugh Joins GOP Hypocrites

Steven Greenhut: Orange County Republican Party Chairman Scott Baugh has gained much well-deserved publicity for his “Manifesto” declaring that the

2/3 Wis. 8th Graders Not Proficient

John Seiler: Wisconsin teachers have been on strike. And they object to Gov. Scott Walker’s move to end or limit