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28 May 2009

The front page of today’s Jornada reports (article by Miriam Posada and Roberto Gonzaléz.  My translation):

President Felipe Calderón and former Communications Secretary Luis Téllez, in discussions with Carlos Slim, offered to eliminate the legal restrictions under which Telefonos de Mexico (TelMex) is frozen out of the television market in exchange for allowing Slim’s competitors low-cost access to the telephone company’s infrastructure in the most profitable zones within Mexico. After a tense two-hour meeting at Los Pinos, Slim rejected the proposal, arguing that to accept it would destroy Telmex.

[As Lawrence Wright reports in The New Yorker (registration required) this week] last March Communications Secretary Téllez arranged a secret meeting between Slim and president Calderón. The now former Secretary confirmed the facts with Wright, saying that he had hoped the meeting could pave the way for an ambitious plan to open the telecommunications sector to competition.  In return, Téllez told The New Yorker, the government was prepared to offer the industralist the one thing he hopelessly desires: television.

A couple of points.  While people like to complain about TelMEx, it isn’t nearly as bad as some claim. Consumer telephones weren’t seen as a necessity until relatively recently, and most complaints have been about the delay in obtaining service, not in the service itself.  Competition would not necessarily resolve this challenge, though — in theory – it would lower the consumer rates (which are some of the highest in the world, and are the second area in which there are legitimate complaints).   The justification for the high rates — “homologizing” the entire system (which had an ad hoc mix of European and North American standard switching stations, as well as obsolete, “good enough” equipment throughout the country — have largely been resolved, and other companies seek to benefit from the huge expeniture Slim undertook to create the new TelMex.

Note that the competitors only want to service the high-traffic areas.  When I was living in rural west Texas, we paid a much higher fee for our telephone service than in “high volume” areas, while we were more dependent on the telephone than other parts of the country.  In rural Mexico (even worse off than rural areas in the United States),  this sort of competition could cause even more hardships in the campo than there are now.

People forget what a huge change decent phone service has been, and how much that has improved rural life.  Even in the most backwards ejital you’ll find an internet cafe (I went to one in Tabasco where you had to step over the very, very large pig sleeping in the doorway.  Still, it means rural farmers have access to market prices, taxes can be paid electronically and rural kids have access to the same educational resources as the kids in Mexico City.

I just read a crime novel, written about 10 years ago, where the plot revolves around a murder in a Mexican town with only one telephone.  Try finding a place in Mexico now without phones, and without a couple internet cafes — you  won’t find places where the murderer can get away with it (almost) because nobody  is able to make a telephone call.  Crime writers are, perhaps, the only people who have a legitimate reason to complain about TelMex infrastructure development.

jornadaI don’t have any problem with Slim getting even richer than he was as a result of Telmex expansion.  He didn’t invent the internet, nor did he create the consumer demand. Much as I would like lower rates, I can see his point, that making TelMex simply the service provider (and, given that foreign companies are unlikely to want to do anything more than make a profit and extract it from the country) are not going to be willing to make the investments that TelMex has, and continuing to make, in providing adequate service throughout the country.

As to television, I have mixed feelings.  Basic cable isn’t available everywhere now, and isn’t affordable.  There are a few independent stations, but still Televisa (and it’s pseudo-competitor, in reality simply a second network with much the same ownership, Galaxia) control the market.  A new network would be welcome, but creating a Televisa network — would just concentrate ownership of the airwaves within the same small group that now controls the broadcast media.  It would not improve Mexican access to information all that much, and probably doesn’t make much sense.

I depend for my information mostly on the print media, which is suprisingly strong for a country that supposedly doesn’t read.  And the newspapers are doing well economically.  But that’s a post for another day.

One Comment leave one →
  1. 28 May 2009 2:01 pm

    My biggest complaint is with internet access and literacy for young people. Our Colonia has spotty access. When we asked for better, we were told it wasn’t profitable because people in the gap between Xico and Coatepec coverage didn’t have enough money to pay for it. So the schools in our colonia don’t have it. Nor do they have access to the print media, for that matter.

    Slim talks about the need for education and job skills, etc, but his charitable foundations which could probably, if they were imaginative give quite a boost in these areas, are too scattered and not all in Mexico. So Mexico which Slim could help push up into sturdier middle class status singlehanded is sliding.

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