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This article analyzes the design and implementation of telecommunications service policies targeted at the poorest regions of Mexico (1990-2008). It begins by defining universal access and service policies, their economic and social rationale. Secondly, it discusses the scope of public policies on universal service provision designed by Mexican authorities to achieve universal access. Thirdly, the paper analyzes the distributive effects of this set of policies among the poorest sectors of the population. The sources on which this research was based were two national surveys: the Household Income and Expenditure Survey (2008), and the Household Survey of the Access and Use of Information Technologies (2007). The additional information on regional economic development was based on the poverty indexes by the national population council and economic information given by Mexico's Census Bureau. Further use was made of the annual reports prepared by the Ministry of Communications, statistics published by the Federal Telecommunications Commission, and official documents prepared by the government agencies. Finally, a series of in-depth interviews was conducted with the former representatives of the Office of Rural Telephony. Finally, the article discusses, in the light of available evidence, possible explanations for the apparent failure of the universal service policy that was implemented to bring at least basic voice services to Mexico's neediest.
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Paper Telecommunications, Universal
Service and Poverty in Mexico: a Public
Policy Assessment (1990–2008)
Cristina Casanueva-Reguart and Antonio Pita S.
Abstract—This article analyzes the design and implementa-
tion of telecommunications service policies targeted at the
poorest regions of Mexico (1990–2008). It begins by defining
universal access and service policies, their economic and social
rationale. Secondly, it discusses the scope of public policies on
universal service provision designed by Mexican authorities to
achieve the goal of universal access. Thirdly, the paper ana-
lyzes the distributive effects of this set of policies among the
poorest sectors of the population. The sources on which this
research was based were two national surveys: the House-
hold Income and Expenditure Survey (2008), and the House-
hold Survey of the Access and Use of Information Technolo-
gies (2007). The additional information on regional economic
development was based on the poverty indexes by the national
population council and economic information given by Mex-
ico’s Census Bureau. Additional use was made of the an-
nual reports prepared by Ministry of Communications, statis-
tics published by the Federal Telecommunications Commission
and official documents prepared by the government agencies.
Finally, a series of in-depth interviews was conducted with the
former representatives of the Office of Rural Telephony. Fi-
nally, the article discusses, in the light of available evidence,
possible explanations for the apparent failure of the universal
service policy that was implemented to bring at least basic
voice services to Mexico’s neediest.
Keywords—development, digital divide, market power, regula-
tory capture, social inclusion, universal service.
1. Introduction
The telecommunications services infrastructure is an im-
portant factor for economic development and social inclu-
sion, and a crucial component leading to greater equality
when services are available to and affordable to any person,
irrespective of levels of income and geographic location.
In developing countries gaps remained in the market mainly
because of regulatory failure, combined with exceptionally
challenging geography and extremely low population den-
sities, isolation and extreme poverty [1]. Government, in-
stitutions and public policy design have been faced with
a situation where authorities had a social obligation to en-
sure that their people had access to basic telecommunica-
tions, but the ability to enforce these obligations entailed
increasing difficulties. Some of these difficulties are related
to the asymmetry between the government regulatory bod-
ies and the power of the operators, particularly in the case
of an incumbent operator with market power in the supply
of almost every telecommunications service1.
This article analyzes the design and implementation of
telecommunications service policies targeted at the poorest
regions of Mexico (1990-2008). It begins by defining uni-
versal access and service policies, as well as their economic
and social rationale. The article then discusses the scope of
public policies on universal service provision designed by
Mexican authorities to achieve the goal of universal access,
namely:
Monitoring by the regulatory authorities of compli-
ance on the part of the incumbent telecommunica-
tions operator, Teléfonos de México (Telmex), in ful-
filling its social obligations as the dominant operator,
following the company’s privatisation (1990);
Government policy aimed at providing connectivity –
basic telephony services – to rural communities. This
article presents the main research results, which focus
on basic (voice) telecommunications services, both
land-line and wireless2. This policy was deployed
by private operators, mainly the incumbent. The par-
ticipation of operators was based on a public tender
processes organized by the government, which has
resulted in an additional profitable business for the
incumbent operator, with limited results in terms of
access to these services by the poor.
Thirdly, the paper analyzes the distributive effects of this
set of policies among the poorest sectors of the population.
Finally, the article discusses, in the light of available evi-
dence, possible explanations for the apparent failure of the
universal service or social coverage policies that were im-
plemented to bring at least basic voice services to Mexico’s
neediest, as well as the difficulties faced by the regula-
tory bodies behind the design and implementation of these
policies.
1Almost 20 years after Telmex’s privatization (1990) in 2009, Telmex’s
operated the 84.8% of the total the number of fixed line connec-
tions, and 72.3% of cellular lines. “The Competive Intelligence Unit”
(CIU), http://octavioislas.wordpress.com/2009/07/23/3236-mexico-the-
competitive-intelligence-unit-competencia-en-mexico-%C2%BFque-20-
anos-no-es-nada-telecomunicaciones/
2The results and the discussion, presented in this article, are part of
a larger project on Universal Access and Service which include telecom-
munications services and bandwidth in the provision of Internet, data and
video transmission.
15
Cristina Casanueva-Reguart and Antonio Pita S.
The sources on which this research was based were two
national surveys: the Household Income and Expenditure
Survey (2008), and the Household Survey of the Access and
Use of Information Technologies (2007). The additional
information on regional economic development reported in
this article was based on the poverty indexes drawn up by
the national population council and economic information
given by Mexico’s Census Bureau National Institute for
Statistics, Geography and Information (INEGI), Bank of
Economic Information (BIE), and housing and population
counting, 2005. Additional use was made of the annual re-
ports prepared by the Communications and Transport Sec-
retary (Ministry of Communications), statistics published
by the Federal Telecommunications Commission (COFE-
TEL) and official documents prepared by the government
agencies in charge of designing and monitoring the uni-
versal service telecommunications policies, principally the
Ministry of Communications. Finally, a series of in-depth
interviews was conducted with the former representatives of
the Office of Rural Telephony, who were in charge of mon-
itoring the implementation of social and universal telecom-
munications policies.
2. Access to Telecommunications
Services as a Fundamental Right;
Definitions of Universal Access
and Universal Service:
its Economic and Social Rationale
The recent literature on the universality of telecommunica-
tions services states, as a fundamental principle, that every
citizen has the right to access telecommunications services
with high quality standards. This implies fulfilling three
basic conditions: universality, equality and continuity, de-
fined as follows:
universality: every citizen has the right to have access
to telecommunications services with a high standard
of quality;
equality: universal access, irrespective of income lev-
els and geographic location;
– continuity: ensuring that the service continues to
maintain high quality standards, in an uninterrupted
manner.
Regarding universality, the literature on this subject distin-
guishes between universal access and universal service:
Universal access is when everyone has the right to
use the service somewhere, in a public place. This
service is also defined as communal or shared access.
In general there would be at least one point of access
per settlement over a certain population size, within
a convenient and reasonable distance.
Universal service is when every individual, house-
hold, business or institution can be provided with
a service, using it privately, either at home or in an
increasingly mobile variant, carried with the individ-
ual through wireless devices [2].
The rationale for a universal access or universal service pol-
icy is both economic and social. The economic rationale
is based on the market’s inability to provide infrastructure,
connectivity and services on a universal basis. Thus, uni-
versal access and service policies are justified in the face of
market gaps, so as to guarantee equality of economic op-
portunities, since telecommunications services are a critical
component in the production of goods and services, as well
as for social inclusion and, increasingly so, for political par-
ticipation.
The social rationale consists of the will of the public policy
makers who, as representatives of the state and its citizens,
must guarantee social inclusion and avoid the exclusion of
parts of the population, irrespective of income levels and
geographic location.
Furthermore, the three defining characteristics of universal
access and universal service are:
– availability: the service is accessible to inhabited
parts of the country through public, community,
shared or personal devices;
accessibility: all citizens can use the service, regard-
less of location, gender, disabilities and other per-
sonal characteristics;
affordability: the service is affordable to all citizens.
Thus, the policy of a universal telecommunications ser-
vice consists of an explicit, direct and focused public pol-
icy, aimed at offering telecommunications services at prices
that are affordable to the poorest sector of the population.
The fulfilment of this policy requires a subsidy, since this
sector of the population cannot afford these services at
market prices. The subsidy may be applied on the sup-
ply or demand side of these services. On the supply side,
it is usually applied through development and/or optimisa-
tion of the infrastructure (investment), which allows con-
nectivity and thus takes into account the difficulty of infras-
tructure provision given the level of geographical disper-
sion of these communities, as well as the cost of providing
the service.
On the demand side, the affordability of the provision of
these services must be addressed, because the population
currently without service generally lives in conditions of
poverty, sometimes extreme, and thus their income does
not allow them access to these services at the market price.
Hence, when supplying these services is not profitable for
the service operators, provision depends on various forms
of subsidy [3].
16
Telecommunications, Universal Service and Poverty in Mexico: a Public Policy Assessment (1990–2008)
3. Public Policies on Universal Service
Provision in Mexico under
the Responsibility
of the Telecommunications
Regulatory Bodies
According to the population counting of 2005, there were
184,748 rural communities in Mexico with a population of
fewer than 2,500 inhabitants, and 197,479 communities of
fewer than 5,000. These communities are inhabited by over
30 million men and women, which represented 29.1% of
the Mexican population. In addition, a notable feature of
these communities was their high level of dispersion, with
92.5% having fewer than 500 inhabitants.
Thus, in order to increase the social coverage of telecom-
munications services, a set of policies was drawn up and
implemented. They represented the main public policies
that have been put into practice to provide access and uni-
versal service in Mexico and among them, the most impor-
tant were:
Monitoring of Teléfonos de México’s (Telmex, the
incumbent operator) compliance with its obligations
to provide a universal service, as set out in Telmex’s
licence of 1990, at the time that the public telecom-
munications operator was privatized. This licence
was granted by the Ministry of Communications and
Transport (Ministry of Communications3), which has
acted as a regulator and has the authority to moni-
tor Telmex’s compliance with its obligations regard-
ing universal service, rural telephony, as well as the
modernization and expansion of the public network,
contained in Telmex’s licence.
Rural telephony (1995–2007), aimed at offering ser-
vices to communities with fewer than 500 inhabitants,
with a direct subsidy from the Ministry of Commu-
nications.
The creation of the Social Coverage Fund (Fondo
de Cobertura Social, FONCOS: 2002–2007) by the
Ministry of Communications aimed at increasing the
coverage of rural telephony in communities with
a population of between 400 and 2,499 inhabitants.
For this purpose the regulator organized went out to
public tender, calling for bids from telecommunica-
tions operators. The conditions of the tender included
3In Mexico there are two main regulatory agencies directly involved
with telecommunications, the Subsecretaría de Comunicaciones (Ministry
of Communications), which is part of the Secretary of Communications
and Transports (Ministry of Communications and Transport). The second
regulatory agency is the Comisión Federal de Telecomunicaciones (Fed-
eral Telecommunications Commission), which is an autonomous govern-
ment agency. In the case of universal service and universal access, the
agency in charge of designing these policies is mainly the Ministry of
Communications. This ministry has performed the major role in the de-
sign of universal telecommunications policy and in the surveillance of the
implementation universal services by the operators.
the provision of non-returnable monetary resources,
which were originally allocated by the Ministry of Fi-
nance. In addition, the regulator allocated frequency
bandwidth resources that were reserved for the pur-
pose of social and universal service coverage, with
a ten year licence (renewable) to use these frequency
bands.
3.1. Telmex Licence: Universal Service Obligations and
Network Growth
The design of the universal service obligations included
in the incumbent operator’s licence should have addressed
the main challenges posed by the gaps in the market,
mainly in small rural communities generally located in re-
mote and isolated areas and where the poorest people of
the country live. This section deals with the context in
which Telmex was privatized, which explains the scope of
the clauses relating to universal service and rural telephony
included in the licence. The scope of both the content and
schedule for its implementation, as well as their impact
on bringing connectivity to the neediest communities, was
shaped to some extent by the context in which the privatiza-
tion of Telmex took place. This section begins by describ-
ing this context, then briefly presents the content of the
clauses relating to universal service obligations, namely,
regarding network expansion, rural telephony and public
telephones. It then presents the main results of an anal-
ysis of the impact of Telmex’s fulfilment of these licence
clauses.
In order to understand the government policy makers’ lim-
ited leverage on the definition of the clauses relating to uni-
versal obligations or social coverage in Telmex’s franchise
agreement(1990), it is useful to analyze the specific junc-
ture at which this process took place. During the 1980s,
with the economy severely indebted, the burden of foreign
debt and fiscal deficit had a major effect on the process of
privatization of public companies and specifically on the
approach adopted in the privatization of Telmex. Between
1965 and 1980 the economy had been growing at an aver-
age rate of 6.7%, but during the 80s this slowed to a yearly
average of 1.8%. In this context, government policy makers
embarked on an aggressive privatization program of pub-
lic companies, with two purposes in mind: to increase the
efficiency of Mexico’s economy and to improve Mexico’s
public finances.
In the case of the public telephone company in Mexico, the
potential revenue gain from this privatization and the public
finance argument prevailed. The decision to privatize the
public telecommunications operator in Mexico took place
in 1989. During the privatization of Telmex, emphasis was
placed on expected revenues. In fact, the privatization pro-
cess was chaired by the Ministry of Finance and not by the
Ministry of Communications and Transport [4]–[6].
To maximize revenues from privatization, the government
sold to a single set of investors a package that included
Telmex and Telnor, in addition to the only nationwide mo-
bile network franchise, as mentioned above, the Federal
17
Cristina Casanueva-Reguart and Antonio Pita S.
Microwave Network, as well as an ample bandwidth al-
location. Thus, overnight, the emerging company became
a formidable player in the sector. It was allowed to of-
fer all types of telecommunications services with the ex-
ception of television broadcasting services. Thus, Telmex
became a horizontally and vertically integrated telecom-
munications service provider with a nationwide network
for all its services. Furthermore, it was guaranteed lit-
tle or no competition in key services for several years.
The new private owners of Telmex were given a de jure
monopoly over the long distance markets (national and
international) for six years. They inherited the monopoly
over local telephone services. By creating a horizon-
tally and vertically integrated telecommunications com-
pany, the government could receive a higher price for pri-
vatizing the firm and reach a short-term public finance
goal. For potential buyers, the company was very attrac-
tive [4], [5]. They were allowed to buy a stream of ex-
cess profits sustained by a monopoly, more valuable than
a stream of revenue generated under competitive con-
ditions [7].
In the negotiation process that accompanied the privatiza-
tion of Telmex, government policy makers let the collec-
tion of revenues from privatization preside over other goals
such as economic efficiency, well-being and social inclu-
sion. This context explains the lack of leverage or bar-
gaining power of the authorities, specifically on the subject
of social coverage. Although Telmex’s license included
clauses governing universal service obligations, rural tele-
phony and public telephone booths, as well as network ex-
pansion, Telmex’s commitment to these clauses ended in
1994 and the results lagged very much behind the objective
of providing a basic universal telecommunications service
to rural areas.
The following paragraphs give a summary of the main
clauses relating to Telmex’s universal service and network
growth obligations. The result of an empirical analysis is
also presented, showing the outcomes of the implementa-
tion of these policies, reflecting the achievements of net-
work growth, rural telephony and public telephone services
or telephone booths (1990–1998).
From a regulatory perspective, Telmex’s licence made this
company operate as a regulated monopoly. The company
was given a set of operational goals that it was required to
meet:
– to expand the number of basic telephone lines by
a minimum of 12% per annum, until the end of 1994;
to continually reduce the waiting period for the basic
telephone service in localities with automatic switch-
ing capabilities to a maximum of one month by the
year 2000;
to provide a public payphone service to every locality
with more than 500 inhabitants by the end of 1994,
and to increase the penetration of public telephone
booths from 0.5 per thousand inhabitants, to five per
thousand by the end of 1998;
– to provide a public payphone service to every lo-
cality with more than 2,500 inhabitants (less than
5,000 inhabitants, according to the definition of rural
community), if there were at least 100 applications
from potential end users, and an up front payment
equivalent to three months’ line rental. After these
conditions were fulfilled (...) Telmex would deliver
the service within a time frame of not more than
18 months4;
to publish a four year (network) expansion and mod-
ernization programme, in accordance with the goals
set by the licence, and to agree with the Ministry of
Communications on programmes for rural telephony
and public telephone booths.
3.1.1. To Expand the Number of Basic Telephone Lines
by a Minimum of 12% per Annum
The 12% telephone line expansion requirement ended only
four years after the 1994 privatization of the sector. Quan-
titative goals for a longer period would have conflicted
with the goal of revenue maximization at the time of pri-
vatization. The results shown in Table 1 tend to support
the view that the quantitative line expansion requirement
set out in the concession or Telmex licence was an ef-
fective regulation. In fact, during the years 1991 to 1994,
Telmex’s average annual line expansion was 11.8%, and
thus close to meeting the 12% requirement. However, once
such an expansion requirement ceased to exist, average
line expansion fell to only 6.8% in the period 1994–2000
(see Table 1).
Table 1
Five year average growth in telephone lines and GDP
(1965–2000)
Period Telephone lines [%] GDP [%]
1965–1970 12.8 6.9
1970–1975 12.9 6.5
1975–1980 10.5 6.7
1980–1985 6.4 1.9
1985–1990 7.6 1.7
1990–1994 11.8 3.6
1994–2000 6.8 3.5
Source: SCT, Anuarios Estadísticos (1965–2000).
3.1.2. Rural Telephony: Basic Telephone Service to
Communities with More than 500 Inhabitants
(1990–1998)
As a result of the negotiations between government pol-
icy makers in the field of telecommunications and the
group of investors, Telmex’s licence freed them from their
obligation to serve communities with fewer than 500 in-
4SCT, Modificación a Tel´
efonos de M´
exico, 1990, http://www.cft.gob.mx/
work/sites/Cofetel 2008/resources/LocalContent/3964/1/10ago90.pdf
18
Telecommunications, Universal Service and Poverty in Mexico: a Public Policy Assessment (1990–2008)
Table 2
Telephone service to communities with more than 500 inhabitants
State Lines per 1,000 Lines per 1,000
Rural
inhabitants inhabitants
communities Total population Total population GDP
towns 500 to 2,499 towns 500–4,999
communicated towns towns per capita
by Telmex, 500–2,499 500 to 4,999
1990–1994
Chiapas 1.00 0.44 950 951,521 2,136,825 37.8
Oaxaca 1.24 0.65 1,362 1,095,547 2,102,278 39.8
Tabasco 1.31 0.78 678 517,227 863,855 47.6
Guerrero 1.27 0.63 932 732,388 1,470,855 47.8
Tlaxcala 0.77 0.37 109 141396 294,861 47.9
National 1.35 0.65 16,738 13,339,307 27,937,529 83.2
Campeche 1.43 0.70 135 94653 193,781 121.7
Quintana Roo 1.54 0.74 122 79123 164,691 126.4
Coahuila 1.65 0.70 238 144448 337,934 129.8
Nuevo León 3.30 0.79 232 70211 293,812 173.5
Distrito Federal 0.00 0.00 0 13268 26,550 188.0
Source: SCT, Annual Reports, INEGI, Census 1990.
habitants, which according to the census of 1990 repre-
sented 21.16 million people or 47.2% of the inhabitants in
rural communities in Mexico [8].
An analysis of the impact of Telmex’s rural telephony op-
erations points to very limited results. The impact on tele-
phone density, following Telmex’s compliance with require-
ments on basic telephone service provision in rural towns,
was extremely low, even when telephone density was es-
timated as the number of lines per thousand inhabitants5.
This estimate shows that the country’s average telephone
density was 1.35 lines per 1,000 inhabitants in rural com-
munities (500 to 2,499 inhabitants), and if the definition of
rural communities included “enlarged rural communities”
(from 500 to 4,999 inhabitants), the telephone density es-
timate drops to half the previous figure, or 0.65 lines per
thousand inhabitants. Based on this analysis it is possible
to assert that fulfilment of overall requirements, provision
of rural telephony and the installation of public telephone
booths in rural areas, had very much fallen behind in rela-
tion to the goals set by Telmex’s licence (see Table 2, which
presents the telephone density, according to our definition,
in the five more prosperous states and in the five poorest
states in Mexico).
Thus, in spite of the fact that public telephone booths were
the strategy mostly used by Telmex to fulfil its universal
or social obligations, compliance with the commitment of
providing public access through public telephone booths
was insufficient. At the end of 1998, Telmex admitted that
it had only installed 3.19 public booths per 1,000 inhabi-
tants. Taking into account that Mexico’s population at the
time was 96 million, Telmex would have had to install at
least 480 thousand public booths in order to comply with
the social obligation dictated by its licence. Unfortunately,
5See Caslon analytics, metrics and statistics, http://www.caslon.com.au/
metricsguide8.htm
Fig. 1. Number of rural communities with more than 500 inhab-
itants, communicated by Telmex with at least one telephone line
(1990–2007).
according to the definition of universal service set out in
Telmex’s licence and because of the government’s lack of
leverage at the time of privatization, the universal service
obligation ceased and areas that were served with at least
one public booth increased slightly in 1995 and 1996 and
ceased to grow indefinitely from 1997 (see Figure 1 and
Table 3).
Table 3
Telephone lines provided by Telmex in communities
with a population of 500 or more inhabitants
Acumulated Annual Annual
[number] [%]
4,350 2,854 190.8
16,542 4,006 32.0
Average annual growth: 1990–1994 93.4253
16,735 193 1.2
16,738 0 0.0
16,738 0 0.0
16,738 0 0.0
Average annual growth: 1994–2007 0.0014
Sources: SCT, Annual Reports (2000 and 2007).
19
Cristina Casanueva-Reguart and Antonio Pita S.
Table 4
Teledensity and level of development in different states in Mexico, 2008
State Lines per Non residential Mobile GDP Poverty index
households [%] lines1[%] lines2per capita
National 52.2 12.7 71 96.8
Chiapas 19.1 4.2 41.1 37.8 Very high
Oaxaca 26.4 4.6 39.8 39.8 Very high
Tabasco 28.1 6.7 75 47.6 High
Guerrero 40.6 7 44.8 47.8 Very high
Tlaxcala 40.3 4.4 44.1 47.9 Medium
Campeche 32.7 6.4 71 121.7 High
Quintana Roo 38.0 16.1 95.9 126.4 Low
Coahuila 63.3 12 86.6 129.8 Low
Nuevo León 79.9 22.2 91.8 173.5 Very low
Distrito Federal 104.6 40.5 102.7 188 Very low
1lines per one thousand employed people, 2lines per one hundred people.
Sources: Cofetel, 2008; INEGI, 2005 and 2008, National Population Council, 2005.
According to Telmex’s license, the commitment to pro-
vide a basic service under the premise of universal access
through public booths in Mexico is far outweighed by the
challenge of providing services to the poorest communities
Table 5
Average revenue per capita in selected developing
countries, 2007
Latin Country ARPU GDP ARPU/GDP
America per capita per capita1
Colombia 131.0 7,400 1.8
Mexico 178.0 12,400 1.4
Brazil 17.2 9,500 0.2
Chile 17.0 14,300 0.1
Argentina 12.2 13,100 0.1
Emerging Hungary 26.5 19,300 0.1
Europe
Czech R. 28.5 24,500 0.1
Poland 17.0 16,200 0.1
Ukraine 7.0 7,000 0.1
Russia 10.0 14,800 0.1
Africa/ Turkey 13.7 12,000.00 0.1
Middle East
Iraq 12.3 3,700.00 0.3
South Africa 20.7 9,700.00 0.2
Egypt 9.7 5,000.00 0.2
Emerging India 8.6 2,600 0.3
Asia
China 10.8 5,400 0.2
Korea 45.0 25,000 0.2
Taiwan 23.0 30,100 0.1
Singapore 348.0 49,900 0.7
Hong Kong 22.5 42,000 0.1
1ARPU – average revenue per user: the estimation gives
ARPU as a percentage of GDP per capita, in each country.
Sources: Merrill Lynch, 2008, CIA World Factbook, 2008,
and Office of Rurar Telephony, 2009.
of Mexico. This is true more particularly in the context
of a large deficit of telecommunications services in the
country as a whole: on average, there is provision to
only 5 households out of every ten (52.2%) and 12.7 non
residential lines per one thousand employed people (see
Table 4).
Most likely the deficit of connectivity has been compen-
sated for by the use of cellular or mobile services, at mar-
ket prices. A comparative analysis of revenue per minute
from wireless services suggests that Mexico has one of the
highest tariffs for mobile services (see Table 5).
The following section presents information relating to the
“agreements” between Telmex and the Ministry of Commu-
nications, which according to its licence, were supposed to
continue after 1994.
3.1.3. Telmex Agreements with the Ministry of Commu-
nications on Programmes for Network Expansion,
Rural Telephony and Public Telephone Booths
(1995 to date)
In 1995, according to Telmex’s licence, the company
was required every four years to establish a programme
for network expansion and provision of rural telephony
and public telephone booths. However, in spite of the fact
that an exchange of documents took place between Telmex
and the Ministry of Communications in 1995, this ex-
change did not materialize into an action programme.It was
not until 1998 that this took place, when Telmex set up
a rural telephony programme, supposedly in an agreement
with the Ministry of Communications, retroactive to 1995
(1995–1998).
In December 1998 Telmex sent a report on the fulfilment of
the goals of this programme. The main goal achieved was
the additional coverage, compared to 1994, of 4,288 com-
munities, through public telephone lines or public booths.
20
Telecommunications, Universal Service and Poverty in Mexico: a Public Policy Assessment (1990–2008)
However, strictly speaking, the service provided to these
additional communities was part of a rural telephony
project undertaken by the Ministry of Communications.
Telmex was involved as the winner of a public tender in
which they were chosen as the provider, but the project
was financed by the Ministry of Communications (the re-
sults are presented below of the universal service policy
undertaken by the Ministry of Communications).
It was only in July 2006, when Telmex delivered its results
on network expansion and rural telephony for the periods
1995–1998, 1999–2002 and 2003–2006. The documents
handed over by Telmex to the Ministry of Communica-
tions were accompanied by an appeal for confidentiality
and the Ministry of Communications accepted the condi-
tion of confidentiality requested by Telmex. Nevertheless,
the annual reports published by the Ministry of Communi-
cations (2001–2006) showed that since 1994, Telmex made
a very small contribution in this area.
The privatization of Telmex and the attempts to regulate
the monopoly through this company’s license did not bring
a strengthening of the regulatory authority’s monitoring
and enforcement capabilities. This had a severe effect on
achieving the goals set by the universal service or universal
obligations defined in Telmex’s licence following privatiza-
tion. Studies on telecommunications reform suggest that
privatization by itself, without a strong regulator, does not
yield significant performance improvements in the telecom-
munications sector [5], [7], [9].
4. Rural Telecommunications Services
for Communities of Fewer than
500 Inhabitants: Direct Government
Subsidy
This section analyzes the policy directly implemented
by the Ministry of Communications, aimed at providing
telecommunications services to rural communities of be-
tween 100 and 499 inhabitants. These programmes origi-
nally focused on small towns and villages with fewer than
500 inhabitants (1990–2002), but later on, with the estab-
lishment of the Social Coverage Fund (FONCOS), the focus
of these programmes shifted to communities of between
400 and 2,500 inhabitants.
Table 6
Rural telephony supplier
Cellular company Lines %
Telcel 8,358 25.1
Iusacell 11,012 33.1
Telecomm 13,772 41.4
Others 100 0.3
Total 33,242 100.0
Source: Office of Rural Telephony.
The programme was directly financed by the Ministry of
Communication (1995–2006) and was aimed at communi-
ties with fewer than 500 inhabitants. It involved the main
providers of mobile telecommunications services, includ-
ing Telcel, the mobile company part of the same group as
Telmex (25%), and the public satellite company, Telecomm
(41.4%, see Table 6).
The size of these targeted communities confirmed that the
policy successfully focussed on the poorest towns of Mex-
ico and even in cases where regions of higher income were
served, the subsidy focussed on the neediest rural commu-
nities that are generally located in remote and isolated ar-
eas (see Table 3). Nevertheless, telephone density in these
small towns remained extremely low, as was the case of the
services provided by Telmex in larger communities, where
the estimated telephone density is 0.45 lines per 100 in-
habitants when population data for these communities is
taken from the 2000 census and 0.44 with population data
is from 2005 (counting of population and housing, 2005,
see Table 7). It is also likely that the actual telephone
density in these small towns was higher because of the
use of mobile technology, when it was available in these
regions.
An additional source of information consisted of in-depth
interviews with the former representatives of the Office
of Rural Telephony, part of the aforementioned Ministry
of Communications, where data compiled by this office is
based on their fieldwork aimed at verifying the correct oper-
ation of the installed lines. This information complements
that of the previous analysis6.
The information provided by the Office of Rural Telephony
showed that 33,242 lines were installed between 1995 and
2006. An analysis of this information also showed a very
rapid growth in the number of installed lines between 1995
and 2000 (135.42% yearly average growth) and that the
pace of growth declined considerably over the following
years, where the yearly average growth observed between
2001 and 2005 was only 1.16%. There was no evidence of
growth between 2006 and 2009.
The results of the former analysis are even more dramatic
considering the outcome of the fieldwork aimed at veri-
fying the correction operation of the equipment. Here the
data showed that only 41.5% of the installed lines were
in operation and out of these, 58.5% of the lines were
out of service and abandoned. The interviews with the for-
mer representatives of this office suggested that the peo-
ple of these communities were gradually shifting to mo-
bile technology, where this service was available, in spite
of the higher costs involved in the use of mobile commu-
nication.
The former observations raise doubts over the commitment
made by the government for bridging the connectivity gap
in the smallest and poorest communities of Mexico. It also
6Is worth mentioning that there is an inconsistency between the infor-
mation accounted by the Annual Report (2007) and the Office of Rural
Communication, the first source reported 34,676 installed lines, an the
Office of Rural Telephony accounted for 33,242, the difference between
the two sources is 1,434 installed lines.
21
Cristina Casanueva-Reguart and Antonio Pita S.
Table 7
Rural telephony, lines installed by Secretary of Communications, towns between 100 and 499 inhabitants, 1995–2007
Communities Lines 2007 Teledensity Teledensity GDP per capita
/100, 2000 /100, 2005
Total 184,748 34,676 0.45 0.44 70.88
Chiapas 19,237 3,560 0.48 0.42 28.6
Oaxaca 10,025 2,540 0.41 0.37 32.5
Tlaxcala 1,138 117 0.41 0.41 37.3
Michoacán 8,965 1,861 0.45 0.45 39.9
Chihuahua 12,095 896 0.43 0.53 102.9
Quintana Roo 1,800 177 0.46 0.44 107.5
Campeche 2,595 240 0.49 0.35 121.7
Baja California 3,918 248 0.56 0.56 93.0
Campeche 2,595 240 0.49 0.35 121.7
Nuevo León 5,169 561 0.50 0.57 133.1
Source: INEGI, Censo de Población y Vivienda, 2000; Conteo Población y Vivienda, 2005; Ministry of Communications,
Annual Report (2000–2007) and Bank of Economic Information (BIE), 2007.
raises questions over the nature of the agreements signed
by the Ministry of Communications and the operators un-
dertaking the installation of the telephone lines, specifi-
cally operation and maintenance in accordance with accept-
able quality standards. The personnel interviewed agreed
Table 8
Number of new telephones installed in communities
with less than 500 inhabitants 1995–2008
1995 4,000
1996 9,369
1997 10,545
1998 20,208
1999 23,063
2000 31,083
Average annual growth 1995–2000 135.42
2001 31,083
2002 31,453
2003 31,820
2004 32,326
2005 32,841
2006 33,240
2007 33,242
Average annual growth 2001–2008 1.16
Source: Ministry of Communications, Office of Rural
Telephony.
that the contracts included maintenance and quality clauses,
which pose additional questions on the strength of the min-
istry as a regulator capable of enforcing these clauses.
5. Social Coverage Fund (FONCOS)
In 2002 the Social Coverage Fund (FONCOS) was estab-
lished as a trust fund with an allocation of 75 million
US dollars7provided by the Ministry of Finance to the
Ministry of Communications. Its main purpose was for the
funding of social telecommunications services, focussed on
serving communities of between 400 to 2,500 inhabitants.
The Ministry of Communications designed two differ-
ent public tender processes. The first, Basic Telephony 1
(STB-1 to use its Spanish acronym), was aimed at installing
public telephone lines in communities of extreme poverty.
The second, Basic Telephony 2 or STB-2, focussed on com-
munities with higher levels of income. For STB-1, the sub-
sidy for the chosen operator consisted of both financial and
bandwidth resources for 10 years (renewable), which were
reserved by the government for social coverage purposes.
The subsidy to the end user included all expenses relating
to the installation and rental of the equipment, so that the
end user had only to pay for call traffic, charged for via
prepaid cards.
For STB-2, the subsidy to the winning operator consisted
of bandwidth resources only. The end user was charged
for installation costs and call traffic, exonerating them from
payment for the rented equipment. In this case, the sub-
sidy for the chosen company consisted only of the licence to
operate bandwidth resources for 10 years (also renewable).
Although in the first round four companies participated,
two of them were Telmex and Telcel. The latter is a mo-
bile service provider belonging to the same consortium as
Telmex. In the second round of the tender process, Telmex
was the only bidder. In both public tenders Telmex, the
incumbent operator, was chosen. The contract with this
incumbent operator was signed on February 2005 with the
target of serving 5,979 communities.
There were two changes to the terms of the contact signed
between Telmex and the Ministry of Communications. The
first was related to the inability to serve 737 communities
7The total sum accounted by 750 million pesos, the exchange rate be-
tween Mexican pesos and US dollars at the time was around 10 Mexican
pesos per US dollar.
22
Telecommunications, Universal Service and Poverty in Mexico: a Public Policy Assessment (1990–2008)
due to the fact that these towns lacked an electricity in-
frastructure or due to difficulties imposed by weather con-
tingencies. The settlement consisted of a time extension
granted to Telmex in order to serve 506 communities.
The second change to the original contract consisted of ex-
changing bandwidth resources reserved by the government
for social coverage purposes for bandwidth with high com-
mercial value for Telmex. This change had severe implica-
tions for both the implementation of the universal service
process and in terms of the dominant control of infras-
tructure on the part of the incumbent operator. This latter
implication had negative consequences due to the lack of
competition in the telecommunications services markets,
thus affecting the economy and society as whole.
In November 2006, a few weeks before the end of the pres-
idential and ministerial administration of 2000–2006, an
exchange of frequency bands took place: its 21 MHz allo-
cation in the 1.5 GHz band, which was originally allocated
by the Ministry of Communications to Telmex as part of
the Social Coverage Fund, was exchanged for 10 MHz in
the 450 MHz band. The Ministry of Communications did
not exercise its power to monitor the use of these frequency
bands.
The exchange of frequency bands turned out to be commer-
cially convenient for Telmex, since the 450 MHz band was
the most appropriate for the provision of wireless services
with technology known as CDMA 450. Among the advan-
tages of the use of frequency resources with this technology
are:
The ability to digitalize and interleave calls with
a code attached to each one, allowing a large number
of simultaneous calls without interference.
An additional advantage consisted of having a larger
coverage per cell, which requires a smaller number
of cells, resulting in a more cost-effective technology.
Also, the possibility of supplying a wide variety of
services, such as Internet, telephony, data transmis-
sion, videoconferencing and connectivity between lo-
cal networks.
This frequency band also makes use of CDMA 2000
1X and CDMA 2000 1xEV-DO technologies, which
allow for high speed data transmission, equivalent to
the digital service line (DSL).
The exchange of bandwidth resources dedicated to social
telephony for resources with ten years of high commercial
value was carried out by the Ministry of Communications
and allowed Telmex access to and use of these resources
without going through an open public tender. This raised
questions over Telmex’s interest in participating in the so-
cial coverage tender process.
Former representatives of the Office of Rural Telephony ar-
gued that Telmex’s true interest was to acquire the use of
the frequency bandwidth resources, with a potentially high
financial return, thus evading the higher transactional and
monetary costs involved in taking part in an open public
tender, which has been the allocation mechanism for radio
bandwidth resources for commercial use drawn up by the
government in accordance with the federal law on telecom-
munications (1995)8.
The former analysis leads us to consider the role of the
government authorities in organizing tender processes and
allocating public financial and bandwidth resources for so-
cial coverage. In this case, the Ministry of Communications
played a different role by granting valuable infrastructure
resources to be used commercially, at a very low cost for
the incumbent operator.
Additionally, and based on fieldwork and remote monitor-
ing performed by the Office of Rural Telephony, the super-
vision of the services offered by Telmex under the Social
Coverage Fund (FONCOS) showed that, out of the pro-
gramme objective of 109,016 telephone lines (75,797 lines
under the STB-1 program and 33,219 under the STB-2 pro-
gram), only 88,791 were actually installed, which implies
that 20,225 lines were never installed.
There was a brief period, after 2006, when the new admin-
istration of the Ministry of Communications verified the
services delivered by Telmex, under the Social Coverage
Fund. The Ministry Office of Rural Telephony identified
numerous irregularities, for example the installation of two
land line connections in the same household, which proved
less costly for Telmex (19,397 lines). A similar discovery
was made of lines that were not connected to any specific
household, which obstructed the verification of their opera-
tion (6,983 lines). In contrast, before 2006, the Ministry of
Communications had punctually paid Telmex, based on the
invoices that the company presented. During a brief period
of time the Ministry of Communications initiated a process
to impose sanctions on Telmex and to suspend payments to
the company. However, this process never transcended the
boundaries of the ministry because different groups within
the ministry restricted the sanctioning process. Further-
more, the group that initiated this process no longer serves
in the Ministry of Communications.
Here again, the analysis reveals the role of the regulator,
firstly in the tender process, and specifically, in the pro-
cess of allocating bandwidth resources with a high poten-
tial return for Telmex. Furthermore, the regulator did not
supervise the use of these resources, which were specifi-
cally allocated for social communications coverage. This
finding suggests regulatory capture and corruption on the
part of the regulator [10], taken to a serious extreme since
the regulator did not exercise its power in preventing the
re-allocation of resources originally targeted at the poor-
est people, which in turn strengthened the market power of
Telmex. Secondly, the regulator did not impose sanctions
on Telmex for its breach of the agreement on social cover-
age. The role of the regulator was eclipsed, most probably
by numerous instances of lobbying, resulting in a failure to
8Federal Telecommunications Law: Article 14. The licenses for the use
of radiofrequency bands for determined uses will be granted through an
open public auction. The Federal Government has the right to receive the
agreed monetary resources; http://www.diputados.gob.mx/LeyesBiblio/
pdf/118.pdf
23
Cristina Casanueva-Reguart and Antonio Pita S.
Table 9
Telecommunication services distribution according to households’ income (deciles), 2008
Service Deciles
12345678910
Line connection 22.6 45.8 56.4 66.5 76.2 78.5 83.4 87.7 91.7 92.6
Mobile service122.1 42.2 52.0 65.2 70.4 77.7 82.1 87.0 91.1 86.7
Cable or satellite TV 5.0 12.7 17.5 26.2 32.6 41.5 50.3 62.3 72.3 75.8
Internet 0.2 1.7 3.4 7.2 11.4 17.4 27.2 41.4 56.1 60.1
1Mobile services are accounted when at least one member of the household has a mobile line.
Source: INEGI: ENIGH, 2008.
consider the well being and social inclusion of the poorest
sector of the population.
So far the limited achievements of the different public poli-
cies aimed at providing universal service have been pre-
sented as being due firstly to the limited implementation of
the clauses set out in Telmex’s licence and secondly to the
violation of various agreements, including the FONCOS
contract with Telmex.
There are then at least three main findings that can be drawn
from the previous analysis: firstly, that the provision of uni-
versal service or universal access has been extremely lim-
ited in addressing the market gaps in Mexico’s rural areas
and telephone density in the different services continues to
be very low. Twenty years after privatization of the pub-
lic telephone company and 15 years after the liberalization
of the telecommunications markets in Mexico, connectivity
and telephone density remain a major challenge for public
policy in Mexico. The second major finding is the contin-
ual breaching by Telmex of its universal access or service
commitments, not only as was originally stated as part of
its licence, but later as the result of a contract that was
signed with the Ministry of Communications making it the
main supplier of these services. Finally, the third finding is
the limited leverage of the telecommunications authorities
and their difficulty in enforcing contracts and agreements,
as well as in imposing sanctions.
There is an extremely low density telecommunications in-
frastructure in rural areas, with the exception of the mobile
infrastructure existing in some. This has led end users to
rely increasingly on mobile services, which are more costly
than regular services. The following section analyzes the
distributive effects of this set of policies among the poorest
sectors of the population.
6. Access and Expenditure in
Telecommunications Services by the
Poorest Sectors of the Population and
their Relation to Income Distribution
In this section, we analyze the distribution of telecom-
munications services as a function of different levels of
household income. The starting point for this analysis is
the decile distribution of households by level of income
and their expenditure on telecommunications services as
a proportion of their income. The source of informa-
tion is the Household Income and Expenditure Survey for
2008, based on a nationwide representative sample. Each
decile comprises the same number of households, which
are ranked from the lowest to highest income. Compar-
ing the lowest income decile with the highest, the latter is
30 times higher.
6.1. Access to Services
Those households within the lowest income decile (the
poorest) have a significantly lower level of access to
telecommunications services compared with households
with higher income. This finding is consistent with the
results previously presented on universal service provision
and on the low density of infrastructure presented before.
In the lowest decile, only two households in every 10 have
a home telephone line connection, while in the highest in-
come decile, nine out of every 10 have a land line connec-
tion in their homes. Very similar figures can be found for
mobile services (see Table 9).
In the case of cable or satellite TV services, which have
the technical capability for supporting telecommunications
services and are currently used by many countries for that
purpose, including urban areas of Mexico, the distribution
of these services is even more skewed than land line con-
nections or mobile services. Thus, in the lowest decile only
5% of households have access to TV based on this infras-
tructure, while 75% of households in the highest income
decile have access to this service. The most dramatic case
of this unequal distribution is found in relation to Internet
access, where 60.1% of households in the highest income
decile have access to the Internet, while in the lowest, only
0.02% have this service in their homes (see Table 9).
6.2. Expenditure on Telecommunications Services
The expenditure of the poorest households on telecommu-
nications services as a percentage of their total outgoings
is twice as high as the expenditure of the wealthiest house-
holds: 4.2% in the lowest deciles and 1.9% in the highest
24
Telecommunications, Universal Service and Poverty in Mexico: a Public Policy Assessment (1990–2008)
deciles. These results suggest that the demand for telecom-
munications services tends to be inelastic, which means that
people tend to demand and use these services regardless of
their income. The larger proportion of the expenditure of
poorest families is explained by the fact that they live in
remote and isolated areas and depend more on public tele-
phone booths and mobile services, which tend to be more
expensive (see Table 10). As mentioned before, mobile ser-
vices in Mexico have one of the highest prices compared
to other developing countries (see Table 5).
Table 10
Expenditure in telecommunications as a percentage
of total expenses by decil (2006=100)
Decil
Average households Expenditure in telecom-
income per munications as a percentage
quarter MEX pesos of total expenses
1 3,320 4.2
2 7,174 4.1
3 10,042 4.3
4 12,739 4.3
5 15,845 4.4
6 19,506 4.5
7 24,246 4.2
8 31,472 3.8
9 43,796 3.2
10 99,215 1.9
Source: INEGI: ENIGH, 2008.
An additional factor that induces greater expenditure for
the poorest areas is related to the outdated definition of
the areas of local service, which has no technical or eco-
nomic (cost-related) basis and artificially classifies a call as
long distance, incurring higher charge. This particularly af-
fects people in rural areas, where the largest share of their
traffic consists of long distance calls. The higher expen-
diture on telecommunications services has an impact on
the opportunity for the poorest sectors of the population to
spend in other areas like health, nutrition, education, home
maintenance, or make a higher investment in productive
activities.
These results also suggest that the provision of telecom-
munications services under the aegis of “universal access”
or “universal service” is lagging behind the unfulfilled de-
mand for these services. This leaves the poorest sectors of
the population dependent on the supply of services at mar-
ket prices, and mostly wireless services which are more
expensive and difficult for them to afford.
7. Conclusions
Almost 20 years after Mexico’s privatization of the telecom-
munications services by the incumbent operator, Telmex
(Teléfonos de México), the premise of universal service is
far from being fulfilled. Thus on average, only five out of
every 10 households have access to a basic telephone ser-
vice and in some states such as Tabasco and Chiapas only
three, while in Oaxaca only two (1.9) out of 10 households
have access to a telephone line. Similarly, when analyzing
expenditure on telecommunications services, the collected
data has demonstrated that in contrast to what has been
the goal of the universal service policy in Mexico, namely
social inclusion and overcoming poverty, the telecommuni-
cations policies have become a regressive tax for Mexico’s
poorest. These dramatic results are in direct contradiction
with the fact that Telmex cheaply acquired radio bandwidth
for social services by continually winning their public ten-
ders, because regrettably, they later used them exclusively
for commercial purposes.
In explaining the reasons for these poor results, the paper
has also pointed out the shortcomings of the regulation in
place and of the implementation of this regulation by the
authorities, who are directly responsible for the failure to
comply with the telecommunications service policies orig-
inally targeted at the poorest regions of Mexico. These
shortcomings consist essentially of:
restricting the application of services to communities
with more than 500 inhabitants;
– allowing Telmex to choose between serving rural
communities either by a public telephone booth or
by a land line connection to households;
allowing a policy far below the standard provided by
the International Telecommunication Union;
providing insufficient direct government subsidies for
rural telecommunications services for communities
with fewer than 500 inhabitants located in the poorest
states in Mexico, who not only lack a basic telecom-
munications infrastructure but also present the lowest
telephone density, seriously jeopardizing their right
to use adult distant learning education;
imposing strong limits on competition by establishing
high barriers of entry for competitors in the mobile
services market, which has allowed very high prices
to be set for the end user and some of the highest
among developing countries (as shown in Table 5
above).
These shortcomings show that universal access to telecom-
munications services in Mexico is a representative case of
“regulatory capture” [10], [11], where the regulators and
government authorities have been ”captured” by the incum-
bent operator and have subordinated their regulatory power
to a monopoly-based profit-seeking behavior.
Finally, although it is impossible to go back to the time of
privatization, there is a long list of different regulations that
have already been implemented by both developed and de-
veloping countries, which were created before the described
policies for efficient universal access and service were im-
posed upon the incumbent operator’s licence permit. These
policies have achieved a larger density and better distribu-
25
Cristina Casanueva-Reguart and Antonio Pita S.
tion of services and some of the following regulations could
thus now be applied with greater chances of success:
An obligation to provide interconnection on a non-
discriminatory basis, according to high quality stan-
dards and establishing charge estimates on the basis
of long term incremental cost. This applies particu-
larly to those networks with market power: Telmex
and Telcel.
Unbundling the local loop, thus allowing non-
discriminatory access to sections of the incumbent
operator’s network infrastructure.
To guarantee a free flow of information on network
capabilities, specifically on the points of presence and
network architecture. This also applies particularly to
Telmex and Telcel. This will contribute to creating
incentives for new investment and the participation
of new players, increasing coverage in regions previ-
ously lacking provision.
To provide services across networks on a non-
discriminatory basis, to high quality standards. It
is known that international networks get better roam-
ing services from Mexican networks than the cross-
network services that national networks get between
one another. This has been a barrier to entry for new
players that have prevented investment and coverage
in regions lacking coverage. It is worth reiterating
that Telcel is the operator holding control of 75% of
lines and operating the largest mobile infrastructure.
To allow mobile virtual network operators (MVNO),
which enable new players in the market to provide
mobile phone services without necessarily having
their own licensed bandwidth allocation, nor does it
necessarily require them to have the entire infrastruc-
ture required to provide mobile telephone services.
Re-defining the domain of local services, whose def-
inition currently incurs an artificial increase in prices
for so-called long distance calls. Without a techni-
cal basis for such a definition, this particularly affects
those rural areas whose traffic is mainly long-distance
based.
Enforcing the declaration of Telmex as an operator
with (monopolistic) market power and imposing upon
it special requirements regarding quality, prices and
information, so as to level the playing field by allow-
ing other operators to enter the market and promote
healthy competition.
Closely monitoring Telmex and Telcel, in order to
guarantee the proper delivery of telecommunications
services to the poorer areas of Mexico.
To ensure accountability and transparency in all legal
processes relating to telecommunications services,
regulation and competition. This not only provides
legal certainty, but is a potential antidote for regula-
tory capture and corruption.
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Cristina Casanueva-Reguart
received her Ph.D. in Devel-
opment Studies from Stanford
University in 1988 and holds
an MA from Harvard Uni-
versity and a B.A. in soci-
ology from the Universidad
Iberoamericana, Mexico City.
She worked in the Federal Gov-
ernment (1992–1998) where
she was part of the Federal
Competition Commission, Mexico’s anti trust agency.
Working in the Economic Regulation Department, she fo-
cused on the analysis of telecommunications markets, par-
ticipating in the interministerial group that defined the
rules of interconnection. In the following administration she
joined the Ministry of Communications, where she was
involved in drafting the Federal Law on Telecommunica-
tions. In 1998 she returned to an academic position at the
Monterrey Institute of Technology, in Mexico City, where
she led the creation of an Interdisciplinary Masters Pro-
26
Telecommunications, Universal Service and Poverty in Mexico: a Public Policy Assessment (1990–2008)
gram on the Management of Telecommunications. In 2001,
Dr Casanueva joined the Universidad Iberoamericana where
she has written numerous articles on telecommunications,
regulation and public policy. In 2007–2008, she worked
with the Ministry of Communications as a consultant in the
field of universal telecommunications service provision.
e-mail: ccasanueva@stanfordalumni.org
Universidad Iberoamericana
Prolongación P. Reforma 880
01210 Mexico D.F., Mexico
Antonio Pita S. obtained his
Ph.D. and M.Sc. in solid and
fluid mechanics from the Uni-
versity of Iowa in 1967 and
1962, and his B.S.E. from the
Johns Hopkins University in
1960. He spent 15 years in
teaching and research at the
Tecnológico de Monterrey’s
campus in Monterrey, Mexico
and 25 years in R&D at Vitro, a Multinational Mexican-
based glass company, including five years as Director of
the Corporate R&D Center, 10 years as Technology Di-
rector for one of Vitro’s Business Units and 10 years as
a Senior Researcher. His last assignment was the establish-
ment of Vitro’s new R&D centre in Fribourg, Switzerland.
Since then he has been Manager of University Relations
for the Global Centre for Technology and Innovation that
Cemex, a Multinational Mexican-based cement company,
has in Brügg, Switzerland and is also Director of the Swiss
Office for International Relations for the Tecnológico de
Monterrey. He has published 12 articles, 25 Technical re-
ports and holds 3 US and International Patents on Glass
and Pre-Reacted Batches of Raw Materials for the Produc-
tion of Glass Formulas.
e-mail: antonio.pita@itesm.mx
Cemex, Manager of University Relations
for the Global Centre for Technology and Innovation
Römerstrasse 13
2555 Brügg, Switzerland
27
... Not having an internet-capable device was reported by only 2%. These results are consistent with a previous assessment in Mexico, where poverty is identified as the main reason for technological exclusion (Casanueva-Reguart & Pita, 2010). Unfortunately, the Reform has only been centered on the supply side, as it has not been complemented by digital skills programs (Mecinas, 2016). ...
Article
In 2013 the Mexican Telecommunications and Broadcasting Reform was launched with the goal of promoting competition and access in the telecommunications sector. The aim of this paper is to evaluate whether the 2013 reform had an impact on household fixed internet adoption and to what extent Mexican households, classified into ten wealth groups, had adopted internet. For the assessment, after a revision of supply and demand Reform's measures to reduce the digital divide, data from the 2010 Census and 2015 Intercensal Survey were used to create adoption indexes using Poisson estimations. The results were analyzed by ten wealth groups, constructed on principal components based on household characteristics (type of dwelling, electricity availability, availability of drinking water, sewer system, internet and ICT devices: computer, telephone, cell phone and internet). Additionally, the impact of both indexes was validated by a difference in differences method. The results suggest a 66% overall increase in internet adoption between 2010 and 2015. The decile analysis showed considerable internet adoption in the low and middle wealth groups (deciles 2–8), while in the highest wealth groups (deciles 9–10) the impact of internet adoption has been relatively moderate. It is worth noting that internet adoption is unequally distributed, as less than 1% of households in deciles 1 to 6 had adopted internet in 2015, while nearly all of the wealthiest ten percent of households have internet access. Nevertheless the increment in internet adoption was not only the result of the reform but the combination of the broadband penetration trend and the reform together.
Article
Using data from Mexico's 2016 National Household Income and Expenditure Survey (ENIGH), we estimate the impact of Internet access on the multidimensional and income poverty of rural and urban Mexico. Based on a Propensity Score Matching approach, our results show that Internet access helps reduce poverty levels in Mexico. Findings also reveal differentiated effects in the two indicators accounting for greater deprivation. The impacts on reducing extreme income poverty and extreme multidimensional poverty are more significant for the rural sector than for the urban sector. The results suggest policy measures aimed at solving issues that limit Internet access for individuals and households with higher social vulnerability, thereby contributing to a reduction of the poverty levels experienced by an important segment of Mexico's population.
Article
The recent report by the Organization for Economic Cooperation and Development (OECD) on Mexican telecommunications (OECD, 2012a) makes two main points. First, the performance of the sector, while improved, remains below attainable goals. Second, the causes of the performance deficit are insufficient competition and ineffective regulation. This article focuses on two issues. The first is the relative performance of the telecommunications industry in Mexico. The second is whether Mexican telecommunications regulation departs from international best practice, and whether the OECD's recommendations make sense. The principal conclusion of this article with respect to performance is that the OECD's analysis generally is correct and the criticisms of the OECD report by Hausman and Ros are, for the most part, misplaced. With respect to policy, the OECD's analysis of Mexican regulation reflects the conclusions from scholarly research and the practices of peer nations in which the performance of the telecommunications industry is better than in Mexico.
Article
In 2012 the Organiuzation for Economic Cooperation and Development (OECD 2012a) issued an assessment of Mexico's telecommunications industry. This report concluded that the performance of the sector, while improved, remains below attainable goals, and that the causes of the performance deficit are insufficient competition and ineffective regulation. The dominant telecommunications firm in Mexico, Telmex, responded to the OECD by commissioning two consulting reports (Hausman and Ros, 2012, and Sidak, 2012) that were highly critical of the OECD report. This article assesses the main criticisms of the OECD report by the Telmex consultants. The main conclusions are that both the regulatory policies and the performance of the industry are generally worse in Mexico than in peer nations, and that most of the criticisms of the OECD report by the Telmex consultants are not valid.
Research
Full-text available
The study explores the effects on social coverage of services that will potentially be brought about as a result of Mexico's recent Telecommunications Reform. Specifically, the Reform (a) aims to introduce regulation to boost competition, and thereby bridge the market efficiency gap; (b) propose a significant shift in policy on digital inclusion, with the aim of bridging the access gap. It thus represents the most significant shake-up of the telecommunications industry in the last 20 years, ever since the privatization of public telecommunications firm Telmex (1990) and the introduction of the Federal Telecommunications Act (1995). In relation to the first of these, boosting competition, an assessment of the situation as of 2014 reveals that the Reform and its institutional embodiment in the form of a new regulatory body, the Federal Telecommunications Institute, has begun to bear fruit by way of declarations of dominant economic agents in both the telecommunications and broadcasting sectors, and the proposal of specific asymmetric regulation measures to be imposed on these economic agents. In addition, investigations are underway into illegal market concentrations in relation to the provision of certain services, with a view to issuing a declaration of significant market power in relation to the provider in question in the very near future. The telecommunication service markets in Mexico have seen a rise in their contestability, attributable to the institutional strength of the new regulatory framework.
Article
Full-text available
What happens to “universal service” commitments when there is a weak institutional framework and a marked imbalance of power between the regulatory authorities and the dominant telecom operators? Commitments are abandoned and service breaks down, according to the author. Using Telmex in Mexico as a case study, and using national, regional, and international comparative data, she builds econometric models that indicate shortcomings in the design and enforcement of telecommunications policies and regulations. These account for the gap in coverage for Mexico’s lower-income population.
Article
Full-text available
The aim of the present research is to examine the implications that this market power held by the dominant telecommunications companies has on ensuring affordable access to telecommunications services, to high quality standards, under conditions of social equity.The paper begins by examining the coverage of telecommunications services in various regions of the country, ranked according to their respective level of development (and poverty). In order to put Mexico’s progress into perspective, the study presents international comparisons from over the last decade (2002-2009) of telephone density in those continents with the largest proportion of developing countries, namely Latin America, Asia and Africa. Then, the paper analyses the scope of public policies on universal service provision designed by Mexican authorities to achieve the goal of universal and presents the main research results of these policies.
Article
Full-text available
La regulación juega un papel clave en las reformas de los servicios públicos. No obstante, la corrupción y el riesgo de captura pueden impedir u obstaculizar el cumplimiento de los objetivos de las reformas. La regulación por costos y por incentivos entraña riesgos de captura y corrupción. En este trabajo se muestra que la captura es un problema menor frente a las fallas de mercado. Por ello, se proponen reformas que den transparencia y establezcan responsabilidades en los procesos de regulación.
Article
Technological innovation and the decreasing costs of wireless and other technologies, combined with progressive policy and regulatory environments, have resulted in the provision of telecommunication services in remote areas thought unserviceable by incumbent telcos in Latin America, Central Europe, and Asia. In line with the increasing number of success stories in other parts of the world, the South African government, as part of the policy of "managed liberalization" of the telecommunications sector, lifted the monopoly provision of telephone services in under-serviced areas by permitting smaller-scale entrants into the telecommunications market.Emerging from the second round of telecommunications policy reform in 2001, following the initial reforms to the sector in 1996, it was anticipated that these special operators would be licensed in 2002. Although licenses were finally granted following several licensing delays in June 2004 to seven applicants (three conditionally) from the ten areas demarcated in the first round, further delays in the final issuing of these licenses meant these licensees were only able to become operational in 2005.With the Ministry of Communications' latest policy directives on further liberalization of the market, which allows for some of the services previously reserved for Under-Serviced Area Licensees (USALs) to be more widely available from February 2005, just prior to the underserviced area licensees coming on stream, the window of opportunity for these small-scale new entrants may have closed.This paper assesses the degree to which policy and regulatory conditions promote the viability of these operators and facilitate their evolution as business and developmental models. Drawing on international experience, the policy and regulatory framework for these licenses is assessed.-super-2 The paper focuses specifically on other jurisdictions where similar regimes have been introduced as part of a national policy rather than on
Trends in Universal Access and Service Policies: Changing Policies to Accommodate Competition and Convergence, in "Support for the Establishment of Harmonized Policies for the ICT Market in the ACP
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Crony Capitalism and Economic Growth in Latin America: Theory and Evidence
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