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Cenbank: Slim's Dominance Hurts Competitiveness
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Mexican telecoms incumbent Telmex and mobile telephony group América Móvil are hurting the country's competitiveness with their high rates, Mexico's central bank president Guillermo Ortiz was quoted as saying by Bloomberg news agency.
Telmex and América Móvil, both owned by billionaire Carlos Slim, account for 94% of the local telephone and 80% of the mobile telephone markets, respectively, Ortiz said.
In comparison, Brazil's largest local telephone company Telemar has 39% of the market and the biggest mobile phone operator Vivo has 34%, he said.
"This dominant position implies difficulties for promoting more competition and, as a result, for lowering prices,'' Ortiz said.
High costs of telecommunications, electricity, transportation and gasoline have caused an erosion of Mexico's competitiveness compared with Asian and European countries, leaving growth of per capita income lagging behind, he said.
Mexico has the highest costs of telephone service for business and for residential clients when they are calling long distance, as well as the highest cost of broadband internet for businesses among the 30 countries in the Organization for Economic Cooperation and Development, Ortiz said.
Mexico has less than three broadband users for every 100 residents compared with 25 for South Korea, Ortiz said.
RESISTANCE TO REGULATION
Ortiz said resistance by companies, such as Telmex and América Móvil, to government regulation designed to increase competition has left Mexico trailing behind South Korea, China and Ireland in competitiveness. The US filed complaints with the World Trade Organization beginning in 2000 to force Mexico to rein in Telmex's market power that eventually led to lower connection fees for competitors such as the Mexican units of AT&T and MCI.
Mexican regulators, such as the telecommunications regulator Cofetel, need more autonomy from their controlling ministries, in this case the SCT, to reduce the market power of dominant companies, said Eduardo Perez Motta, head of Mexico's antimonopoly commission during the conference.
The heads of regulating agencies should be appointed for a specified period that protects them from being removed as a result of political pressure, he said.
"First we have to confront these interest groups and do things well internally and then see if we can compete better,'' Perez Motta said.
Perez Motta cited the example of cellular telephone companies América Móvil, Grupo Iusacell and Unefon seeking court injunctions against the telecommunications commission order to interconnect SMS with trunking operator competitor Nextel.
The lack of competitiveness has caused Mexico's share of the US import market to fall to less than 18% from about 20% in 2002. That's equivalent to about US$30bn of Mexican exports that would have allowed the economy to grow one percentage point higher than the 3% it posted in 2005, Ortiz said.
BNamericas.com"
Tags: [grupo iusacell] [at&t] [autonomy] [iusacell] [telmex] [world trade organization]
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