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 Business News | October 2007 
Mexico Must Boost Competition in Telecom, OECD Says
 Patrick Harrington & Thomas Black - Bloomberg
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 |  | Among international organizations, the OECD is the strongest, most effective proponent of open, competitive, innovative market economies |  | |
Mexico must do more to increase competition in the energy and telecommunications industries, the Paris-based Organization for Economic Cooperation and Development said in a report released this week.
Telephone costs in Mexico are among the highest among OECD member countries in terms of purchasing power parity, the report said. Mexico must do more to increase competition in telecommunications and spur the development of national cell- phone coverage among companies other than Telcel, the Mexican unit of America Movil SAB, which is controlled by Mexican billionaire Carlos Slim.
Today's OECD report highlights the place in Mexico's telecommunications industry of Slim, who has argued that costs in Mexico are competitive internationally.
"Preventing monopoly power being used to limit entry and to facilitate competition in contestable parts of the telecommunications market, requires access regulation and the effective enforcement of competition law," the report states.
The report also highlighted the need to broaden internet access, noting that among country members, Mexico had the second-lowest number of subscribers per-capita to total fixed internet lines and broadband. New legislation is needed to allow regulators to set access prices for telecommunication services, the report said.
Monopoly control held by Telcel, which has 79 percent of the mobile-phone market, is stifling competition, according to the report.
Pemex
The OECD urged more autonomy for Mexico's state oil monopoly Petroleos Mexicanos, or Pemex.
The organization recommended Pemex's board include members with experience in the oil industry. Pemex's 11-member board now consists of six cabinet members and five union representatives, with the energy minister acting as chairman.
"The governance and operation of the company should be changed with a view to improving Pemex's efficiency in developing oil resources," the report said.
The OECD said that restrictions on Pemex forming partnerships with international oil companies must be eased to give Pemex the technology and risk management needed to drill oil deposits in Gulf of Mexico deep water.
Pemex's oil production has declined steadily since 2004 as Cantarell, the world's largest offshore oil field, begins to play out. Cantarell's oil output fell 12 percent in 2006 from the previous year and is forecast to drop 15 percent this year to an average of 1.53 million barrels per day.
Pemex has increased investment to boost production in other offshore fields, such as Ku, Maloob and Zaap.
The company has set a goal of maintaining oil production above 3.1 million barrels per day over the next five years. That's down from peak production of 3.38 million barrels per day in 2004.
To contact the reporter on this story: Patrick Harrington in Mexico City at pharrington8@bloomberg.net ; Thomas Black in Monterrey, Mexico, at tblack@bloomberg.net. |
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