| | |  Business News | March 2009 
Mexican Companies Hampered by Poor Telecoms: OECD
 Noel Randewich - Reuters
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Mexico City - Mexican companies are at a competitive disadvantage because of expensive and low-quality telephone and Internet services, and the government should shake up the sector by inviting in foreign investors, the OECD said on Friday.
Mexico could drastically improve its telecommunications by making better use of a government-owned fibre optic network and opening up the fixed-line sector to foreign investors like Spain's Telefonica (TEF.MC), Organization for Economic Co-operation and Development economist Taylor Reynolds told reporters.
"Businesses in Mexico are paying more money than they need to for telecom services. This makes them less competitive with other companies in other countries," he said.
Mexico's telephone industry is dominated by billionaire Carlos Slim, who controls the biggest mobile operator America Movil (AMXL.MX), which uses the Telcel brand in Mexico, and fixed-line incumbent Telmex (TELMEXL.MX).
"Telmex and Telcel continue to dominate the market here in Mexico and as a result people are paying more than they should for telecommunications services," Reynolds said.
Telmex, a former government monopoly, owns 86 percent of Mexico's fixed telephone lines and America Movil's Telcel unit has 75 percent of mobile lines, according to data from Telmex and industry regulator Cofetel.
Slim in the past has said the OECD's comparisons of Mexican telephone rates are flawed.
Reynolds recommended Mexico's power utility make its mostly unused fibre optic network available to telecom operators at cut-rate prices to bolster competition against Telmex.
He said the utility's current policy of leasing the cable at only a slightly lower price than Telmex's infrastructure was short-sighted.
Mexico suffers from having too few competitors in sectors like television, cement, beer and soft drinks. But weak competition in the telecoms industry is especially blamed for slowing down the country's economic development.
Regulator Cofetel passed rules recently forcing Telmex to share much of its network with smaller players, as many developed countries have done, but experts expect Telmex to fight the regulations in court.
Internet service in Mexico, dominated by Telmex, is expensive and extremely slow compared to other countries in the OECD, Reynolds said, adding Mexico was about average compared to many developing economies.
Allowing foreign investment in Mexico's wireless sector has led to the entry of regional heavyweight Telefonica and legislators are expected this year to discuss letting foreigners into the fixed-line market as well.
(Editing by Gunna Dickson) |
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