By IPS Correspondents
MEXICO CITY, Feb 8 2000 (IPS)

Although many Mexicans lack access to or even understanding of telephone and voice and data transmission services, major progress has been made in that area, which is the site of a fierce battle between transnational corporations.

Since Mexico’s public telecoms company Telmex was privatised in 1990, 17 billion dollars have been invested in developing the sector, the number of fixed telephone lines has climbed from 6.4 to 10.6 per 100 people, and the average wait for installation has been slashed from two years to 25 days.

Stimulated by the arrival of foreign companies that require quick, agile communications, and by the newly opened market, which has placed Mexico among the world’s 12 top exporters, the country’s telephone network is now totally digital and currently accounts for 2.5 percent of Gross Domestic Product, twice the proportion registered in 1990.

“Significant but difficult advances have been made in telecommunications, and especially telephony,” said Judith Mariscal, with the Centre for Economic Research and Teaching (CIDE). “But (the sector) still falls short of social needs and is behind in relation to rich countries.”

The main investment in the sector has taken place in the past three years, after the government opened up to competition local and international telephone services, private voice and data transmission networks, mobile and wireless telephony and access to special bands for Internet use.

In 1997 and 1998, telecoms grew five times faster than the Mexican economy as a whole, according to official figures. Local firms, in association with foreign companies, made large investments, despite their complaints against Telmex, which they accuse of receiving preferential treatment from the government.

Although Mexico’s legislation limits foreign participation in telecoms companies to a 49 percent stake – with the exception of cellular telephony – telecoms remains the most attractive sector for foreign investment, says a study by the Economic Commission for Latin America and the Caribbean (ECLAC).

With capital and technology from firms like the US Southwestern Bell Corporation, AT&T and MCI, and France’s Cables et Radio, local firms are fighting hard for market share.

Unlike in other Latin American countries, the opening of the telecoms sector in Mexico and privatisations in the area did not trigger major protests by trade unions or opposition parties, which added another attractive element for investors, Mariscal pointed out.

But much remains to be done, and the rules governing and facilitating competition are still in need of finetuning, states a report by the Organisation for Economic Cooperation and Development (OECD), the club of the world’s 30 richest countries, of which Mexico is a member.

Mexico remains at the very bottom of the ranking in telecoms, says the OECD report, with the lowest teledensity, barely half of that of the country with the next lowest rate, Poland.

It is precisely that situation that has made Mexico so attractive for investment in telecoms, according to ECLAC and CIDE’s Mariscal.

But to take the task on with the necessary speed and transparency, the OECD recommends that Mexico improve its telecoms regulatory framework in order to generate more competition, better services and lower prices.

The companies competing with Telmex – whose economic strength allowed it to obtain permission to enter the US market in 1998 – accuse that firm of receiving special treatment from Mexico’s Federal Telecommunications Commission.

Analysts say the advantages enjoyed by Telmex, in which Bell Corporation and a branch of France Telecom have invested, are due to the fact that it was the only company able to develop a broad- ranging physical infrastructure in Mexico prior to 1996.

Today, Telmex rents part of its lines and other installations to its rivals.

The OECD suggests that Mexico slap stricter regulations on Telmex, the “dominant provider,” than on its competitors.

The president of the Federal Telecommunications Commission, Jorge Nicolín, conceded in late January that the rules governing competition were in need of updating, as powerful interests were at play in the dynamic telecoms sector.

But for now, the flow of investment into telecoms is heavy, because Telmex and the new companies have already begun to install their own networks for providing not only telephone services, but much swifter voice and data transmission in wider bands as well.

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