Mobile Communications in Mexico in the Latin American Context

Abstract

The Latin American region has embraced the zeal for mobile technology that is sweeping the world. Indeed, the use of mobile telephony has increased dramatically, vastly surpassing all expectations for the industry. The level of mobile penetration in Latin America has grown so rapidly and in such magnitude in the past few years that it has left axed telephony behind: today, the penetration of mobile telephony is twice that of axed telephony and projections for growth point toward a further widening in the gap between the two. Although the tendency observed in the region mirrors a worldwide trend, the way mobile services are used in a developing region such as Latin America is very different from the developed regions of the world. Access to telecommunications is largely mobile and not axed; mobile services are a substitute—not a complement—to other services. While during the mid-eighties mobile telephony was considered a device to be used by the richest segments of the population, today mobile telephones reach into the poorest segments of the population, providing their only source of access.1 In fact, for some of the poorest segments of the population mobile telephony has become the central mode of communications in Latin America. In the region, despite several economic slumps, the number of mobile subscribers increased from 4 million in 1995 to almost 200 million at the end of 2005. One factor that has contributed to the expansion of the mobile network is the relatively more competitive market context in which it has developed. Compared to axed telephony, mobile has since its inception faced less regulatory restraints and has a signiacantly higher number of operators. Competition between mobile carriers has encouraged innovation, expanded the network, and reduced prices. Indeed, innovative pricing strategies such as prepaid subscription and calling party pays have contributed very signiacantly to the dramatic growth in mobile subscription. Today, however, this more competitive market structure appears to be confronted with the increasing market concentration the telecommunications sector is experiencing in Latin America. Despite the implementation of numerous promarket reforms whose objective was to promote the entrance of new players into the market, Latin America may be heading toward a duopoly market. Today, the Spanish arm Telefonica and the Mexican corporation Grupo Carso Telecom, owners of Telmex and Amer-