02/02/2012 - In response to comments that have appeared in the media over the past 24 hours regarding the OECD’s Review of Telecommunications Policy and Regulation in Mexico, released on 30 January 2012, the OECD reaffirms the conclusions reached in the report.
It was particularly significant that in endorsing the report’s findings at the launch event in Mexico City, the Minister of Transport and Communications, Dionisio Pérez-Jácome, outlined 10 pro-competitive measures that his Ministry would apply in order to improve the market and boost the economy.
Critics of the study focused on the estimates for the cost of the lack of competition, the lack of industry involvement in the report, and the years for the data used.
Cost to Mexican economy
The OECD estimates that the lack of competition in Mexico cost the country USD 129.2 billion between 2005 and 2009, equivalent to USD 25.8 billion or an annual 1.8% of GDP. This massive cost to the Mexican economy is a wake-up call to all current and future regulators and competition authorities, on the fundamental importance of effective regulations and policies to promote open and fair competition. The implementation of these regulations and policies should be guaranteed by a strong regulator to ensure a low cost and high quality service.
This estimate represents the opportunity costs of lack of competition in Mexico. It does not represent the profit or sales of any single firm. The figure is based on an analysis of the economic loss that Mexicans have suffered as a result of paying higher prices than they would have paid in a more competitive market. It also takes into account the loss suffered by potential users who were deterred by high prices from subscribing to telecommunications services in Mexico. (A detailed explanation of this analysis is available here).
Following standard OECD practices, the review involved a broad consultation process with telecoms operators right from the start of the review. OECD experts travelled to Mexico in 2011 and met with all major market participants, including America Movil and Telmex. The objective was to give these companies the opportunity to state their views on the policy and regulatory framework in Mexico and to make proposals for reform.
The draft report was reviewed by the Committee for Information, Computer and Communications Policy (ICCP), composed of representatives from all 34 OECD member countries in October 2011, with France and the UK as lead examiners. A representative of America Movil was present at that meeting and given the opportunity to comment. Other companies were also invited to take part. The comments received from America Movil and other major Mexican telecommunication operators were taken into consideration in finalising the report. This peer review process, common to OECD work, guarantees the transparency, integrity and impartiality of our evaluations and recommendations.
The report was drafted and discussed by member countries in 2011. At that time, the only verifiable and comparable data available for a full year was for 2009. However, all price data included in the review are for 2011 or end of 2010, and are benchmarked according to the OECD price methodology, approved by all member countries.
Mexico is the 19th OECD member country to have had its telecommunications policy and regulation reviewed. As is standard practice when a country requests a review, the costs are covered by the country in question, as opposed to shared between all member countries. This review was undertaken at the request of the Mexican Government. This is the procedure that was also adopted in dozens of sectoral studies requested by Mexico over the years and is now being used for new studies on regulation, competition, education, civil protection, and public procurement by PEMEX, CFE and IMSS, among others.
The OECD Review of Telecommunications Policy and Regulation in Mexico is fully available to the public and the media, in English and Spanish, at www.oecd.org/sti/telecom