Setting the record straight: Response to comments regarding OECD Review of Telecommunications Policy and Regulation in Mexico

 

In response to comments that have appeared in the media in the past 24 hours taking issue with the OECD’s Review of Telecommunications Policy and Regulation in Mexico, released on 30 January 2012, the OECD stands by its report in full.

 

Endorsing the report’s findings at the launch event in Mexico City, the Minister of Transport and Communications Dionisio Pérez-Jácome Friscione outlined 10 pro-competitive measures that his Ministry would put in place in order to improve the market and boost the economy.

 

Comments in the media centred around estimates of the cost of lack of competition, a lack of industry involvement in the report and timeliness of the data used in the report.

 

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 1.8% of GDP per year. This massive cost to the Mexican economy is a wake-up call to regulators and competition authorities about the fundamental importance of rules and regulations that ensure open and fair competition, are enforced by a strong regulator, and deliver good quality of services and at low prices.

 

This estimate reflects the opportunity costs of the lack of competition in Mexico. It does not represent the profit or sales of any one firm. Instead, it 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, and taking 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)

 

Industry participation

 

As is standard OECD practice, there has been extensive consultation with telecoms operators 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 report was reviewed by representatives of 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 in that meeting. The comments received from America Movil and other major Mexican telecommunication operators were given serious consideration in finalising the report. This “peer review” process underpins the transparency, integrity and impartiality of our assessments and recommendations.

 

Data

 

The  report was drafted and discussed by member countries in 2011 at which time the full year data available was for 2009.  Since 2009, there has been progress in the different telecommunication markets in Mexico, as in all other OECD countries.  But there is no evidence to show that developments in Mexico were sufficiently significant to change the analysis or recommendations of the report.  Price data  included in the review are for 2011 or late 2010 and are benchmarked according to the OECD price methodology, approved by all member countries.

 

OECD reviews

 

Mexico is the 19th OECD member country to have had its telecommunications policy and regulation reviewed. And, as is standard practice when a member requests a national review, the costs are covered by the member country, not shared between all 34 OECD member countries. This review was undertaken at the request of the Government of  Mexico. This is the procedure that has been followed 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 full OECD Review of Telecommunication Policy and Regulations in Mexico is available to the public and media in English and Spanish versions at the OECD Mexico Centre Website www.oecd.org/centrodemexico