monopoly


One principle LIRNEasia defended consistently over the discussions at UN ESCAP about the Asia Pacific Information Superhighway (APIS) was that of open access. And despite many entreaties we held firm that the fiber had to owned by any entity other than the incumbent telecom operator in the country passed by the APIS fiber. From the time we conducted the Afghanistan sector performance review in 2011-12, I’ve been waiting for reports on the fiber investment paying off. But all that it appears to have yielded are vacuous presentations at international organizations. I hope that President Ghani will remove the fiber network from the dog-in-the-manger incumbent Afghan Telecom and allow the entire economy to benefit from the USD 130 million investment.

Crunch time in Mexico

Posted by on March 8, 2014  /  0 Comments

Once monopolists get entrenched, it takes significant courage to dislodge them. The monopoly profits have been used to build up considerable political capital. So it is noteworthy when entrenched monopolies get taken, as it appears to be happening in Mexico. The lack of serious competition in Mexico has kept prices high, has limited investment and has held back the penetration of new technologies. According to the International Telecommunications Union, only 26 percent of Mexican households had access to the Internet in 2012, compared to more than 45 percent in Brazil.
The ITU’s Secretary General appointed the biggest single barrier to broadband in Latin America, the wily Carlos Slim Helu, as the co-chair of the Broadband Commission. He specializes in tying up efforts to regulate his enterprises. Now that the political elites in Mexico have agreed to curb the hegemony of Telmex, his hands will be full and there may be a vacancy in the Broadband Commission. Slim, the world’s richest man, dominates Mexico’s telecommunications market, controlling 70 percent of the country’s mobile market and 80 percent of its fixed phone lines. Televisa, controlled by tycoon Emilio Azcarraga, has about 60 percent of the broadcast market.
One of the great ironies of the present discourse on Internet/broadband is the appointment of Carlos Slim Helu, the world’s richest man and possibly the single most significant barrier to greater Internet access in Latin America, to serve as the Co-Chair of the ITU-UNESCO Broadband Commission. It is widely recognized that Telmex exerts significant market power to keep prices up, users out, and its profits high. I co-authored a few pieces on Mexico’s early reforms in the 1990s so I have some knowledge of the subject. Now the government has set its sights on telecoms. According to Aurelio Nuño, the president’s chief of staff, within two months the PRI will present a bill to attack the “great problem of concentration” in telephony, internet and television.
A state-owned enterprise. But you cannot call a state-owned enterprise a monopoly. Not in China. Challenging the system, Mr. Zhang contends, has been the key to China’s economic success.
A roaming customer buys the service from his/her service provider, the one who controls the number. The service provider purchases roaming and billing services from a foreign operator in order to provide the service to the customer. Today, the most that a customer who wants to be reachable (who wants to receive calls while abroad) can do is register on networks of operators in foreign countries who offer lower prices to his/her provider. If there is a possibility of competition here, it’s a faint one. What the EU appears to be doing is to allow a customer to buy roaming services in the home country from a service provider other than the regular carrier.
The European Union was the only regional grouping taking concerted action to curb the exploitation of the customers of others by operators. But all this time, their actions had effects only within Europe. Now they’re capping roaming costs overall. This will cause European operators to actually negotiate for lower rates from those from whom they purchase roaming services. According to the waterbed theory (which has no foundation in fact, but is trotted out every time operators see some monopoly niche being attacked), this should result in higher roaming costs for the rest of us, non-Europeans.
We have worse postal services in our region. They do not have hard budget constraints, so they keep going. But the future looks bleak for those that do have hard budget constraints: Mail volume has plummeted with the rise of e-mail, electronic bill-paying and a Web that makes everything from fashion catalogs to news instantly available. The system will handle an estimated 167 billion pieces of mail this fiscal year, down 22 percent from five years ago. It’s difficult to imagine that trend reversing, and pessimistic projections suggest that volume could plunge to 118 billion pieces by 2020.

Fixing the post

Posted by on August 18, 2011  /  1 Comments

In the 13 years I lived in the US, I saw the postal service change. It was a horrible, rude bureaucracy when I moved there; and I saw the reengineering at work in the last few years. Counter staff were actually trained to smile and be nice to customers (and those who could not be converted, were sent to back offices where they could “go postal”). You stood in a line, staff would come up to the line with handheld devices to serve customers with minor needs such as a sheet of stamps, shortening the line for people with complex problems that had to be dealt with at the counter. They started selling wrapping paper and tape and creating spaces for people to wrap gifts according to USPS rules.
LIRNEasia is on record supporting tariff forbearance, another word for deregulation. But that does not mean that we support it in all circumstances. The key is that consumers have a choice of suppliers. For that to happen, there must be multiple suppliers. In places such as airports the owner of the building/space usually concessions out the payphones, partly to make his life simple and partly to generate revenue.