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Weekly Report - 07 September 2017 (WR-17-35)

TRACKING TRENDS

MEXICO | OECD hails telecoms reform. Mexico’s 2013-2014 telecommunications reform has led to a fall in prices in the sector of more than 60%; and an increase in the number of mobile broadband users by 50m since 2013, according to a new report released on 31 August by the Organisation for Economic Co-operation and Development (OECD). The ‘OECD Telecommunication and Broadcasting Review of Mexico 2017’ said that the telecoms reform promoted by the government led by President Enrique Peña Nieto, which was designed to increase competition in the oligopolistic domestic telecoms market, succeeded in reducing the market share of the dominant local telecoms firm, América Móvil, and this has produced benefits for Mexico’s general population. The report, presented by the OECD chief of staff and ‘G-20’ summit Sherpa, Gabriela Ramos, notes that, in the wake of the reform, “mobile services in Mexico went from being amongst the most expensive among the OECD before the reform to one of the cheapest”. According to the report, the prices of the three main mobile services providers in Mexico fell by 61%-75% thanks to the encouragement of increased competition in the sector and the adoption of a regulatory and legal framework that encourages the reduction in prices of mobile services packages. In particular, the report highlights that the prices of mobile broadband have “considerably fallen” between 2013 and 2016 and that these now lie below the OECD average. All of this has led to the number of mobile broadband users in Mexico over the period to increase by “more than the population of Colombia”. Significantly, the report states that the “sharp drop in the cost of telephone calls and internet access overwhelmingly benefits poorer families in a country where spending on [these] services in the poorest households averages 10% and 6.2% of monthly income compared with 1.8% and 1.2% in the wealthiest households”. However, the report also points out that there is still room for improvement as the overall market share of incumbent operators remains at a high 71.8% compared with 83.8% in 2012.

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