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Mobile telephony: Costa Rica booms, while Mexico lags

Tuesday, April 23, 2013


Costa Rica's decision to end the state monopoly in cell-phone service has been a success. In Mexico, not so much.

In little more than two years since the opening of the sector to private competition, the number of subscribers has doubled, and the market value has risen to $1.3 billion, while the average Costa Rican now has 1.3 cell phone lines.

In Central America, only Panama can beat that figure, with a cellular phone-line penetration of 137 percent.

Under the state monopoly, Costa Rica was the regional laggard.

That is the power of private enterprise, you are likely to say. And you are probably right, but only up to a point.

Yet the mobile-phone market penetration is only 83 percent in Mexico, where the telecom sector has been open to private mobile providers for two decades, and where people on average earn 50% more than Costa Ricans.

The difference lies in regulation.

Only now, Mexico is debating a reform, which the government says will ensure free and fair competition in this key sector.

The chairman of mobile giant América Móvil, Carlos Slim, doesn't agree, but the competitors of the world's richest man's claim that he has used his financial muscle to repress their opportunity to grow.

For its part, the Mexican government plans to replace its regulator, Cofetel, with a new body, which supposedly does not respond to pressure from financial and political interests.

By comparison, Costa Rica's regulator, Sutel, is looking good.