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Telecommunication Reforms in Mexico: A Battle in the Backyard of the Real Challenges Facing the Industry

The Mexican telecommunication reforms of 2013 and 2014 were inspired by a misguided perception of backwardness of the industry, by a blind belief in the benefits that can be brought about by competition in markets with strong economies of scale and by unrealistic expectations of what economic regulation can achieve in such a setting. As I set out in this article, the results thus far are: (i) a crusade against the incumbents under the banner of competition, (ii) a spiral of regulatory intervention with increasing costs and diminishing returns, and (iii) a stealthy erosion of the incentives private operators are left with to invest in the expansion and upgrading of their networks. The reforms may well turn out to be counterproductive in the near future. Apart from that, the reforms fail to address the real challenges facing the industry.