The Impact of Asymmetrical Regulation on Less Well-Off Mexican Households
Posted: 9 Oct 2018
Date Written: October 15, 2017
Access to mobile communications in Mexico is heavily skewed in favour of those with higher incomes. In 2014, 80% of the highest 10 percent (decile) in the income distribution had access to mobile communications, while only 30% of the lowest decile did. The same figures for 2016 are 84% and 40%. In spite of the stark differences in penetration rates for the highest and lowest deciles, behind the numbers lies a story of a closing gap in penetration over the course of only two years. This report sets out to review some of these numbers and places them within the narrative of asymmetric regulation which Mexico adopted in 2013/14.
Among our observations are that buyers of mobile communications services in the lowest decile in 2014 spent 6% of their income on that service while those in the highest decile spent only 2%. Over the next 2 years, mobile communications prices fell by 36%; this means that the poorest households benefited proportionately the most from the fall in prices. The fall in price of mobile communications followed regulatory reforms in the sector which were introduced in 2013/4. A major component of these reforms was the imposition on the preponderant operator, asymmetric access charges, which reduced its mobile termination rates to zero.
While other measures are still being developed, asymmetrical charges had an immediate effect on conditions of competition, which entitles us to attribute a lot of the fall in mobile prices to this measure. There is a concern that if the asymmetric rates are eliminated or reduced before the other elements of the reform package have taken root, the process by which poorer households have benefited from the reforms may be reversed, leaving them the principal losers from the return of the market to its former state of a high level of dominance by one operator.
Keywords: Asymmetrical Telecom Regulation, Zero Tariff Mexico, Impact Mobile Tariff on Poorest, Competition
JEL Classification: L4, L5
Suggested Citation: Suggested Citation