If you’re looking for an example of one of the most monopolized telecom markets in the world, you only need to look at Mexico. Carlos Slim isn’t counted among the world’s richest men for no good reason. The bulk of his wealth stems from the fact that his company, America Movil (ADR) (NYSE:AMX) as well as Telmex (ADR) (NYSE:TMX), controls the lion’s share of the Mexican telecom market. In fact, there have been many allegations throughout the years leveled against Mr. Slim for using anti-competitive measures to shut potential competitors out of the Mexican telecommunications market.
The Mexican telecoms market is no small market. Thanks to the millions Mexicans who work in America as well as who have close ties to the United States, the volume of calls domestically and internationally is quite sizable. Mexico’s telecommunications industry is so monopolized that the Mexican government stepped in forcing Mr. Slim to cut his market dominance to 50% or lower.
While the jury is still out whether the government-mandated anti-competitive measures will actually work, competition is heating up in Mexico for really the first time in ages. Considering the American telecom giant AT&T’s (NYSE:ATT) recent acquisitions of Nextel and Iusacell, it seems that AT&T is serious about spending a lot of capital to expand its wireless network. This will not only boost the data speed of mobile phone users but also improve the service quality overall.
While America Movil does provide a decent quality for Mexicans living in major metropolitan areas, outside of those areas, service quality can be an issue. By expanding its network in Mexico, AT&T might be able to offer enough competition where service quality across the board for all wireless and possibly even landline customers can dramatically improve. If there’s any one lesson we can walk away with from AT&T’s expansion in south of the border, it is this: Competition makes market dominant players pay closer attention to customer satisfaction and overall quality.