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Where Monopolies Rule, Cell Phones Costs Soar

By Jeremy Schwartz | Monday, February 26, 2007, 12:47 PM

When it comes to telecommunications, Mexico is a land of monopolies.

Billionaire Carlos Slim’s Telmex controls 94 percent of the landlines in the country, charging some of the highest rates on earth.

The situation isn’t much better when it comes to cell phones. Slim’s Telcel has about 80 percent of the market share and upstart Movistar takes much of the rest.

The lack of competition results in rates and pricing plans that seem outrageous compared to the U.S.

With Telcel, you need a plan that costs about $100 a month to qualify for free nationwide roaming, in a country with a minimum wage of $6 a day.

Since Movistar offered free roaming with more reasonably priced plans, and because it seemed like a scrappy underdog fighting the Telcel goliath, I recently switched to Movistar when my Telcel contract expired.

All seemed to be going well when, without warning, my cell phone stopped working. After calling Movistar I learned it had cut my service because I had surpassed my “credit limit” of about $60 (I was never told of this credit limit when I signed up, but it’s in the tiny fine print on the back of my contract).

I had traveled to Honduras for work and made international calls that had made my bill higher than usual. I certainly planned to pay the bill when it arrived, but Movistar apparently didn’t trust me and cut me off. I ended up having to make an emergency payment of the full amount to get my phone working again. I was told the only way to avoid such situations in the future was to leave a large cash deposit, which every Mexican I know tells me I’ll never recoup.

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Comments

By Margaret

March 5, 2007 1:30 PM | Link to this

Wouldn’t you be better off with Amigo than a monthly plan? Your case is probably quite different from mine, because I mostly stay in DF and don’t travel around much, but Amigo is definitely the cheapest system for me… it might be worth looking into. Every December for the past few years they’ve offered a special where you get MXN 1000 airtime for a MXN 500 card. In the case of someone who hardly uses their phone for outgoing calls, the minimum cost to maintain the line is as low as MXN 50 a month (you only have to get a MXN 100 card every month).

By Ron Mader

March 11, 2007 9:28 PM | Link to this

I’d like to see a good table that shows the various cell plans and costs for cell phone user and the landline user calling cell phones, comparing Mexico with other countries. What’s available here seems very, very expensive. And as you point out, customer service isn’t a priority.

The other item on my wishlist is a single page on the Web that explains how to make phone calls. Recent changes in how one dials cell numbers is not well explained.