During the 1990s governments throughout the world displayed a growing optimism regarding the prospects of market oriented reforms. The theoretical literature considered privatization and deregulation as means to increase economic efficiency and promote social welfare. Reality, however, reflects a variety of policy measures being implemented rather than a cross-national convergence towards open markets. Differences in policy response may be explained by examining the domestic priorities as perceived by key players as well as national institutions and the policy context that shape the process of reform. Furthermore, the policy choices elected determine the extent to which the promises of reform are reached.
This book offers an analysis of the policy decision of deregulation and privatization of the Mexican telecommunications sector during the period 1990–1997. 1 Telecommunications was chosen as the focus of this research because of its critical importance to economic development. If industrialization was the first wave of modernization, the information revolution represents the second major wave towards modernization. Indeed, in 1987, then-presidential candidate Carlos Salinas de Gortari asserted, “Telecommunications will become the cornerstone of the program to modernize Mexico’s economy.”
In 1990, the national telephone company, Telmex, was privatized and in 1996, the long distance market was opened to competition. The element to be explained in the Mexican telecommunications case is the policy decision to maintain a vertically integrated firm with substantial market power in all segments of the telecommunications industry. This policy decision is significant because it determined the further development of the sector in Mexico. The permanence of a vertically integrated firm in the market intro-