Behind the Scenes

MEXICO BEHIND THE SCENES
by Bob Brooke

The workings of any great organization have come to be known as it infrastructure. While Mexico on the outside may seem to many to be just another third world country, Mexico on the inside, behind the scenes, is a different story.

The administration of President Ernesto Zedillo continued the previous administration’s government's modernization of infrastructure and services, de-regulation and development of more efficient transport systems, with increased privatization of formerly government-owned service companies.

Mexico's highway network is one of the most extensive in Latin America. Since 1989, more than 2,400 miles (4,000 kilometers) of new autopistas (four-lane toll roads) have been built through government concessions to private contractors. The 22,000 miles (36,000 kilometers) of government-owned railroads in Mexico are currently being privatized through the sale of 50-year operating concessions.

Early in 1997, the Northeast Railroad, Mexico's primary freight carrier, was privatized for $1.4 billion. Another significant section, the Northwest Railroad, was privatized in June 1997 for $400 million. Unfortunately, Mexico’s extensive network of passenger railroads tumbled into decline in the late 1980s, after massive renovation and upgrading, due to lack of ridership.

Tampico and Veracruz, on the Gulf of Mexico, are Mexico's two primary seaports. Recognizing that the low productivity of Mexico's 79 ports poses a threat to trade development, the government has steadily been privatizing port operations to improve their efficiency.

A number of international airlines serve Mexico, with direct or connecting flights from most major cities in the United States, Canada, Europe, Japan, and Latin America. Most Mexican regional capitals and resorts now have direct air service to Mexico City or the United States. No longer do passengers have to land in Mexico City and go through customs before landing at their destination within Mexico. Airport privatization, based on the successful experience with ports, has been underway for several years with dramatic results.

Mexico has also taken significant steps to modernize its telecommunications system. A key element was the privatization in 1990 of the national telephone company, Telefonos de Mexico (TELMEX), which was sold to a consortium of Mexican investors, Southwestern Bell, and France Telcom. This privatization has meant some fine improvements for the Mexican telephone system. Fiber optic lines have been laid to towns and villages that formerly had no telephone service, connecting more Mexicans with each other.

In addition, eight regional companies are providing cellular telephone service to various parts of Mexico, resulting in a dramatic expansion of cellular telephone users. Two larger communications satellites have been ordered to replace the two now in use. The government has also opened the telecommunications sector to greater foreign investment. Competition in long-distance telecommunications service began in 1997, and competitors quickly gained a 30 percent share of the market. Recently, AT&T began service in Mexico.

To read more articles by Bob Brooke, please visit his Web site.