MEXICO: NGO Battles Telmex Planning Move into US Market

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U.S. consumers may soon have yet another long-distance phone company competing for their monthly accounts. After years of wrangling, Telefonos de Mexico (Telmex) was recently granted approval by the Federal Communications Commission to test-market telephone services aimed at Spanish-speakers in Tucson, AZ. With its partner Sprint, Telmex hopes to target the millions of Mexicans and Mexican-Americans residing north of the border, especially those living in California, Arizona, New Mexico, Texas, Florida, and Illinois. Plans include special long distance services between the United States and Mexico designed help separated families stay in touch.

In a recent press statement, Telmex-Sprint Communications L.L.C. declared that they "best understand Mexican-Americans," but back home in Mexico, where customer complaints about Telmex overbillings are common, tens of thousands would likely disagree.

In Mexico, dissatisfaction with Telmex is so deep that a growing consumer movement is taking on the telecommunications giant. Spearheading much of the opposition is a Chihuahua-based organization of volunteers, Mujeres por Mexico (Women for Mexico). Originally founded three years ago in the border states of Chihuahua and Nuevo Leon, the group defines its goals as ending violence against women and children. But Mujeres por Mexico is best known for its "Fair Payment" campaign against Telmex.

The central demands of the campaign, explained coordinator Graciela Ramos, include ending the current system of controversial measured service for local phone calls, restoring cheap public telephones to the city streets, and curbing pocketbook abuses stemming from the proliferation of sex, horoscope and joke lines.

In pursuit of their goals, members of Mujeres por Mexico and their supporters have utilized a variety of tactics and strategies. During the last three years, they've filed mass consumer legal complaints with the
federal authorities, convened public hearings, held hunger-strikes, staged protests, and conducted occupations of Telmex offices throughout the state of Chihuahua. On occasion, they've even faced down heavily-armed police.

"Our actions have arrived at civil resistance only in extreme cases," asserted Ramos. "We're not an organization that invites disorder, nor are we an organization that invites no payment. We believe that citizens have to live in a way that is more conscious, but also more responsible. In a more just way."


Fraud and Overbilling Common Problem, Group Claims


In a recent interview, Ramos detailed both the causes and gains of her group's struggle. She recalled how an older widow was once presented with a Telmex bill for thousands of pesos because of calls made to a phone sex line the woman did not make. Another common grievance, continued Ramos, is the practice of double-billing collect calls. "The majority of farmers in Chihuahua have relatives in the United States. They have children and brothers and sisters over there. They always call their people in the U.S. collect," said Ramos. "Invariably the collect calls to the U.S. are charged over there, but they are also charged here. Because the rural people live pretty far from the city out in the countryside, they could wind up spending much more time to travel in order to make a complaint, only to risk not even being heard. So they prefer to pay and not lose the service. But this is a phone service for which people are being double-charged."

Other charges against Telmex by critics are that the company applies fees to competitors whose customers make toll-free calls from pay phones and applies a local charge when clients of other carriers make long-distance calls.

Rising costs for local phone service -- one consequence of the NAFTA-inspired opening for multinational telecommunications investment -- is proving a hardship for many families. When Telmex's monopoly over Mexican long-distance service ended in 1997, and foreign companies such as AT&T entered the market, Telmex cut its long-distance rates by about 10 percent but hiked the cost of local measured service 50 to 70 percent. "There are retired people, old people, for whom the telephone is indispensable," contended Ramos, "and they receive 700 or 800 pesos a month for their pension and get billed in that same amount for calls they haven't made. There are many people, we can say thousands, who try to adjust to this situation, but in their bills there can be 300, 400, 700 or even 1,000 in extra calls which amount to a bill that is impossible for the families to pay.."

In the view of Ramos, another outrage was committed when Telmex began retiring the old, cheaply-operated public pay phones and replacing them with card-activated telephones. Unfortunately, the Ladatel cards that are needed to activate the phones are usually only sold in either 30 or 50 peso denominations -- amounts which are more than the daily minimum wage in many places. At a time when the communications revolution is sweepinng the globe and breaking down international barriers, perhaps the majority of Mexicans find themselves unable to afford a local call. Indeed, there is only one phone line for every 10 Mexicans.


"Fair Payment" Campaign Growing in Scope


Since late 1995, however, Mujeres por Mexico can point to some concrete victories for their movement. The group assisted 970 people in Chihuahua with filing billing complaints against Telmex with Mexico's Federal Consumer Protection Attorney General (Profeco), and winning the cases. At the same time, negotiations between Telmex and Mujeres por Mexico resulted in the company's agreeing to restoring the service of more than 200 phone protestors who had been cut off. Ramos estimated that about 4,000 people are now willing to pay their monthly bills into escrow as a protest against Telmex overcharges. She ventured that even more people would probably join the campaign, but many remain afraid of being blacklisted and cut off from service.

"To have more than 4,000 people like we have, who are going to pay in escrow, means that the situation has reached its limits," said Ramos. "Not only is it a situation in which people can't pay for a service of prime necessity, but apart from this, it's like the foreign debt. People make payments but owe more all the time."

Meantime, the Telmex consumer movement has spread to other regions of the Mexican Republic. Earlier this year, meetings were held in Sinaloa, Nuevo Leon and Veracruz. Groups such as El Barzon, the bank debtor's movement, have rallied to the cause. Additionally, politicians from the country's three major parties -- PRI, PAN, PRD -- have expressed support for Mujeres por Mexico's demands for affordable phone service, as have state legislators in Chihuahua, Nuevo Leon, and Veracruz. Activists are expected to form a national network at a September meeting scheduled for the state of Sonora.

In response, Telmex officials have told the Mexican and foreign press during the last two years that the company is always willing to meet with any disgruntled customer and review complaints. Recently, the company announced it was instituting a new billing format to clarify statements. And in response to Mujeres por Mexico's demands that measured service be thrown out as unlawful, Telmex representatives wrote in a recent letter to customers that the system has been authorized since 1995 by Mexico's Secretariat of Communications and Transportation, the agency responsible for regulating Telmex.

Given the loss of an estimated 30 percent of its Mexican long-distance market to U.S. companies since last year, Telmex's entry into the U.S. market is a predictable and logical decision: the Latino population of the United States numbers around 30 million, some 63 percent of whom are of Mexican origin or descent. But while strategizing for a big share of the U.S. Latino phone business, Telmex clearly faces significant troubles at home. Ideological supporters of the 1990 privatization argued that turning over the company to private-sector managers and owners would improve a notoriously inefficient phone system. But eight years later, public telephones are regularly broken, persistent complaints of overcharges abound, and rural towns sometimes claim they go days without service before repairs of broken lines or faulty equipment are made.

Telmex Update, August 11, 1999: Mexico: Consumers Accuse Phone Company of Human Rights Violations

AMP Section Name:Technology & Telecommunications