Usually people keep quiet in libraries. But not last Thursday night, when the richest man in the world, Carlos Slim Helú, spoke in a grand, softly lit public room at the New York Public Library. Slim had been invited because of his stunning philanthropy: NYPL President Tony Marx reminded the audience that Carlos Slim had committed $10 billion to charitable giving. Earlier this year, Slim promised to pay for the translation of Khan Academy videos into Spanish, and Salman Khan sat next to him at last week’s event.
I happened to be there because I was interested in Slim’s role in Mexican telecommunications. His companies control 80% of the landlines and 70% of the wireless market in Mexico, and the OECD said last year that uncompetitive telecom services were costing the Mexican economy $25 billion a year.
Loud laughter greeted Slim’s early remarks, and within a few minutes a major nonviolent protest erupted: kazoo-playing audience members trooped around the giant hall and left the building after flinging multicolored pieces of monopoly money into the air.
What was printed on that money? It bore the legend “$73 Billion Net Worth By Price Gouging & Overcharging.” And that’s when I realized that this moment represented a turning point: Monopoly communications industry behavior may finally become socially interesting in America. There are just a few steps between what’s happened in Mexico and what’s going on here in the United States.
Mexico is at the bottom of the OECD ranks for high-speed Internet access adoption and Mexico’s network investment is lower than in any other OECD country — but Slim’s profit margins are much higher than the OECD average.
Yet in the absence of regulatory oversight, Slim’s profit-taking is neither illegal nor evil. It’s entirely rational for him to allocate capital to dividends and profits rather than investing in upgrades to his network, much less encouraging his competitors. He is in harvesting mode, because neither competition nor oversight pushes him to do anything else.
But his behavior — which includes charging high rates, making life difficult for competitors, and obstructing attempts at regulation through the court system — is not in the interests of all Mexicans. So Mexico’s Congress passed legislation by a vote of 108-3 last week to rein in his monopolistic practices.
Here’s what stands between us and Mexico: We have several monopolists, not just one.
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