Cesar Duenas

Mexicos Plan to Smash TV and Phone Monopolies

Article 6

Summary: Mexicos President Enrique Pena Nieto proposed new laws to break up TV and
phone monopolies in Mexico. Televisa controls Television news channels making them bias
as only a few producers write the broadcasts. Carlos Slim owns Telmex and Telcel giving
him control over telephone services. He charges high rates for a spotty and unreliable
phone service. Pena Nietos goal is to lower prices and to give new phone and television
companies a higher opportunity of succeeding.
Analysis: The Mexican Market economy1 (an economy that puts decision making in
the hands of many firms and households) struggles as it depends on only a few firms that
control all decision making. With the property rights2 (the ability to own control scarce
resources) of Televisa and Carlos Slim it is difficult for new companies to arise. There is a
scarcity3 (the limited resources in society) of small companies, causing low incentive4
(something that induces a person to act) to create startup businesses. There have been
marginal changes5 (small adjustments made to a plan of action) made by the Mexican
government to control the growing monopolies6 (a firm that controls sells of one product
without competition). They have created price floors7 (a maximum price at which in hope
of creating more equality8 (the distribution of economic prosperity) within the Mexican
economy9 (The study of how society manages its scarce resources). With rational
thinking10 (the use of personal knowledge to make the best possible conclusions), Pena
Nieto and his party concluded that a bigger change was in need in order for the economy
to reach efficiency11 (society getting the most from its scarce resources). Pena Nietos
latest proposal is to give monopolies more price restrictions in hope of giving new
companies incentive with easier entry to market12 (the difficulty required for a company to
enter a market).
Pena Nieto plans to create more of a competitive market13 (a market with many
buyers and sellers causing the companies to become price takers) within the phone and

television industries to create more economic profit14. In order for Pena Nietos changes to
make a substantial difference he will have to take away the absolute advantage15 (the
ability to produce a good using fewer inputs than another producer does) of corporate
powerhouses. The purpose behind it all is bring Mexico out of the recession they have
been in for years. The new law will create a need for entrepreneurs16 (a person who
creates a business and takes financial risk to do so) who start small businesses.
Professionals state that once the law is in place investment will rise as new companies
intrigue investors.
A statement made by Carlos Slim in defense of his company is that it is not right to
give his companies restrictions making it free for other companies to succeed. He says
that his investors are depending on his company to succeed and taking that away from
them can hurt the economy as well as help it. He also states that his company creates
economies of scale17 (the advantages that large companies get with more production)
making prices lower. The problem with Slims statement is that most of his investors are
part of the upper class and Pena Nietos proposal is to reach more distribution of wealth.
Pena Nieto states that the opportunity cost18 (the costs given up to obtain something else)
of hurting large corporations is outweighed by the positive results that will occur as new
companies create more money flow20 (the amount of money that is flowing in the
economy) through productivity20 (the quantity of good and services produced from each
unit of labor input).