Unbundling Path Dependence: a Case Study Of
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UNBUNDLING PATH DEPENDENCE: A CASE STUDY OF TELECOMMUNICATIONS REFORM IN MEXICO (1990-2006) A DISSERTATION SUBMITTED TO THE SCHOOL OF LAW AND THE COMMITTEE ON GRADUATE STUDIES OF STANFORD UNIVERSITY IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE OF DOCTOR OF THE SCIENCE OF LAW Beatriz Adriana Camarena Osorno September 2007 © Copyright by Beatriz Adriana Camarena Osorno 2007 All Rights Reserved ii I certify that I have read this dissertation and that, in my opinion, it is fully adequate in scope and quality as a dissertation for the degree of Doctor of the Science of Law. ________________________________ (Thomas C. Heller), Principal Adviser I certify that I have read this dissertation and that, in my opinion, it is fully adequate in scope and quality as a dissertation for the degree of Doctor of the Science of Law. ________________________________ (Alberto Díaz-Cayeros) I certify that I have read this dissertation and that, in my opinion, it is fully adequate in scope and quality as a dissertation for the degree of Doctor of the Science of Law. ________________________________ (Mariano-Florentino Cuéllar) Approved for the University Committee on Graduate Studies. iii ABSTRACT This is a case study of the telecommunications reform in Mexico, which transformed the state telephone monopoly, through privatization (1990-1996) and liberalization (1996-2006), into a multi-competitor telecommunications market. Reform results show (1) growth, but primarily through a concentrated market and the economic output of the dominant privatized incumbents, and (2) improvements in sector development, but with insufficient levels of competition and investment, and underdevelopment in infrastructure, service diversity, pricing, technology deployment, and universal access. This dissertation explains these mixed results as the consequence of path-dependence of reform on a negative institutional endowment, one which favors regulatory governance structures that establish or enforce selective property rights (monopoly rights) on the market. The institutional endowment is defined herein as the formal structures of the federal division of powers (legislative, executive and judicial powers), as well as other institutions and organizations which affect its functions. The institutional endowment is reviewed within the broader context of a democratic transition which shifted control of policymaking between the executive and legislative branches in Mexico, but which maintained rent-seeking coalitions of political and economic entrepreneurs (elites in a position to enact policies) that gain or protect selective entitlements within the system during reform periods. This case study of regulatory reform in Mexico shows the growth and development of the iv telecommunications sector to be constrained by the institutional characteristics mentioned above. At the same time, unexpected consequences of incremental strengthening of the judicial branch have presented new options for future structural reform of the regulatory governance system of the telecommunications sector. v ACKNOWLEDGEMENTS In writing these acknowledgements, I look back on several years since I first entered the JSD program in Fall 1998, to remember the people and experiences that significantly shaped the final version of this work. Special and sincere gratitude is due to Professor Thomas C. Heller, who as my advisor, provided supervision and expert orientation through many years, and ultimately, the opportunity to present this work. I also want to thank the SPILS and JSD fellows, who allowed me to read and comment their drafts, and hence helped me understand how to construct good research and dissect the meaning of interdisciplinary legal scholarship. Thank you, everyone, who at different times provided commentary to my own drafts and scholarly (or unscholarly) arguments. During 2001, Professor Heller and Professor Erik Jensen, co-directors of the Rule of Law Program, invited me to participate in their program as research assistant. I am grateful for the opportunity to interact with them, as well as the many other distinguished scholars from Mexico, the United States of America, and other parts of the world, who brought their special knowledge about politics, economics, vi development, society, and law to the seminar sessions and activities of the ROL program during the academic year 2000-2001. I also express my appreciation for the directors and staff of the SPILS and JSD programs. I particularly want to recognize Kate Deboer, the former Administrative Assistant of the SPILS program, whom I assisted part time in the SPILS office from 1998 to 2000. Her common sense approach to work and life, in general, often helped me see degree requirements as practical actions rather than labrynths of theory and data. In 2002, I took a leave from the JSD program and entered public service during President Fox’s administration in Mexico. From 2003 to 2006 I worked as a public officer with the telecommunications regulator, Cofetel. I am thankful for having had the opportunity to work with a talented group of people on implementing regulatory reform in a challenging environment of transition. I want to particularly express my appreciation to Jorge Arredondo, former President of Cofetel and Head of the Board of Commissioners; former Commissioners Clara Luz Álvarez, Salma Jalife, and Abel Hibert; my ex-co-workers Lorena Aragón, Liz Mora, Armando Covarrubias, Edgar Meade, Sylvia Vásquez, Rodrigo Ojeda (also a former SPILS Fellow), and Manuel Huacuja, among many other Cofetel colleagues. For me, they set the example of ethical and expert civil servants, who continuously exercised technical, legal, and independent decisionmaking, even when the formal or informal “rules of the game” discouraged this conduct. I also humbly thank former outside counsel to Cofetel, vii litigator and Constitutional expert Raymundo Vásquez, who helped me understand that even when the options for reform are reduced to the introduction of discrete (and seemingly unambitious) new rules, it is still possible to gradually improve the capacity, independence, and transparency of decisionmakers. Linked to this thought, I want to recognize a minority of Senators of the Mexican Congress, who in an electoral year led the opposition against the “Televisa Law,” in direct contradiction to express interests of their political parties, and who furthermore provoked a constitutional controversy which resulted in a “veto” against the law by the Supreme Court of Justice of Mexico. In doing so, they set a significant precedent in the legal history of the country and a higher standard of conduct for politicians. However, the greater benefit of watching this case unfold was awareness of the shared commitment of various actors within Mexican civil society to protect the public interest, above and beyond, but preferably through, the institutions of the rule of law. In my capacity as a citizen, this led to co-authoring an amicus curiae brief with Salma Jalife and Clara Luz Álvarez, which was delivered to the Supreme Court and admitted as such, even though this type of brief is not recognized in Mexican procedural law. I admire Salma and Clara for their unwavering enthusiasm to do their part to make a difference. I must also express my deep appreciation to Professor José Roldan, Dean of the Law School at ITAM University, who invited me to teach interdisciplinary legal research to the master’s students at the ITAM, and who rallied me back into writing my viii dissertation. He and his students also delivered their own amicus curiae against the validity of the “Televisa Law,” which is just another example of his constant engagement with students and researchers in projects which prod at the status quo of the Mexican legal system. I hold him in high esteem as a friend, academic, and mischievous social revolutionary. These projects are always better with the support of friends, so I want to recognize the lasting friendships which I made elsewhere on Stanford campus, in particular with Tatiana Melguizo, Lucrecia Santibañez, and Agustín Paulín, as well as sensei William Hinton, sempai Louise McCormick, and the rest of the dojo; all of whom provided continous support, good times, and encouragement through this process. I am also grateful to Gaby Bejarano for many years of mutual loyalty, and Tony Torres who helped me understand that life is best enjoyed by accepting uncertainty. This leads me to give a heartfelt “thank you” to Chris Carlsson, for his caring presence, and healthy disregard for rules, norms, regulations, institutions, and other stoplights that get in the way of living with full enjoyment, particularly when writing, riding a bicycle, or keeping good company. To conclude, I express my deepest gratitude and tenderness to my parents, Martha and Jorge, and my sisters, Ani, Celia (la Bolis), Isa, Ale and Lore, who know me best and understand how this time has shaped me. For your understanding and support, I dedicate this work to you with love. And, because we are like sticky mueganos, I must ix also conclude by saying “gracias” to Abi, Cheli, my brothers-in-law, and the many aunts, uncles, cousins, nephews and nieces, who spillover from the connections to Amatlan 135 and La Huerta, Jalisco, which includes the memory of Doña Mati, Don Ignacio, Don Luis, Cristina Osorno, and Felicia Camarena. Thank you all for time shared, stories inherited, good recipes for food and mischief, and your sense of humor and support over the past years. x TABLE OF CONTENTS