THE PUBLIC'S INTEREST IN TELECOM REFORM: POST-REFORM PERFORMANCE OF THE MEXICAN TELECOM SECTOR DISSERTATION Presented in Partial Fulfillment of the Requirements for The Degree of Doctor of Philosophy in the Graduate School of The Ohio State University By Lilia Judith Pérez Chavolla, M.A. * * * * * The Ohio State University 2002 Dissertation Committee: Approved by Professor Susan Kline, Adviser ___________________________ Adviser Professor Rohan Samarajiva, Co-adviser School of Journalism and Communication Professor Robert Graniere ___________________________ Co-adviser School of Journalism and Communication Copyright by Lilia J. Pérez-Chavolla 2002 ABSTRACT This dissertation analyzes the public interest discourse that accompanies the implementation of telecommunication institutional reforms in developing countries. Whereas previous research has focused on interpretations of the public interest concept by policymakers, this dissertation addresses the point of view of consumers affected by such reforms. Telecom reforms are often accompanied by official discourse emphasizing benefits in price, quality of service, and access that consumers expect to receive; this dissertation analyzes the extent to which consumers consider that these expectations have been fulfilled. The importance of the consumers' interpretation of the public interest is also emphasized by the increased attention of regulatory agencies and public utility commissions worldwide to consumer protection and education in the new regulatory environment. The dissertation focuses on the case of Mexico, a country representative of the political, economic, and social challenges faced by nations with low and middle levels of telephone penetration. Using argumentation analysis, the study reconstructs the consumers' public interest argument about telecommunications reform in Mexico, based on a purposive sample of letters to the editor published in the nationally distributed Mexican newspaper El Financiero from 1991 to 2001. ii The letters were coded to identify three parts of the consumers' argument: industry performance, recurrent themes, and values. Ninety-two percent of the letters were complaints about the service provided by Teléfonos de México (Telmex), the incumbent local exchange operator; quality of service, both equipment-oriented and people-oriented, was the area of performance that consumers complained the most about. Thematically, consumers emphasized different aspects of their relationship with Telmex that made them feel powerless before the operator. In their view, Telmex's power over consumers was increased by its close relationship with the communications ministry. Consumers gave priority to values of interaction, such as respect, politeness, and responsiveness, which Telmex seemed to lack. Three main arguments emerged: (a) Telmex exercised power over consumers; (b) the government failed to fulfill the public's interest by facilitating abuses, and (c) consumers were victims of Telmex. I propose that for consumers in Mexico the public interest in telecommunications means empowering consumers before providers. Serving the public interest is a fundamental mandate that justifies the existence of regulatory agencies. Based on its findings, this dissertation provides policy recommendations that might enrich the understanding between regulators and the general public and facilitate the realization of the public interest. iii To my parents, Maria and Jorge, to whom I owe it all "Without their suffering, their undying love, and their beautiful spirit, I would not be [here] today . my heart singing a song of hope for a better tomorrow. With the blinking stars above, I became brave. Fear of leaving vanished, and in my heart a pledge was born. Their hopes became mine, their lives I would continue to live, and their dreams, through me, would become even bigger" Da Chen Sounds of the River iv ACKNOWLEDGMENTS I wish to thank my advisor, Dr. Susan Kline, for her continuous support, counsel, and trust in me. Her encouragement to develop the communication perspective of my dissertation, integrating it into telecommunication policy, substantially improved this project. I truly appreciate her stepping up to the plate, taking on the role of advisor and helping me bring this project into completion. I am also deeply grateful to my co- advisor, Dr. Rohan Samarajiva, for his wise guidance during my studies, his encouragement to do more and better, and for his effort for being there for me until the end even while being on the other side of the world. He spurred me to take this challenge; helped me gain the confidence to face it, and, through his work, is setting a high standard for what the future might be. Professor Graniere, a devoted committee member, encouraged me to keep moving the dissertation along. His insightful comments during the development of the Mexican case study helped making it a well rounded evaluation of performance and of institutional reform. Thank you for dedicating time during the actual writing of the document and for your willingness to remain on the committee even when circumstances made it difficult. Thank you, also, to Professor Pollins for serving as a member of my committee and seeing me through the prospectus defense. v I am grateful to Dr. Raymond Lawton and Dr. Vivian Witkind Davis at the National Regulatory Research Institute for allowing me to take the necessary time to accomplish this goal. Special thanks to the National Council for Science and Technology (CONACYT) in Mexico. The fellowship that they graciously extended to me partially funded my doctoral studies and allowed me to develop the dissertation project. I would also like to thank the library support staff at the Universidad Iberoamericana in Mexico City for going beyond their regular duties in locating and sending some of the documents used as data in this document. I am indebted to Jorge Pérez and to Madeleine Marcano for their participation in conducting the intercoder reliability test. Their insights helped fine tuning the codification process. I am also deeply thankful to Luz Maria Pérez for her vigilance in keeping me abreast of the latest news about the telecommunications sector in Mexico, and for her dedication in helping me collect data for the dissertation. I would like to express my appreciation to Jack Derifaj for the time and effort he dedicated in helping me organize all the technical aspects necessary for the dissertation defense. I am also deeply grateful to Michael Green for being there for me throughout the different stages that getting to this point involved. Thanks to his tireless proofreading expertise, this document takes the form it now has. His critical, but supportive insight was always kindly appreciated. vi Thank you to Dr. Lee Cohen and all my fellow ABDs who helped me put the dissertation work into proper perspective. Sharing experiences certainly eased going through the dissertation process. Thanks to my dear friends, Lillie Jenkins, Madeleine Marcano, and Carmen Ramirez; their friendship provided me with a haven in difficult times and encouraged me to keep going and finish this work. Above all, I wish to thank my sisters, Luz María, Laura, and Ruth, and especially my parents, María and Jorge. You gave me the courage to pursue this dream and, with your infallible love and trust, the strength to accomplish it. Any honor I receive, any goal I accomplish, is a reflection of your example and a tribute to all the values and lessons you have taught me over the years. vii VITA June 21, 1966 …………………….. Born - Mexico City, Mexico 1991 ……………………………… B.A. Communication, Universidad Iberoamericana, Mexico City, Mexico 1995 ……………………………… M.A. Communication, The Ohio State University, Columbus, Ohio 1995-1997 ……………………….. Graduate Teaching Associate, The Ohio State University, Columbus, Ohio 2000-present …………………….. Graduate Research Associate, The National Regulatory Research Institute, Columbus, Ohio PUBLICATIONS Pérez-Chavolla, L. (1999, July-September). Telmex into a turmoil. Telecommunications & Space Newsletter, 4, Third Quarter, 2-4. Pérez-Chavolla, L. (1998, Spring). Institutional reform and the challenge of universal service in low-teledensity countries: The case of Mexico. Telecommunications and Space Journal, 5, 65-89. Pérez-Chavolla, L, & Samarajiva. R. (1997). Privatization, market liberalization, and regulatory reform in the Mexican telecommunication system. In D. J. Ryan (Ed.), Privatization and Competition in Telecommunications (pp. 149-166). Westport, CT: Praeger. Pérez-Chavolla, L. (1992). El desarrollo de la tecnología espacial brasileña y sus perspectivas ante el libre comercio [Brazilian space technology development and its perspectives vis-a-vis free trade]. In J. Marqués de Melo (Ed.), Comunicación latinoamericana: Desafíos de la investigación para el Siglo XXI [Proceedings of the 1st ALAIC Conference] (pp. 285-304). Sao Paulo, Brazil: ESA-USP. viii Pérez-Chavolla, L. (1991, August). Brasil, rumbo a la autonomía tecnológica espacial [Brazil: Towards its autonomy in space technology]. Este País, 42-43. FIELDS OF STUDY Major Field: Communication ix TABLE OF CONTENTS Page Abstract .............................................................................................................................. ii Dedication ......................................................................................................................... iv Acknowledgments ...............................................................................................................v