Telmex: 403K Quarter, 2M Year, 6.4M Total

Good growth, finally, in Mexico, with a third more net adds than the U.S. adjusted for population. Prices have been high in relation to income, given per capita a third of that on average as the U.S.. Measured by Gini coefficient, Mexico's inequality is very high (46,) similar to the U.S. (45) but much higher than France and Germany (28) or Britain (34.)
Part of Telmex's success is installment sales of 2.3M computers, with brand name laptops currently available from 100 pesos/month (US$8.) Telmex tells investors, “the service has to be affordable to succeed in appealing to large numbers of users. An important component of expanding the broadband market is to make sure that customers have access to computers.” A customer can “walk out of a TELMEX store with the computer in hand, online service arranged, and monthly cost set.”
This highlights what Brian David of the U.S. broadband plan emphasized: poor people often can't afford the computer even when they can pay for the broadband connection. He put that as one of the highest priorities. Folks making $100,000 often forget that coming up with hundreds of dollars up front is often as great an obstacle as the cost over time.
That needs to be part of the program, along with a requirement that companies set reasonable deposits for people without credit. Hooking up a DSL line, including modem and labor, costs $50-150.
Washington lobbyists talk as if the only way to bring down prices is massive government subsidies, most of which go to company shareholders rather than helping the poor. The marginal cost of broadband at line speed up to 20 meg is $5-12/month, including initial equipment. Add a generous profit to that and you come to a fair wholesale price for the service. It's far less than what many carriers demand for even slow, 3-5 megabit service.
If the government is paying for hundreds of thousands of lines through universal service, they should ask for a wholesale, not a retail price. http://bit.ly/280HH4
The poor should not pay more. Written by Dave Burstein


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