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Access in Mexico

Horacio Gallegos, Markell Pool & Rachel Anderson, May 2001



Introduction

Mexico is the most populous Spanish-speaking country in the world with an approximate population of 97 million. There are many different ethnicities residing in Mexico but the majority (60%) is Mestizo, a mix between indigenous and Spanish ancestry. The remaining population is 30% indigenous and 10% white. Mexico's society also lives with huge discrepancies in wealth between the different social classes and ethnic groups. This contributes to the problem of Internet access and the digital divide that currently exists. The issues of economy, telecommunications infrastructure, and various social issues pinpoint the major barriers to Internet access in Mexico.


The Digital Divide in Mexico

As in many developing nations, the digital divide has roots in the country's economy and weak middle class. Middle-income families lack the purchase power to support a high-tech industry. Therefore, information technologies become a tool of the elite and the line is drawn between "haves" and "have-nots." The infrastructure that can erase this line is comprised of PC penetration and availability, Internet access, and electricity. Although Mexico has seen significant improvement in many areas like access to electricity, the country still suffers from limited access to technologies. ISP's, PC's, and phone lines are not as accessible to people of lower incomes, and virtually unattainable to those in rural areas.


Telecommunication Infrastructure

The second major problem creating the digital divide is the country's infrastructure. Using the Internet requires three tools: a computer, Internet access, and electricity. In regards to the majority of the population two if not all three of these tools are usually unattainable, not unavailable.

To even begin to consider having Internet access one must first look at hardware. In 1998 only about 4.7% of the population owed a personal computer. Access to hardware is a significant barrier. However, availability is not a major problem. Most cities in Mexico have the presence of stores such as Office Depot. It is people located outside cities and having limited incomes who are denied access to the Internet.

The second concern is phone lines. Telmex, Mexico's largest phone line provider, was sold by the state to the private sector in 1990 with the promise that it would provide phone service to the entire country. However, Telmex has done little to keep its promise. In 1997, the state broke Telmex's monopoly. As a result, Telmex was forced to lease lines to other private phone companies (resellers). The state failed to make arrangements with the telecommunications giant to establish a price ceiling for line leasing. Telmex was overcharging resellers to lease lines, thus killing any competition. Furthermore, Telmex required a fee of $120 US dollars to connect, while the average Mexican worker made only $200 per month. In 1998, there were only 104 main telephone lines per 1000 people. In simplest terms, Telmex was failing to provide.

However, in the case of electricity, Mexico is at an advantage. In 1996, 95% of the population had access to electricity. This number increased to 97% in 2000. The major problem exists not in availability of electricity, but in cost.

Once the barriers of computer, phone line, and electricity have been breached, an Internet Service Provider (ISP) must be present. A current search of "Mexico>Internet Service Provider" on Yahoo brings up almost 40 different ISP's. In addition, some computer corporations are facilitating the use of the Internet. Presario Compaq offers one-year free Internet access with the purchase of a computer. The rural villages and small towns, however, are usually still excluded from ISP connectivity. It is in these communities where most poor Mexican resides. With the current growth rate of users in cities, there is too much demand there to divert connectivity efforts to the small rural villages.


Economic Issues

Compared to other countries in the region Mexico ranks among the highest in economic growth and foreign investment, and boasts an administration that encourages innovative business practices. However, Mexico continues to display large discrepancies in wealth between various socio-economic classes. Moreover, Mexico's various regions create enormous inequalities between urban city dwellers and rural peasants. In addition, the Federal District around Mexico City continues to monopolize Mexico's economic, political, cultural, and financial essence. This exponential population growth and continued urbanization has increasingly strained an already struggling economy.

During the 1960's and 1970's Mexico's economic development strategy involved a large state role and heavy protection from international competition. By 1980, this strategy, known as import-substitution industrialization, had produced an inefficient, uncompetitive economy that could not produce what the nation demanded for growth. After repeated devaluation and high inflation rates during the 80's and 90's, the Mexican government has attempted to restructure the economy with a development strategy sought to make Mexico more efficient and globally competitive by reducing the role of the state, emphasizing private-sector initiatives, and replacing foreign loans with capital obtained from exports and foreign investment. Initiatives and changes like these have improved the situation of the Mexican economy, consequently convincing the World Bank to classify the nation as upper middle in terms of GNP per capita. Only a few countries, like Brazil, Argentina, and Chile, attained this status within this region.

As the Internet era arrived, industry specialists realized that technology penetration was low and technology infrastructures weak. These matters only made prices more expensive for everything technology-related. Prices, combined with a low GNP per capita of US$4,400, alienated most Mexicans.

Experts often attributed the lack of technology penetration to high poverty levels. However, this reality can be better attributed to purchasing power. While a medium income family earning $4,400 may be able to afford basic necessities like food, shelter, and medical care, the ability to support a high-tech industry (PC's, Internet service) is very difficult with 42.5% of the population earning under $2 per day. A middle class existence can condemn a Mexican family to miss out on the Internet Era.

Mexico counts on an elite population that controls a significant portion of the income. With the top 20% group controlling almost 60% of the nation's income, they maintain the status quo. Real progress cannot be made until this group commits to support the cause of the lower classes. This barrier of indifference may be social, as well as economic.

Also, in recent history there has been a considerable amount of red tape when dealing with local authorities. Jupiter Communications stated that independent Latin American e-marketplaces that don't partner with international marketplaces would probably run out of funding and close. In an attempt to modernize the economy the Mexican bureaucracies have relinquished some power to the private sector as well as to their international partners. The percentage of the GDP produced by state-owned enterprises has dropped from 6.7 to 4.9 from 1990 to 1997. Foreign investment has increased dramatically from $2.6 to $10.2 billion between 1990 and 1998. These two figures are usually indicative of countries headed for modernization.

With modernization and urbanization comes an increase in manufacturing and service-related industry and a decrease in agricultural labor markets. A high percentage of the Mexican GDP is currently produced by the manufacturing and service industries, with 21 and 68%, respectively. The service-industry percentage is higher than in some Scandinavian countries and closely trailing the United States (72%). The only sector that has seen a decrease is agriculture, falling from 7 to 5% between 1990-1999.


Social Issues

In addition to economic and infrastructure barriers, distinctive social classes feed the digital divide. Mexico, as a whole, has experienced a rapid economic growth in the last couple of years, but the proportion of Mexicans living in poverty has grown simultaneously. At least 28.6% of the Mexican population is classified as poor, and the gap between the rich and the poor has steadily increased. Currently, 70% of the population lives in urban areas and only 30% in rural areas.

This migration from rural areas to the cities can be attributed to a lack of job opportunities, leading people to settling in areas that were lacking urban services. This development of urban poverty is most obvious in the border towns. Rural poverty is closely connected with lack of land ownership and indigenous rights. There are concerns of violations of Universal Human Rights in regards to these issues.

In addition, the Mexican population consists approximately of 60% Mestizo (mixed indigenous-Spanish), 30% indigenous, 9% white, and 1% other. There is a definite racial hierarchy in Mexico that is easily observed, but seldom acknowledged. The present day indigenous people suffer from oppression, poverty and discrimination caused by a mind-set that idealizes a white skin color. This is reflected in all kinds of media and, especially, in advertising. There is reason to believe the public education system is contributing to the augmentation of racism by encouraging this type racial division.

Another social barrier to Internet access is the issue of education. Based on the literacy rates (91% are literate) and the required primary education (86% reach 5th grade), a large majority of the population has the basic knowledge necessary to use computer technology. However, one of the problems is that most Internet access and training in technology occurs in universities and at higher levels of education. The majority of the population does not have access to these institutions . Even though college enrollment has increased from 62,000 in 1954 to 1.2 million in 1994, this still represents a small percentage of the young population.


Conclusion

It has become apparent through our research that there is a significant digital divide in Mexico, which might augment if not addressed immediately. Due to inequalities in income distribution and the presence of structural racism it is difficult for the majority of the population to gain access to new technologies like the Internet. With 20% of the population controlling almost 60% of the nation's income and at least 10% of the population living in absolute poverty, the barriers to Internet access might seem somewhat overwhelming. A monopolized telecommunications system only adds to the division of access by creating a price structure infeasible to the lower classes. Despite Mexico's rapid economic growth in recent years that has classified the country as an upper middle nation, the digital divide remains a major problem that will only add to already-existing disparities.


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