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 Business News | November 2006 
New Fees for Calling Cellphones in Mexico
 James S. Granelli & Alana Semuels - LATimes
| | The fees are negotiated individually between Mexican phone companies and their counterparts in other countries |
Say adios to cheap calls to cellphones in Mexico.
Started Saturday, the Mexican government is imposing a surcharge of at least 14 cents a minute to complete international calls to cellphones, more than doubling or tripling rates callers pay.
"It's going to hurt the average consumer significantly," said Jeff Compton, an executive at Telscape Communications Inc., a Monrovia phone company that caters to Latinos.
Southern California boasts the nation's largest population of Latinos, about 80% of whom trace their roots to Mexico. Many still have family there, making Mexico one of the most popular international call destinations and a rich source of business for phone companies.
About 20,000 San Diego customers of Telscape have been paying a penny a minute to call friends and relatives in Tijuana. That cost will climb to 17 cents a minute. Sprint Nextel Corp. customers who pay $5 a month for free calls to Mexican border towns and 5 cents a minute for calls elsewhere now will pay an extra 18 cents a minute.
Daniel Onorato, 17, uses his employer's cellphone to call his parents and two sisters in Mexico City every few days, and each of them uses a cellphone.
"He'd better not call anymore," chided his employer, downtown Los Angeles fruit stand operator Lorena Lopez. Her bill already tops $300 a month.
Gabriel Lasco, 27, a waiter at Maria's Pescado Frito at Grand Central Market downtown, already knows how to get around the surcharges to call his father in Mexico City.
"I guess I'll have to call the house phone now," he said, "but it's so much less convenient."
But carpenter Emilio Ochoa, 26, will absorb the cost of calling his family in Jalisco.
"I have to call my family, so I'm not going to stop," he said. "I'm not happy about the price, but what can I do?"
Lisa Pierce, an industry analyst with Forrester Research Inc., said, "Look at who the fees hurt: the people who can least afford them."
The surcharge was imposed by Mexico's version of the Federal Communications Commission as part of an overhaul of how mobile phone companies bill their customers. For six years, Mexico has been moving toward a system in which the calling party pays all the costs of a call to a cellphone, including long-distance charges. That makes the incoming call free to mobile users.
Mexico's surcharge does not apply to calls made to land-line phones in Mexico or to walkie-talkie systems used by some cellphone carriers. At least four smaller Mexican cellphone carriers have obtained a court order, applying only to them, to block the surcharge.
But the country's largest phone company, Telefonos de Mexico, or Telmex, said it would abide by the Mexican authority's new fees. The fees are negotiated individually between Mexican phone companies and their counterparts in other countries.
Most of the money collected will go into the coffers of companies controlled by Mexican entrepreneur Carlos Slim, the world's third-richest man with a net worth of $30 billion, according to Forbes magazine. Slim controls Telmex, which has 94% of the Mexican land-line market, and America Movil, whose Telcel subsidiary has 80% of the Mexican mobile market.
AT&T Inc. and Sprint have been alerting their customers about the new fee, but customers still unaware of the higher cost "may suffer sticker shock," said Sprint spokeswoman Kathleen Dunleavy. Verizon Communications Inc. will absorb the fee for three months as it notifies customers, spokesman Jonathan Davies said.
Having the caller pay all cellphone costs is prevalent in Europe. The trend never caught on here, despite efforts to implement it. On land-line phones, the calling party has long paid the freight on the call, but the U.S. mobile market grew up with each party sharing the cost.
"We see more countries adopting calling-party-pays regimes, and the big problem is that the rates they adopt don't reflect true costs," said David Nall, Sprint's director of government affairs in Washington.
"If you're a mobile carrier, you can exert monopoly control because nobody else can complete calls on your network," Nall said. "We know the costs of completing calls, and we don't think that anything more than 4 or 5 cents a minute is justified."
International calls to cellphone customers in Europe, for instance, also have high surcharges: 20 cents a minute for England, 19 cents for Italy and 17 cents for France. Calls to Canadian cellphone users are billed the way they are here.
Sprint, AT&T and others want the FCC to lobby other countries to lower their surcharges.
"This represents billions of U.S. dollars going overseas," Nall said.
The surcharges also suppress demand among U.S. customers, reducing carriers' revenue, analyst Pierce said.
To prevent accidental calls to cellphones, Mexico changed the way people in and outside the country call mobile customers. International callers have to add a 1 to reach cellphones, dialing 011-52-1 before the final 10 digits.
But that's not going to ensure that callers know they are paying a much higher price for the call, Telscape's Compton said.
"Some people may not even realize they're calling a mobile number in Mexico until the bill arrives," he said.
james.granelli@latimes.com alana.semuels@latimes.com Times researcher Carlos Martinez in Mexico City contributed to this report. |
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