Movistar’s rural franchising model shows its true colors

Many months back we wrote about Movistar/Telefonica’s rural franchising scheme. Well it has become a reality, and it seems the local franchisee in Oaxaca is intent on following us around and attempting to install wherever we have already established our networks. While on the one hand this is a positive step – these communities have been practically begging to be connected for over a decade, on the other hand it represents the worst aspects of business-as-usual with regards to this and other telecom companies.

There are two aspects to what is going on in the Sierra that are most objectionable. The first is that the community must pay for all the upfront capital costs of setting up the network in order to have the “opportunity” to pay the exorbitant rates the incumbent providers charge per minute. The second aspect is that, at least with regards to the Movistar franchisee in Oaxaca, there is a very clear intention to descredit the work of Rhizomatica and our community partners by claiming we are operating pirate networks.

Here is what is going on: the Movistar franchisee has partnered with a local politician, and the two, it seems, have started some sort of shady business venture in which the politician puts up a small part of the money and convinces the villages to put up much more (around $40,000 USD). Then, perhaps, the franchisee and the politician split up the money, possibly greasing the palms of some of the local authorities. In order to convince villages to spend this amount of money, the local politician actively defames us and our model, which costs about 20% of the total cost of the Movistar option. All of this is nothing new. What is unfortunate is how the franchise model has been totally distorted and is being used to extract money from the local economy, rather than sharing a part of the money generated by the traffic, as originally proposed.

Oswaldo Martinez, the coordinator of Fundacion Santa Maria, Rhizomatica’s partner in Santa Maria Yaviche, Oaxaca, was recently interviewed by the state’s most important newspaper about this issue and stated, “it’s good that [the telecom companies] are coming, provided they respect us and vice versa, because we are competing legally. We want people to decide which of the two options to opt for based on a comparison of quality and costs … people who have money, go ahead and spend it, but we will continue with our project”.

According to Movistar’s own documents regarding the franchising model, the local operator keeps around 40% of the profit from the traffic, under the assumption that they (the local operator) have made a capital investment to put up the network. What is happening in the Sierra is that this capital or investment costs are being passed on to the communities themselves and none of the profit is being shared with them. Instead, it is all taken by the franchisee, who risked nothing. We have heard that America Movil/Telcel, the country’s largest, causi-monopoly operator is doing something similar in rural areas, requiring investment by the community of up to $90,000 USD (1.2 million pesos) in order to have service. Although a jaw-dropping figure, at least they don’t pretend to have any intention of sharing profits with the communities.

Speaking about the entrance of the large telecom companies under these new schemes, Oswaldo offered the following: “unfortunately, for our indigenous communities, the looting continues. A few are getting rich while the rest of us pay expensive service costs. In the case of phone calls, they are very expensive, but now we understand that there is a difference between what the service is really worth and the price we pay. A real and affordable rate is our right”.

The issue is not only economic. This situation is also telling of the way that these multinational corporations operate and their abhorance of competition and, god-forbid, conceiving of telecommunications as anything other than a money-making venture. Rhizomatica decided to work in the Sierra Juarez because we feel confident that the communities can resist the logic of capital and the way telecommunications and other services attempt to introduce this logic.

Oswaldo’s words are important in this respect. “What we seek is to restore autonomy to the people; that the State give us … concessions to operate our own communication services … The community telephone network supports our organization’s ability to generate alternatives … and share options that apply knowledge to [increase the quality of] daily life.”

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