Telecommunications Policy

Reason.tv: The Guatemalan Telecommunications Miracle—A Conversation with Alfredo Guzman

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"In Guatemala we have a clear example that freedom works," Alfredo Guzmán told us in May, 2011.

A graduate of the market-oriented Universidad Francisco Marroquin , Guzmán was appointed director of Guatemala's state-run telecommunications company, GUATEL, in 1995. Back then, Guatemala had a population of 11 million people but fewer than 300,000 phones. President Arzú had a simple request for the new head of Guatemala's state-run monopoly: I want a lot of phones, everywhere, fast.

So what did Guzmán do? Despite fierce political opposition, Guzmán successfully opened up Guatemala's telecommunications industry to competition and privatized GUATEL. As Guzmán told us, "sometimes thoughts become things," and, as it turns out, Guzmán had learned a few things about economics while studying at UFM.

The results? Guatemala currently has a population of around 13 million people and more than 18 million phones. Today, even the poorest Guatemaltecos own cell phones and enjoy high-quality service at low cost. 

Approximately 7.5 minutes. Produced by Paul Feine and Alex Manning.

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49 responses to “Reason.tv: The Guatemalan Telecommunications Miracle—A Conversation with Alfredo Guzman

  1. Cool story thanks we need some upbeat stuff.

    I really believe Latin America will become a great field of victories for freedom. The dinosaurs of the left that are still around there are destined for history’s asscan. They are developing relatively competent government and are fragmented enough to keep the governments competing against each other.

    1. The asscan’s gettin’ kinda full.

  2. It’s a great story but the murder rate down there makes Juarez look like Peoria…

    1. Crime usually follows proverty. Solve the latter and you solve the former.

      1. Its a lot more complicated than that – the end of the civil war started a lot more problems and the drug war/sharing a border with Mexico – I’ve lived in very poor areas of latin american countries before where the murder rate was almost nil – the poverty = crime linear view – especially at the levels seen in Guatemala recently just doesn’t pan out.

        1. Well, it’s obviously not that simple, but there’s no motivation for crime if legal activities are more profitable. Drug prohibition in the US only hurts the bottom line there, too.

          1. There are decent arguments for drug legalization, but that’s not one of them. Even if you assume that crime is the most profitable activity and that profit is the primary motivating factor for any decision, then why isn’t everyone a criminal?

            1. then why isn’t everyone a criminal?

              Not enough jobs. Might as well ask “if GUATEL is so profitable why doesn’t everyone work there?”

  3. A nice example, but it weirds me out a little that they said “if you strike you go to jail” to the unions.

    1. Go to jail for quitting your job huh Alfredo? Ju keep jusing dis word “freedom”. I do not think it means what ju think it means.

  4. The free market solves *everything*. About time someone in a third world nation caught on.

    1. You’ve surely noticed that Lula hasn’t exactly been in a hurry to overturn his predecessor’s economic policies in Brazil. He might be a pinko, but he’s a sane pinko.

    2. I have been trying to figure out how the free market is going to work once automation supplants a large fraction of the work force and removes their jobs and thus market participation.

      People seem to think that jobs will magically be created, but modern trends do not support that notion. This eBook can be had for free from Amazon, it poses a lot of questions for libertarians, I would like to see what people think.

      http://www.amazon.com/Lights-T…..1448659817

      1. “I have been trying to figure out how the free market is going to work once automation supplants a large fraction of the work force and removes their jobs and thus market participation.”

        I answered this one in my head a long time ago. Automation will mean the end of blue collar workers. This is not necessarily a bad thing. Manual labor is generally to be avoided as one’s primary source of income. As blue collar jobs slowly disappear, there will be a higher demand for white collar jobs: engineers, designers, architects, managers, accountants, etc. The majority of people (in a closed, world system with automation) will work in the white collar professions, with a large number of machine-operators and technicians. Agriculture is already fairly cushy in western nations (from what I’ve seen, not from experience, not considering economics, which is covered elsewhere (I means, this *is* reason.com)), so it won’t be greatly hurt.

        1. I need to start a robot repair correspondence course.

  5. I’m a firm supporter of the free market and do not doubt that it contributed to the proliferation of phone lines. I do wonder however the extent to which this is due to technological advances.

    How much of this is due to cell phones vs landlines and how much is due to deregulation? (Not that the two are completely unrelated.) Is there a suitable comparison country that had similar penetration in the mid-90’s that did not deregulate?

    1. Probably the rest of Latin America.

    2. Take a look at Canada’s heavily regulated and protected communications industry, which has gone from having the fastest (though most expensive) internet in the OECD to having the slowest (but still most expensive) in less than 15 years.

      Crony capitalism at its finest.

      Our cell phone service is also the most expensive in the OECD as well.

  6. A nice example, but it weirds me out a little that they said “if you strike you go to jail” to the unions.

    Could be that one of the conditions for being extended certain legal privileges as a union is that you not strike.

    Or it could be leftover thuggery from the caudillo days.

    Latin America has its own history with unions, many of which became petri dishes for radical leftism and fronts for violent revolutionary groups.

  7. I don’t care. That nation gave us Carlos Ruiz, and as an FC Dallas fan, that makes me the enemy of all Guatemalans.

    1. The little fish makes HnR – how can we ever move on from here?

      1. I ran into “pescadito” in a club once (a friend of a friend was dating him, while his wife languished in Guatemala), and he’s a womanizing asshole. Not cheap though; he paid for our drinks. But he really is short, which is a worse crime than being cheap.

  8. Didn’t most people have pagers in 1995?

  9. Post hoc ergo propter hoc.

    1. Non sine causa.

      1. Hic et nunc.

        1. In hoc signo vinces

          1. In vino veritas.

            1. Quidquid latine dictum sit, altum videtur.

                1. Semper ubi sub ubi

                  1. Sic gorgiamus allos subjectatos nunc. Not just pretty words.

                    1. Nice.

                    2. frere jacques – ehHehehehehe.

  10. The next step will be to change the law to require the regstered owner to pay the fine.

    And while they’re at it, require you to supply a credit card number to register the car so

    they can just charge the credit card.

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  12. hmmm, bit of a letdown from reason on this… what he didn’t tell you is the state run company was handed over to a former president and the head of the communications ministry at the time. Incidentally he is now owner of the biggest telecom company in the country. THe privatization certainly was needed, but the way it was done was dubious at best… The interviewee was also nicely compensated for his kind gesture….

    1. There are no real libertarians in any true form in serious power anywhere. There never have been. I need to accept this.

      But we can still change it, eventually.

      1. The thing is: Is the system set up to where you cant anything done without someone in power getting some form of “compensation”… I dont this its all this but to a certain extent it is a reality us libertarians will have to accept. Some systems are so corrupt and fucked up that you wont get anything good unless someone in power gets some benefit they wouldn’t get otherwise…

  13. The food sure looked good.

    Can you guess I’m fat?

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