Digital divide or digital development? The Internet in Mexico
First Monday

Digital divide or digital development? The Internet in Mexico by James Curry and Martin Kenney

This paper discusses the development of the Internet in Mexico within the context of the digital divide. There is skepticism about whether the digital divide is something driven primarily by technology rather than an epiphenomenon driven by socioeconomic factors. The barriers to access are not technological but rather economic and historical. Although Mexico shows wide disparities in Internet access, it also shows rapid development toward more access. The number of regular Internet users in Mexico is small (about 14 million) but has shown consistent growth. Business and non–governmental organization presence on the Web is increasing, and the Mexican government is innovatively using the Web to broaden contact with its citizens. In the Mexican case, there is certainly evidence of a digital divide. Nevertheless, there is also ample evidence of digital development.


The origins of the Internet in Mexico
Digital development in Mexico
The digital divide in Mexico
Mexico’s government and the Internet
E–commerce in a borderless world





The notion of the digital divide is concerned with the possibility Internet technology will either exacerbate existing inequalities within a national or international context, or create entirely new inequalities (Norris, 2001; Kuttan and Peters, 2003; Fink and Kenny 2003). Proponents of the existence of a digital divide see computers and the Internet as expensive technologies to which only elites, or relative elites, will have access. According to this viewpoint, the world will gradually split into two groups: information haves, and information have–nots.

Other observers feel that the digital divide has been over-hyped. They cite cost–reducing factors such as declines in information technology hardware prices, overcapacity in international fiber optic linkages, new technologies such as the US$100 laptop developed by MIT, and new and emerging technologies such as cellphones and wireless networking which cost less to deploy on a large scale. They argue that the Internet and other digital information technologies have the potential to broaden access to information in ways potentially benefiting developing societies in numerous ways (Warschauer, 2004; Compaine, 2001). For others the Internet is beside the point; increasing teledensity, mostly through the deployment of inexpensive mobile phones will have a stronger impact on economic development (The Economist, 2005; Dasgupta, et al., 2001).

Two opposing tendencies — towards digital inequality and towards digital equality — are present in Mexico, but it is dubious to rely on the emergence of digital technology itself as the primary explanation. The specifics of digital technology only partly explain the barriers to Internet growth and usage; far more important are historical trends relating to underdevelopment generally and the underdevelopment of Mexico’s telecommunications infrastructure in particular. Thus, while we recognize the digital divide concept may have at least some utility in the Mexican context, we prefer to put in the context of a more broadly conceived notion of a telecommunications divide. Mexico is overcoming many of its problems, albeit at a slower rate than in developed economies, and is undergoing a parallel process of digital development.

The Internet presents countries like Mexico with numerous possible risks and benefits. These cut to the core issue of the digital divide. The Internet could potentially undermine Mexican media institutions as Mexican Internet users could easily access slicker and better funded Spanish language media in the U.S. or elsewhere. With improved ground mail delivery, U.S. e–retail businesses could undercut their indigenous Mexican counterparts. Portal sites such as Yahoo and MSN could undermine the development of homegrown versions by providing Spanish language versions — in fact, they already have.

On the positive side, the Internet could also provide opportunities for Mexican firms to enter global markets, particularly Spanish–speaking Latin America and the huge U.S. Hispanic market. Many Mexican–Americans already access Mexican news media, entertainment, and other Web sites. It is also helpful for enabling them to communicate with their friends and relatives in Mexico.

Another important aspect of digital development is the potential of the Internet as a tool for improving government. The Mexican government has begun innovatively using the Internet to give citizens more access. This is impressive progress for a country where secretive government was the norm for most of the twentieth century.

The Internet also has the potential for augmenting Mexico’s education system and bringing more knowledge and information to the public. School children and others can access numerous resources such as the Wikipedia, an online, open source encyclopedia. The Spanish version already has over 77,000 articles (Wikipedia, 2005). This is important in a country where public libraries are virtually non–existent and high–quality books are often quite expensive.

This paper will explore Mexico’s Internet and telecommunications development, assessing the barriers to it, and situating it in context of the telecommunications divide. We will present an overview of the issues involved in the development of the Internet and e–commerce in Mexico. A key goal is to discuss the development and current state of the Internet in Mexico with an eye to issues of access: we ask who has access to the Internet and what utility does it have for them?

In answering the first part of the question it is necessary to address problems associated with economic underdevelopment. The digital divide is not a problem existing in isolation; it reflects of existing political economic conditions. The poor not only lack access to information technology, they lack access to many other things as well, such as adequate housing and education. While the Internet is helpful for expanding educational opportunities relatively cheaply, it will never displace the need for more and better schools and teachers.

This leads to the second part of the question: the utility of the Internet in many people’s lives. Is the Internet a technology appropriate to the needs of a vast majority of Mexicans? The ability to access vast virtual libraries of information quickly and easily is clearly one of the most useful and important features of the Internet. However, a semi–illiterate farmer struggling to make a living may have little desire or need to access Cervantes over the Internet (although he might want to access information on agricultural practices).

Another matter of concern is the development of Internet business and e–commerce in Mexico, Latin America, and globally. Here we are thinking of an expanded conception of a digital divide to include the effects of digital technology on countries’ and regions’ place in the global economic hierarchy. Given the capacity for digital technology to easily transcend geography, it is increasingly hard to talk of “the Internet” in a specific national context. We situate Mexico within the context of what we term the Pan–Hispanic Internet. With adequate bandwidth and an increase in desirable products available by direct download, there is no reason why e–products and Web sites aimed at other national markets cannot be located in another national economy far away.

Digital communication also allows firms to move digital (or digitizable) processes to other locations. However, this is a two–way process; firms who profit from access to foreign markets could loose out to better capitalized firms from other countries able to easily access the domestic market. For example, the digitally based services outsourcing industry has the potential benefit of providing ways to access to new markets. However, within particular limits, it is possible to perform digitizable processes at any site with access to adequate bandwidth. Thus, for example, a Spanish–speaking country with a lower cost structure could undercut firms providing services in Spanish.

The development of retail e–commerce in tangible goods is also problematic due to the paucity of support infrastructure. Retail Internet businesses such as are almost useless to the vast majority of Mexicans given the unreliability of the national postal service and high cost of more reliable private services.

Lastly, what about Mexico’s Internet and e–commerce growth after the end of the technology boom of the 1990s? The technology recession certainly affected Mexico’s Internet economy, but it was not a complete disaster. Start–ups failed, surviving sites had to retrench, and domain registration cooled. However, business–to–business e–commerce has continued to grow, ISP development has continued (including deployment of cable modem, DSL, and wireless services), the number of consumers with Internet access is still growing, and the quantity and variety of services and information generated in Mexico is still expanding.

The next section of this paper provides a brief overview of the history of Internet development in Mexico. In the third section, we will discuss the current state of Internet use and the recent growth of Internet use. In the fourth section, we will present a discussion of the barriers to Internet access encountered by Mexicans. The main problem here is economic, particularly the relative high cost access and computer equipment. Another important problem is regional disparity in both telephone and Internet access. The region with the least percentage of households with home computers ranks more than 75 percent below the region with the largest percentage of home computers. We will also discuss the deployment of broadband and wireless services in Mexico, as well as the important role Internet cafes play in broadening Internet access.

In the fifth section, we will examine how Mexico’s government is utilizing the Internet to communicate with its citizens and to provide citizens with more access to governmental services and process. In addition, the Mexican government has embarked on an ambitious program to increase Internet access by creating a large network of public access centers. The sixth section consists of a discussion of both the possibilities and the potential pitfalls for Mexico’s e–commerce development in a borderless world of the Internet.

In the final section, we will discuss our main conclusion. Put simply, in the Mexican case there is certainly evidence of a digital divide. There is also ample evidence of digital development. Whether this development will be quick and comprehensive enough to have major impacts on Mexican economy and society is the crucial question.



The origins of the Internet in Mexico

Although the Internet’s early origins go back to the 1960s, widespread computer networks between universities that were more than purely experimental did not really get underway until the early 1980s (Abbate, 1999). In terms of time, Mexico’s adoption of the Internet did not lag so far behind the US’s, it just took much longer to scale up. In 1988 there were about 60,000 host computers connected to the various networks making up the fledgling Internet (Hafner and Lyon, 1996).

In 1987 two Mexican universities connected to BITNET, a network created in 1981 to facilitate e–mail, listservs, and file transfer between universities: The Instituto Tecnológico y de Estudios Superiores of Monterrey (ITESM) and the Universidad Nacional Autónoma de México (UNAM—in Mexico City). In 1989, ITESM established the first connection to the Internet using Internet protocols. In 1990, several other Mexican universities and educational institutions, including the Education Secretariat, linked to the Internet. Three universities: ITESM, the University of Guadalajara, and the University of Puebla created Hypertext Transfer Protocol–based home pages in 1990 (Fernandez, 1995).

By 1994, most educational institutions had Internet connections (Gutierrez and Islas, 2000, see also Palacios, 2002). However, given their small budgets, a connection often meant different things for different institutions, even for different people within an institution. Broadband direct access was rare, many colleges and universities had to make do with dial–up access from a local ISP, often over bad phone lines. Only a few institutions had their own registered domains. In 1997 there were only 13 domains registered in Mexico (NIC–Mexico, 2005). Moreover, Mexico’s network infrastructure consisted of one external backbone, routed through Mexico City, leading to slow, and frequently interrupted, service (Gutierrez and Islas, 2000; see also Palacios, 2003).

As was the case in the U.S., universities’ early adoption of the Internet was in engineering departments. Social sciences and humanities took much longer. After about 1996–97, adoption of the Internet by universities and government agencies took off. However, by 2000, Internet use was widespread in universities; there were nearly 3,000 domain registrations, and most university students had e–mail addresses (Whinston and Choi, 2002; NIC–Mexico, 2004).

In 2001, Mexico joined a consortium of American universities to link to Internet–2, a set of advanced networking technologies that enable distant collaboration on complex projects. Internet–2 technologies are also being used to link far–flung educational institutions through video conferencing. There are 61 member institutions in Mexico’s Internet–2 consortium including universities, some governmental and medical institutions, and five information technology companies (CUDI, 2005). Internet–2 also enables Mexican institutions to access supercomputers and other advanced resources in the United States and elsewhere.



Digital development in Mexico

One way to track the development of the Internet in Mexico is to look at the growth of domain registrations. As of mid September 2005 there were 152,059 top-level ( domain names registered in Mexico (NIC–Mexico, 2005). Coinciding with the slump in the information technology sector, the rate of growth tapered off after reaching a peak in mid–2001 — registrations actually dropped for a short time — only to resume their increase at a slower rate than before. In the last year, however (August 2004 to September 2005) domain growth has taken off at a feverish pace with 59,053 new registrations, an increase of 63 percent (NIC–Mexico, 2005).

The largest growing domain–name category is Of unique registered top–level domain names (i.e., names under the top–level designation in Mexico, 91.8 percent (144,093) are commercial (, see Figure 1) [1]. Commercial registrations have increased 65 percent in the last 12 months. The largest and fastest growing non–commercial domain type is 6,718 as of September 2005, a 54 percent increase over the previous 12 months (see Figure 6 in the fourth section below).

Figure 1 Source: NIC Mexico
Figure 1 — Source: NIC–Mexico

Mexican Internet usage is growing. According to the research firm ComScore Media Metrix, in 2002 Hispanics in the U.S. outranked the number of Internet users in Mexico by 73 percent (Morrissey, 2002). Mexico’s Federal Telecommunications Commission estimates there were about 14 million Internet users (13.2 percent of Mexico’s population) as of 2004 (COFETEL, 2005a). The International Telecommunications Union estimates there are 13.4 Internet users per 100 inhabitants (ITU, 2004a).

For users who access the Internet from home — a key indicator of overall Internet development — the numbers are still quite small and growth is slower than growth in users in all categories. By COFETEL’s estimate, only about 5.5 million Mexicans access the Internet from home (see Figure 2). This amounts to only slightly more than five percent of Mexico’s total population.

The average annual growth rate for home access from 2000 to 2004 was 19.0 percent, slower than the overall user growth rate of 24.0 percent. In 2000, slightly more than half of all Mexican Internet users accessed the Internet from home, in 2004, only 39 percent. Internet penetration — number of users per 100 people — stood at about 11.8 in 2003, ranking about 22 in the world (COFETEL, 2005b).

Figure 2 Source: COFETEL
Figure 2 — Source: COFETEL

Much of the growth of Internet users is harder to track since it is concentrated in the Internet café space. In 1999 office computers accounted for 63 percent of Internet connections — as of 2003 the figure is 34 percent. Public access sites (such as Internet cafes) now account for 32 percent of Internet connections, up from only two percent in 1999. While there is no data on the number of Internet cafes, they are already a US$900 million market for ISPs and estimates are the number of users will increase about 25 percent per year for the next four years (COMTEX, 2003).

Keep in mind that these numbers represent only a small proportion of Mexico’s 106 million population. Even if we assume a large undercount, due to Internet cafes and other factors, it is highly unlikely more than 20–25 percent of the Mexican population regularly access the Internet.

Finally, it is important to take note of what Mexicans do with the Internet. The Internet is a global phenomenon exhibiting a level of homogeneity as to the types of data posted, and the types of programs run. The Internet also enables the fast dissemination of novelty. New ideas and technologies spread quickly over large distances. Trends and fads can mutate and catch on quickly.

Mexico is no exception to this. Most, if not all, of the current social and technological trends reach Mexico in a timely fashion, although they may not spread as widely, or reach the same density, as in other areas. Mexicans use technologies such as chat rooms, instant messaging, web cams, and e–mail. Many Mexican Internet users have at least a rudimentary enough grasp of English to use technologies and software not yet translated into Spanish. While such trends as blogging and social networking are not as developed as in the United States, they are taking hold in Mexico. The Mexican blog directory site, Blogs Mexico, lists 2,887 Mexican web logs, an increase from 436 about a year ago (Blogs Mexico, 2005). Non–Mexican blogging sites such as Blogspot host the majority of these blogs.



The digital divide in Mexico

Poverty and an underdeveloped telecommunications infrastructure are significant barriers to Internet usage for millions of Mexicans (Chen and Wellman, 2003). Data collected by consulting firm Select Mexico (2004) show a wide class disparity in Internet access. The analysis divides Mexico’s populace into three income classes. The bottom third consists of about 73 percent Mexicans: mostly students, housewives, and employees of small businesses. Select found only about 17 percent of this group was Internet users. By contrast, they found that 46 percent of the upper class category is Internet users (about 13 percent of the population).

For many low–income Mexicans, the Internet may have limited practical utility. For people with inadequate disposable income the Internet may be nothing more than an expensive novelty. For example, while their children might benefit from access at school, people without bank accounts or credit cards are at least partially shut out from e–commerce. Moreover, their needs usually encompass things easily available nearby. For people without access from home and who are unable to use a free government sponsored access center (see below), using the Internet to access government health or election information, for example, likely isn’t worth the trouble since much of this information is available from other sources. Internet café rates run about 10 pesos (a little less than a dollar) per hour; affordable for many, but in most cases only if they give up other purchases.

In Mexico, as in other developing countries, most people access the Internet through a dial–up modem to a local ISP (Choi, 2002). For home users this continues to be largely the case, though broadband services are expanding throughout most of the country (see below). Using market size as a proxy measure for how users access the Internet shows that when business and institutions are included — the main market for dedicated lines — it would appear the majority of users have some sort of broadband access (either at work or at school). The estimated size of the market for dialup access in 2006 is US$581 million. This is a slowdown in the growth from 2003 (US$433 million) but considerable when compared to the estimates for the dedicated and broadband markets US$407 million and US$500 million respectively (Sanchez, 2004).

The continued widespread reliance on dial–up access in areas without broadband service, or in areas with large low–income populations, presents a significant barrier to the widespread social diffusion of the Internet. The main problem here is lack of telephones. Mexico has a teledensity of only 17.2 fixed telephone lines per 100 inhabitants (ITU, 2004b). Argentina, for comparison purposes, has 22.4 lines for each 100 people, the U.S. nearly 59.9 (ITU, 2004b).

Another problem is high local telephone costs; until recently, most Mexican phone companies charged by the minute for local usage. This added significantly to Internet subscriber rates, inhibiting long access sessions. ISPs, including the monopoly Telefonos de Mexico, have created plans to reduce high local telephone rates incurred by Internet users. Per–call, rather than per–minute, phone charges, as well as special prepaid access plans, are gradually becoming the norm in most Mexican cities (BCG, 1999; Sanchez 2004).

Generally, for most consumers Internet access can now be had for somewhere between 30 and 50 dollars per month. However, in 2000 — the most recent year for which data are available — only about 10 percent of homes had computers nationwide (COFETEL, 2000). While this percentage has almost certainly increased, it is unlikely anywhere near the level for home computers to be a truly mass phenomenon in Mexico.

There are also regional disparities in the ability to access the Internet and other telecommunication infrastructure. This could contribute to a further worsening of regional economic and social inequality in Mexico. For example, in 2000 the northern border states had more than twice as many phones per capita than the states near the southern border. Both Internet use and e–commerce activity tends to be concentrated in large cities as well (Palacios, 2003). Homes with computers were more than double the national average in Mexico City in 2000 (see Figure 3).

The growth in cellphone penetration is at least partially addressing this computer and telecom gap (see Figure 4). As of 2004, there were 18.1 million fixed telephone lines in Mexico (ITU 2004b). The number of cellphones in early 2005 was 40.1 million, more than double the number of landlines (INEGI, 2005).

Figure 3 - SOURCE: COFETEL, February 2000, compiled by authors.
Figure 3 - SOURCE: COFETEL, February 2000, compiled by authors.
Regions are defined as follows: North Border: Baja California N., Baja California S., Nuevo Leon, Sonora, Chihuahua, Coahuila, Tamaulipas. North Center: Queretaro, Aguascalientes, Jalisco, Guanajuato, Durango, San Luis Potosi, Sinaloa, Zacatecas, Nayarit. South Center: Mexico, Colima, Morelos, Puebla, Michoacan, Hidalgo, Tlaxcala. South Border: Quintana Roo, Yucatan, Campeche, Tabasco, Veracruz, Guerrero, Chiapas, Oaxaca.


Figure 4 — Source: COFETEL

It is unclear just how much increased cellphone usage represents an expansion of access to previously un- or underserved consumers. The low level of landlines, and the higher cost to install a new landline, suggests that at least a reasonable number are now substituting cellphones for landlines (Minges, 2001). However, it is more likely a significant percentage of Mexican cellphone users are affluent enough to already have a fixed line at home. In addition, relatively more affluent families are likely to have multiple cellphone users living under the same roof. Many Mexican cellphone systems have the same digital capabilities as those around the world, including both the ability to access the mobile Web and link a computer to the Internet. However, it is doubtful cellphones have had a big impact on Internet access as both of these methodologies suffer from speed, utility, and expense issues.

Another important aspect of Mexico’s digital development is broadband access. Mexican telecommunications companies are deploying cable modem and DSL service in most large Mexican cities. DSL subscriptions increased 50 percent in the first half of 2005 (Koprowski, 2005). However, cable television penetration in Mexico, at 40.2 subscribers per 1,000 inhabitants, remains extremely low. The largest single operator is Cablevision with about 400,000 subscribers. As of March 2004 there were over 220 operators covering 2.8 million subscribers (COFETEL, 2004). Current estimates (2004) put the number of broadband Internet subscribers in Mexico at 840,147. Mexico’s broadband penetration rate is only 0.8 per 100 inhabitants, ranked twenty–eighth in the world (see Figure 5). By comparison, the United States has a broadband penetration rate of 13.0, ranked twelfth in the world (OECD, 2005). Large areas of most Mexican cities lack reliable quality phone lines (needed for DSL) and cable TV lines.

Figure 5 Source: OECD
Figure 5 — Source: OECD

Mexican broadband access starts about US30–35 dollars per month, comparable to U.S. prices. For many Mexican consumers this is expensive, especially when you factor in the cost of a computer. Because of this, many Mexicans access the Internet outside of home. Most large academic institutions have Internet and there are Internet cafes in virtually every Mexican city and in many smaller towns.

Two examples show the importance of Internet cafes’ contribution to democratizing Internet access in Mexico. Ensenada, a small Pacific coast port city about 60 miles south of the U.S.–Mexico border, has as many as 15 Internet cafes, most with broadband connections. Competition has lowered prices in these Internet cafes to as little as eight pesos per hour — although prices may be higher than in other towns like Ensenada because of the influence of tourism.

Tulancingo, a small city of about 70,000 in the poor, mostly agricultural state of Hidalgo about 100 kilometers from Mexico City, is another example [2]. Lacking an airport, with an economic base centered on agricultural services and textiles, Tulancingo has at least four Internet cafes. The young people who are the main patrons of these cafes pursue the same kinds of activities as their counterparts in the developed world: instant messaging, chat rooms, social networking, multiplayer gaming, e–mail, P2P file swapping, etc. Many younger Mexicans, as well as a smaller number of older Mexicans, use the Internet frequently to stay in touch with friends and relatives who have migrated to the U S. [3].

About two years ago Wi Fi (localized wireless access) began to be deployed throughout Mexico, with hotspots located mostly in cafes and hotels in more affluent areas. The Economist Intelligence Unit (2003) reports at least 20 major Wi Fi access operators were operating in Latin America at the close of 2003. A search of Intel’s hotspot directory turned up 554 hotspots run by seven national providers, including Telmex and Megacable (a cable TV and cable modem provider in several Mexican cities), and numerous independents (Intel 2005) [4].

Some doubt exists, however, as to just how pervasive public Wi Fi access is likely to be in Mexico. The same high prices and multiple provider problems that have hampered the hotspot industry in the U.S. are a problem in Mexico. In addition, far fewer Mexicans are able to afford laptop computers, and those who have them are wary about carrying them on the street — especially in big cities where crime is a serious problem.

Newer, longer range technologies such as Wi–Max — and other wireless access technologies — provide the possibility for a vast and rapid expansion of inexpensive, broadband Internet access. This is similar to the fast and relatively inexpensive deployment of cellphone systems in many developing nations. Mexico is already deploying Wi–Max technology. Multivision, a cable TV company, is deploying its “E–go” service and has plans to reach 60,000 customers in 2005. The service is expensive however, requiring a US$360 modem and a monthly service charge from US$30 to US$80, depending on the speed (Sanchez, 2004).

Computer equipment is still too expensive for most Mexican consumers, although there are some factors in play with the potential to mitigate this. Chief among these is the development of domestically based alternatives to expensive equipment and software. Declines in computer and component prices have contributed to the development of a flourishing trade in locally assembled systems (Guadarrama, 1998). A new PC adequate for basic Internet use costs as little as US$300 in most parts of Mexico. Moreover, PCs considered inadequate or obsolete in the United States are actually still useful to many Mexicans.

A thriving “Plaza de Computacion” in Mexico City has been in existence for nearly 20 years and rivals computer market districts in the U.S. and Asia. Its offerings include a variety of both used and new hardware products including finished systems, networking equipment, peripherals, and a large selection of PC components and parts. The existence of a thriving black market trade in pirated software, while morally questionable, presents an alternative for low-income consumers, aiding digital development. It is also indicative of the widespread diffusion of computer technology. Sellers of unauthorized copies of software programs are operating in virtually every Mexican city (see Kamber, 2000).



Mexico’s government and the Internet

For a country with a history of paternalism and lack of transparency, Mexico’s government has been engaged in some interesting efforts to use the Internet to augment and broaden public contact with, and participation in, government. Compared to the private and educational sectors, government agencies were slower to adopt the Internet. However, both the national government, as well as a majority of state and local governments have caught up, and in some ways even surpassed the business and university sectors. Every Mexican state has a Web site and many have multiple Web sites representing different state government agencies. In addition, virtually every major Mexican city government has a Web site, as do a large number of smaller cities and towns (Gutierrez and Islas, 2000; Authors’ research).

In the past, public sector Internet initiatives were slow to develop, in part due to skepticism about the utility of the Internet in a country where many children still attend school in adobe buildings and the majority of households do not have phones (Scheeres, 2001). According to data compiled by INEGI (2003), as of 2000, 94 percent of central government agencies and 75 percent of state agencies were utilizing the Internet for the provision of services and information to the public. Since 2001, domain registrations have grown an average of 25.5 percent per year and now number over 2000 (NIC–Mexico, 2005).

Another important development is in the growth in the space to more than double those of registrations (see Figure 6). This is a sign that a variety non–governmental organizations, charities, political groups, religious groups, etc., are establishing a presence online — a sort of flowering of Mexican online civil society.

Figure 6 Source: NIC Mexico
Figure 6 — Source: NIC–Mexico

The Mexican government is also working to broaden public computer and Internet access by setting up “digital community centers” in cities and towns throughout the country. The Mexican government initiated the e–Mexico project in 2001, with the goal of linking 10,000 communities to the Internet by 2006 (Scheeres, 2002). According the e–Mexico Web site there are about 7,200 digital community centers throughout the nation (e–Mexico, 2005).

E–Mexico also maintains a portal linking to four specially developed federal government sites: e–Aprendizaje, e-Economia, e–Salud, and e–Gobierno [5]. These sites provide information on government programs, education on public issues, and access to governmental processes. E–Mexico also provides an integrated system of state and municipal government sites with links to all 31 Mexican states. It also has links to 71 “digital cities,” defined as municipal Web sites that “permit intensive use and access to the latest technologies to increase opportunities for development, better the quality of life, and augment the social and economic well being of the urban population” (e–Mexico, 2005—author’s translation). The stated ultimate goal is to get 98 percent of Mexicans online by 2025 (Avila, 2002).

The design of other government sites like Tramitinet (transaction–net) and Compranet (buy–net) are intended to enable ordinary citizens and businesspeople to conduct business with national and local governments more efficiently. The Mexican government is also using the Internet to combat corruption and make government activity more transparent. Mexico’s Secretariat of Public Education has created a Web site to teach children about corruption.

Government agencies have also received mandates to post copies of official reports of their activities and management on the Web. In 2002, a team of journalists searched Compranet and discovered authorizations of more than US$1 million for upgrading the presidential residence, including US$500 bath towels—this lead to “Towel–gate,” the first major scandal of the Fox administration (Scheeres, 2005). Using the Internet for government–citizen exchanges is not only potentially more efficient, but also eliminates direct contact, which provides the opportunity to solicit bribes.

Projects like e–Mexico certainly have the potential to help overcome the telecommunications divide, at least in this case, by enabling lower–income Mexicans to have a better experience in dealing with their government. However there is clearly a top–down aspect to the e–Mexico project: e–Mexico is predominantly a broadcast medium. This is not necessarily a bad thing, since the increased public availability of government information is a positive step.

The same problems hampering Internet access in general limit the types of interactive services that government might provide, even through numerous and widespread kiosks. For example, there are only 13 digital community centers in Tijuana. A two–tier system could develop. First would be those who have the means and the ability to fruitfully interact with government using the Internet. The other tier would consist of those Mexicans for whom Internet access is difficult and/or for whom using the Internet to access government has little practical utility.



E–commerce in a borderless world

Lessening the impacts of disparities in computer ownership and access to telecommunications services addresses the problem of the digital divide in Mexico at the micro, or individual, level. At the macro level, the problem moves from individual access to a country’s place in the global economic hierarchy. Will the Internet, a technology created by developed nations, reinforce old, or create new, exploitative relations with developing nations? Alternatively, is the Internet a technology potentially enabling developing countries to access previously unanticipated pathways to development (as in the case of services outsourcing in India, for example)?

The Internet does not occupy space in the conventional sense. It is a homogenous space structured by protocols and domains expressed in code (Lessig, 1999; Mitchell, 1995). It is a potentially borderless realm where all nodes are essentially adjacent to each other. Insofar as the Internet facilitates exchange of tangible goods (take Internet merchants such as, for example), e–commerce is at least partially subject to the frictions inherent to physical transfer of matter such as time, distance, security, weather, and borders. The transfer of information–based goods, such as music, software video, text, or anything else reducible to bits, is a trivial matter. More than anything else, language and cultural barriers limit communication over the Internet.

The Internet’s borderless character presents Mexico with a conundrum. Mexico can easily access foreign markets and audiences but foreign entities can just as easily access Mexico. The large Hispanic market in the U.S. is an aspect of this. Ranked by population, the United States is the fifth largest Latin American country numbering about 37.4 million Hispanics (2002 estimate; U.S. Census Bureau, 2002). The Census Bureau anticipates that in 2050 the U.S. will rank third with about 102 million Hispanics, nearly the current population of Mexico (U.S. Census Bureau, 2004).

This large Hispanic population, the majority of whom speak Spanish, provides rich market potential for both Mexican and U.S. firms. In addition, U.S. firms who have experience dealing with the domestic Hispanic market can easily seek customers or audience in Mexico.

Non–Mexican firms have come to dominate parts of Mexico’s Internet market. Foreign firms produce much of the news, entertainment, e–mail, and other content consumed by Mexican Internet users. For example, of Mexico’s six major Internet portals three (AOL, T1MSN, and Yahoo! Mexico) are wholly or partially owned by U.S. firms. T1MSN is a joint venture between Microsoft and Telefonos de Mexico (Telmex). A fourth, Terra, is a Spanish company with its Americas headquarters in Miami.

The Internet complicates the question of a firm’s location. U.S.–based firms routinely target Mexican audiences while Mexican (or other Latin American) Internet start–ups are also spending effort on developing markets in other Latin American countries. StarMedia is the most well known example of this. Funded primarily by U.S. investors, StarMedia has its headquarters in Miami and has sub–portals for most Latin American countries and for the U.S. and Spain. Many pan–Latin America–focused e–commerce businesses include U.S. Hispanics as part of their marketing strategy. Moreover, many U.S. e–commerce firms, either intentionally or unintentionally, have customers located somewhere in Latin America.

Interviews and discussions with Mexican Internet users indicate a preference for U.S.–based portals, news and information sites, and Internet retailers. Our research indicates, at least anecdotally, that MSN Hotmail has widespread popularity among Mexicans, due in part to the popularity of the Mexican portal T1MSN. A joint venture between Microsoft and Telefonos de Mexico, T1MSN has a registration page in Spanish, interestingly, once a user has signed up, they are linked to the U.S.–based Hotmail page in English. Reasons for the desirability of U.S.–based services appear to include security concerns, site quality, trust, and the overall appeal of U.S.–based sites and brand names.

The borderless characteristic of the Internet implies that it is more accurate to think of a Pan–Latin American or Pan–Hispanic Internet than an Internet bounded by national borders. Given the underdevelopment of many consumer markets in the Latin American context, important e–commerce startups such as portals, e–retailers, and finance sites, need to focus on as wide a market area as possible.

The possible direct benefits of e–commerce to Mexican consumers are questionable. In 2000, at the peak of the bubble, only 22.5 percent of e–commerce transactions were in the business–to–consumer space, and projections are that most Mexican e–commerce will continue to be in the business–to–business space (Palacios, 2002). The full flowering of retail e–commerce is dependent on outside factors such as the overall health of the economy and the state of the ancillary infrastructure. Most Mexicans have neither credit cards nor bank accounts. The reality is most retail e–commerce in Mexico is, and will likely remain for the foreseeable future, an elite activity and those who are able to buy on the Web are likely to choose foreign Web sites and products over domestic ones.




There are telecommunications and digital divides in Mexico. Large segments of the populace have little or no access to both computers and the Internet. Many schools and universities have inadequate information technology resources (or none at all). Lags in technological development keep bandwidth low and hard to find, and e–commerce is essentially still in its nascent stage. However, as we have shown, not all is bad.

The World Bank classifies Mexico an upper–middle–income country (World Bank, 2005) although domestically there are wide disparities in income. It is also possible to think of Mexico as occupying the middle–tier in terms of information technology (Flores and Gaspar, 1997). Mexico continues to develop is its information technology infrastructure and more and more people are able to access the Internet. The number of users who have access at home is up and increasing numbers of businesses and organizations have a presence on the Web. Perhaps the most surprising change is how the Mexican government is using the Web to make itself more accessible and transparent. The Mexican case provides an excellent example of how developing economies can move away from a digital divide toward digital development.

The digital divide is not “digital” in the sense that digital technology causes it, any more than a luxury car divide would be the result of luxury car technology. Access or lack of access to digital technology is not inherent in the technology itself. The means of transport and communication have a unique character vis–à–vis their key role in economic development and social cohesion. It is in the interest of any nation or city to develop transport and communication, both publicly and privately.

Internet access is only one area where improvement could help Mexico. Universal telephone service, a more reliable and efficient post office, better schools, and improvements to mass transportation, are just some of the things as important, if not more important, than broadening access to information technologies. The success India is having with digital services outsourcing probably has more to do with an excellent educational system than technology in the strict sense.

The question comes down to whether the Internet is a viable tool for reducing poverty and inequality in conjunction with other social forces. The context is all important here; simply broadening access on its own will likely have little effect. A poor person with Internet is still poor, and while Internet–based commerce and communication have the potential to help economic growth, it is not the sole solution. Moreover, the ways the Internet is used are also important. The enhanced ability to communicate must serve in a social context in which enhanced communication can bring direct benefits. End of article

About the authors

James Curry is a professor in the Social Science department at the Colegio de la Frontera Norte in Tijuana, Mexico. His interests include the economics and culture of the Internet, economic globalization, and the economic sociology of the U.S.–Mexican border.

Martin Kenney is a Professor in the Department of Human and Community Development at the University of California, Davis and Senior Research Associate at the Berkeley Roundtable on the International Economy at the University of California, Berkeley. He has researched and written about many topics related to technology. His most recent interest is business services outsourcing in India.



1. A domain name locates an organization or other entity on the Internet, such as While Internet hosts have IP addresses, not all host computers have domain names, i.e., are Web site servers. The domain name system organizes domain names in a hierarchical fashion based on type, geography, etc. For example: Top–level geographical domain names include for the United States and for Mexico. Top–level types refer to the group or individual running the Web site and include for commercial Web sites and for government Web sites. We also note that the number of registrations does not necessarily coincide with the number of Web–based e–commerce businesses. Many sites are either primarily informational, or are held by individuals for purposes other than e–commerce.

2. According to the Mexican census, the municipio of Tulancingo’s population is about 121,000. A municipio is similar to a county in the U.S.; the figure of 70,000 is a rough estimate by the authors.

3. Based on unfinished research by the authors.

4. This is not a definitive number; it is used only to illustrate the point. The authors have been unable to find any reliable data on the number of Wi–Fi hotspots in Mexico.

5. These are e–learning, e–economy, e–health, and e–government respectively.



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Editorial history

Paper received 6 December 2005; accepted 15 February 2006.

Contents Index

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Digital divide or digital development? The Internet in Mexico by James Curry and Martin Kenney
First Monday, volume 11, number 3 (March 2006),

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