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Spanish Re-Conquest of Latin American Countries

Review by
Manuel Chavez  
Michigan State University

Latin American Telecommunications. Telefónica’s Conquest, by Gabriela Martinez. Lanham and Boulder: Lexington Books, 2008. ISBN-13: 978-0-7391-2474-1. 152pp.

It is always important for communication and journalism scholars to read case studies that illustrate the evolution, reach, and control of telecommunication companies in developing societies. This is especially critical when the case study focuses on a region where despite the multiple examples of foreign companies expansion and control, little is published about them. The case of Latin America is without a doubt the prime example of this phenomenon, where Mexico, Brazil, Colombia, Argentina, and Peru have rich examples of transnational telecommunication giants and limited scholarly work describing and examining their history and operations.
 
The book Latin American Telecommunications. Telefónica’s Conquest written by Gabriela Martinez is a welcomed, and needed, contribution to the study of large telecommunications companies operating in developing countries. The book addresses the evolution of Telefónica, a Spanish telephone company that evolved from a domestic landline provider to a major supplier of cellular and Internet services in Latin America, Africa and Europe.
 
The book has 152 pages and seven chapters where Martinez provides a very detailed account of how Telefónica started at the beginning of the 1920s and its evolution to become a European global telecommunications company in the first part of the 2000s. She makes a clear and elaborated argument to show how Telefónica moved from semi-public to semi-private. The book shows how the Spanish government, independently of its political ideology, stimulated and protected the company and at the same time demanded that its goal needed to include national and public interests. Interestingly enough is to learn that U.S. based ITT (International Telephone & Telegraph) was the first company that operated telephones in Spain under a 20 year license that would, in time, to become Telefónica.

Telefónica currently is one the largest telecommunication companies in the Spanish and Portuguese speaking countries with assets of $80 billion dollars. After the European Union accepted Spain's membership, Telefónica received signals to expand, diversify and internationalize and that was the beginning a clear strategy to reach in Latin American countries. As Martinez documented in chapter three, the focus of Telefónica was not only on telephone services but also in Internet, cable, TV, and radio.  Martinez does a good job in showing how global telecommunication companies can become highly diversified to expand their market share in other countries.

In chapter four, Martinez talks about the presence of Telefónica in South American countries, including Brazil, Argentine, Chile, and Peru, where the company has been able to create a virtual monopoly of fixed and mobile telephone services. In fact, according to the book, Telefónica is the largest provider of Internet services with its subsidiary Terra.  She underlines the importance of Latin America for Telefónica profitability since 40% of its total revenue comes from countries in the region. This chapter shows how the Spanish telecomm company turned its attention to Latin America – simply because it was a “natural market.” The notion of a natural market for Spanish Telefónica was due to historical legacies, continuing exchanges between Spain and Spanish speaking Latin American countries, and more importantly language and cultural similarities.

In chapter six, Martinez talks about the transformation of some of the traditional operation of Telefónica in the world by increasing social responsibility and philanthropic goals in the county, she lists programs such as youth sports, preservation of historical monuments, educational programs, and expansion of rural telecommunication infrastructure. The chapter discusses how most foreign companies facing domestic unwelcoming manifestations create these programs to create a more positive corporate image.

In the last chapter the book compares issues of usage of cellular technology. While the Peruvian examples relate to public places to access Internet, Martinez uses political mobilization examples for Mexico. Peru’s public space to access Internet is important to mention because most Latin American countries concentrate thousands of cybercafés across urban areas; the interesting paradox is that in rural areas access is more limited, more expensive, and therefore public access is more scarce. In the case of Mexico, she talks about two political events (the Zapatista movement of 1994 and the APPO teachers protesting in Oaxaca in 2004) in which the leaders of the movements used cellular phones and Internet to mobilize and expand information about their actions. The text is unclear about where the information came from – the press, scholarly sources, or personal observations. One technology use that is left out is where indigenous communities in the Mexican Southwest (Chiapas and Oaxaca), after developing niche markets for their agricultural products (coffee, mango, cocoa, papaya), use mobile and Internet technologies to monitor purchases, global prices, logistics, and supply and demand.  This is an example of how entrepreneurial indigenous populations take advantage of technology for the benefit of their communities.

This book provides valuable information about how companies emerge in one side of the world and profit from areas far and remote form the headquarters. The title is somehow misleading because the book is not about Latin American Telecommunications. It is really about the historical trajectory of a European company with investments and operations in some Latin American countries. The book shows a well-documented case study showing the evolution of Telefónica during the 20^th century in Spain and its transition to penetrate the Latin American market. It is unclear what other domestic or international competitors did during the process in which Telefónica entered in countries in the region. Also unclear is how Telefónica negotiated domestic regulations and laws and what leverage or alliances were built by the company with other Spanish companies operating already in those countries. 

The description and analysis of Spanish telephone and utility regulations and privatization policies are very complete and shed light on the successful corporate relations that Telefónica had with the government. In fact, one of the best elements of the book is the entire account of how successful the company was in collaborating and negotiating first with Spanish policy makers and then with European community officers. It is clear that the company was able to navigate the political turmoil, especially during Franco’s dictatorship, and exit from the process with an advantageous position. Even more remarkable is how the company was able to receive orientation and incentives from the European Union to take every possible advantage of deregulation, privatization, and globalization. In fact, this is what at the end accounts for the success of Telefónica, a European company of Spanish origin, in Latin American countries. 

Gabriela Martinez’s book is recommended reading for those interested in learning about transnational companies operating in developing countries. The story continues and I hope that her second book will provide us with more details about the Latin American telecommunications market. Data about suppliers, consumers, prices, assets, services, and sales is always welcome for a reader hungry for more comparative information about an industry that is in rapid expansion and restructuring.