On the desk at Concepción is the personal secretary of Carlos Slim Jr: a typewriter. In this antechamber of wealth, modernity and digital velocity, this vestige of mechanical typing is like an anachronism. A souvenir of what Mexico was before it became a developing country, before developing its middle class, before its digital swing. A proof of the distance travelled.
‘The smartphone is well named. It is an intelligent telephone. And everybody is soon going to have one,’ Slim tells me, tritely. In his turquoise blue tie and light blue shirt, his easy air, Carlos Slim Jr is a timid nawab. A tycoon who speaks English with a strong Spanish accent. He is also an heir.
I am at the headquarters of the company in Polanco, north of Mexico City. The Slim empire was founded by his father Carlos Slim Sr, seventy-four years, a Maronite Christian of Lebanese origin. In three decades, he became a millionaire—which is fine—heading monopolistic companies abusing their dominating positions—which is less fine. Magnate of Latin American telecoms, he is, according to Forbes magazine, the richest man in the world. It is the mobile phone that earned the Slim family its fortune. ‘When we entered the telecom sector, Mexico was at seventieth position on the international scale. We needed to wait for months together to get a landline connection. The telephone booths were always out of order. My father anticipated the role that mobile phones would play. Today, everybody has a mobile phone in Mexico.’
By privatizing Telmex, the archaic historic operator, in the early 1990s, the Mexican government, without really anticipating it, helped Carlos Slim build his empire. ‘The privatization of Telmex was, in itself, a eureka moment that gave birth to the very idea of a developing country,’ said the finance minister of Mexico in a celebrated speech. Luck or prediction? Favouritism? The fact remains that it is from this fragile concession, coupled by a bonus licence for mobile phones whose value and potential was yet unknown, that Slim was going to build a monopolistic network giving Mexico access to mobile phones (Telcel) and internet (Telmex). The businessman staked everything on the infrastructure: he installed thousands of kilometres of cables, relay towers, and then, started to deploy the fibre-optic cables. He also placed a bet on usages. His genius idea: apply the Gillette model to the telephone. Sell razors at a loss to live off selling blades. Give away telephones to sell communication minutes. ‘My dad understood that to make cellphones accessible to everyone, the handset must be subsidized. He also invented the prepaid.’
In the emerging Mexico, where the middle class have no means to buy mobile phones, this model, without contract or subscription, was a success. It did not matter that such subsidized, and very limited, mobile phones could only be used with Telcel cards: Carlos Slim was a precursor. And though this man, with three ideas a day and fewer principles, was not exactly the inventor of prepaid as he claims (it was first conceived in South Africa), prepaid phone certainly made his fortune. Today, the market for mobiles without subscription in Mexico is at 80 per cent. At forty-seven years, his elder son—who shares the same name—is the privileged heir, already the head. The senior Carlos had for him the dream of any father, but also that of Pygmalion. The blue-blooded junior, rich from his inheritance, waiting for his knighthood, can hardly wait. Truly timid and falsely sybarite, he is not so much a hotshot as the ‘son of’. With his father, who taught him prudence, it is a company they form, not just a family.
Carlos Slim Jr presides over the board of administration of both Telmex, which manages 80 per cent of landlines in Mexico and 75 per cent of broadband internet, and Telcel, which owns 70 per cent of the mobile market. Junior also heads the America Movil group, a dominant operator of mobile telephony, marketed by the brand Claro, in almost all countries in Latin America (except in Venezuela and Cuba). ‘In total, we have about 263 million mobile subscribers in eighteen countries!’ says the young Carlos Slim, jubilantly. He also presides over the Carso group, another diversified holding of mass-market retailing, banks, building and petrol industry, heavy industry infrastructure, highways and pipelines, electricity and also fibre-optic and undersea cables. In total, the Slim empire alone contributes to a third of the stock value in Mexico. Now that Father Slim has entrusted to his son the reins of his conglomerate, making him the king—and chairman of many of his boards of directors—he continues to pull the strings and watch over his 200 companies. ‘Carlos Slim Jr takes no decision without the approval of his father,’ says, a few months later yet again in Mexico, Rafael Tovar y de Teresa, the minister for culture of Mexico.
‘We are first and foremost a telecommunications group and that is the sector in which we are the most powerful on an international level,’ justifies Carlos Slim Jr. ‘Soon, everybody everywhere in the world will be able to access internet on a smartphone. This is the ongoing revolution. Universal connection to the internet is going to be the rule.’ Unmindful of reproaches aimed at his company, Carlos, formerly very powerful in the tobacco business, lights himself a Marlboro. Hanging on the wall is a vintage guitar belonging to a Mexican rock band, El Tri, and a Formula 1 suit, the other passion of the boss. A Mexican flag ripples in the air. Scattered here and there are a dozen owls, the mascot of Sanborns, one of the main Mexican retail companies, of which Carlos Slim Jr is the proprietor.
From the window of his office on the tenth floor, one can spot the square named after his parents and the Soumaya Museum of Art, named after his mother, also of Lebanese origin belonging to the Gemayel family, but no more today. A spectacular work of architecture, somewhere between the Guggenheim Museum in New York, given its snail-shaped interior, and the Walt Disney Concert Hall in Los Angeles, due to its unique materials and acoustics, the Carlos Slim Foundation Museum, free and open to the public, houses one of the largest collections of the French artist Rodin’s sculptures. (The authenticity of some of the sculptures is however debatable.)
Contemplating from this height such a jewel of architecture, without arrogance, even with a certain humility, Slim talks to me for a whole hour about his love for Lebanon, the philanthropic activities of the family to ‘do good’, the economic cooperation with the United States—a ‘priority for free trade’, of the New York Times (8 per cent of whose shares are held by the Slims) and the local rock scene (the Slim group is now an important shareholder of Shazam, a smartphone application specially designed for identifying music). The son wears clothes from Sears (a shop he owns), eats at Sanborns (supermarkets and a chain of restaurants where he heads the board of directors) and talks to me about his father who taught him to put his wealth into perspective. He whispers now, in a voice almost inaudible, and it is as if I was listening to him repeating the memorable first lines of F. Scott Fitzgerald’s The Great Gatsby: ‘When I was small, one day, my father gave me an advice.’ ‘Every time you are tempted to criticize somebody,’ he said, ‘think first that everybody on this planet did not get the same advantages as you.’ Coming out of his reverie, Slim says, ‘My father taught me something very simple: we are down here only as simple administrators of wealth. This is the family philosophy.’
On coming out of Slim’s office, his Mameluke gives me an inquisitive look. The heir of the empire has discrete but heavily armed bodyguards—the country is known for the kidnapping of politicians and assassinations by drug traffickers. His praetorian guard keeps watch. Especially since in 1994 a member of the Slim family was kidnapped and released only after the payment of a ransom of $30 million. At the doorstep, Slim stops me with a gesture of his hand—he seems to have suddenly transformed into the imposing chairman of a multinational group. ‘It is no more the question of knowing how to connect everybody. At Slim, we know how to do that. The question is what would we do, in terms of content and liberties, when we are all connected.’
Dressed in a white shirt, with an orange and fluorescent watch on his wrist, Antonio Martinez Velázquez is twenty years old. ‘In Mexico, the price of mobile communications is exorbitant and internet connection is both one of the slowest as well as the most expensive in the world! Whose fault is that? Carlos Slim’s. What we are asking Slim to do is to make sure we get high-speed internet. This is not the case and it is very expensive. It’s his job. As for the rest, we Mexicans can manage.’
We are seated at the café of the book store El Péndulo, in the Zona Rosa area of Mexico, and Antonio is angry. Half-geek, half-lawyer, he calls himself an ‘IP lawyer’, a pro-internet advocate. He clarifies, in case we have any doubt, ‘I am not a pirate, even if I do defend pirates!’ He is a genius of the Mexican Web—he has managed the site of the main television channel TV Azteca and works for a British NGO which defends freedom of speech online. In a country of 120 million people, only 10 per cent of the population has access to internet at home (broadband, ADSL—Asymmetric Digital Subscriber Line—or fibre), even though 88 per cent owns a mobile phone. Thus, he denounces all that slows down the democratization of technologies, that does not give good coverage or high-speed internet access. He has Carlos Slim on his radar. He points to his interests that nullify his qualities and highlights the faults of the Mexican government, incapable of putting an end to the monopoly of Telmex and Telcel. ‘This monopoly prevents all competition in the telecom field. We need more regulation,’ stresses Antonio Martinez Velázquez.
At the headquarters of Cofetel, the federal telecom regulator of Mexico, on No. 1143, Insurgentes Boulevard, the discourse is muted but the arguments are similar. ‘Internet access doesn’t touch more than 30 per cent of the country’s population, even if we add the connections at home, in cafés, in offices or on phones. It is one of the worst internet penetrations in the world. We are completely underdeveloped, even though the man who owns this sector is a billionaire and a Mexican,’ says Mony de Swaan, the director of Cofetel. He clarifies, ‘We can’t penalize distortions of competitions, nor the abuse of their powerful position. We are without doubt the only regulation agency in the world which has no sanctioning power. And yet, everybody knows the solution: more competition in the telecom field and better coverage.’ Mexico depends on a double monopoly: the Carlos Slim group in telephones and Televisa in television. ‘It is necessary to break this duopoly, there is no other solution. But for now, it is us who are broken! You must have read it, of course, that they want to dissolve our agency …’ (In fact, Cofetel was dissolved in 2012 and replaced by a new regulatory agency, Instituto Federal de Telecomunicaciones. In 2014, the then Mexican President Enrique Peña Nieto launched sweeping reforms to tackle the double monopoly of Carlos Slim and Televisa. Effective from January 2015, the law ended roaming charges and boosted competition among cell phone companies.)
The Mexican internet users call her ‘bimbo’. Her opponents call her ‘Barbie doll’. Sitting in a bright red armchair, wearing bright red shoes and fingernails painted bright red, tight-fitting jeans, a thin, pink belt around the waist, exaggeratedly blonde, Alejandra Lagunes Soto Ruiz may well have been the presenter of a talk show on Televisa or a damsel in distress in a telenovela. But she is the special adviser to the president of the Mexican republic, Enrique Peña Nieto, in charge of digital strategy. She gives me a good impression.
‘We need to shift gears. I am in the process of launching a new digital agenda and we are really going to let go of what the previous governments were doing,’ says this former employee of Yahoo Mexico, who has also worked in MSN, Google and Televisa. ‘I focus on open data, innovation and Cloud, but we have this one real priority: connect the country to the internet.’
While listening to her, I observe a cactus placed on her work table: it stands in need of water. Written on the pot: ‘Mexico Concetado’ (Mexico Connected). Alejandra Lagunes reads my mind. ‘You see this cactus is capable of living. Even without water. That is what Mexico is. We live here in the desert. We have no water, but we can be connected. And internet will help us progress.’
Here is the paradox of Mexico. On one hand, a young country—urban, dynamic, witnessing rapid growth, an emerging economy; on the other hand, a country ridden with corruption, monopoly and drug traffickers. ‘The digital can help rid us of corruption,’ says Alejandra Lagunes daringly. I show my scepticism. She does not cave and moves on to the subject of ‘zonas de miseria’, as they call the slums here. She is convinced that internet will help the poorest Mexicans to come out of poverty. ‘In these places everyone has a mobile phone. That’s how they have access to internet, and not through a home connection,’ explains the adviser to the Mexican president, while constantly handling three mobile phones. According to her, the government’s strategy is to count on the middle class and, relying on them, bring the masses and the whole country out of poverty.
The middle class? Nothing is more difficult to define. For the World Bank economists, the middle class consists of the population whose per capita revenue is somewhere between $10 and $50 a day. Above that, one is ‘rich’. Below that, between $4 and $10, one is ‘vulnerable’ or lower middle class. And if one has less than $4 a day, one is considered ‘poor’ (OEDC uses another mode of calculation and counts as ‘middle class’ everybody who holds between 50 per cent to 150 per cent of the average income of the country).
While the economists are comparing revenues, sociologists focus on other criteria such as education levels, professions or household expenses—for example, the ability to afford a car. In any case, the expansion of the middle class in Latin America has been spectacular in the last dozens of years. Between 2003 and 2009, it expanded, according to the World Bank, from 103 to 152 million people, a 50 per cent increase (according to OEDC, the figure is almost double, at 275 million, proving that the definitions and numbers differ greatly). And poverty would have reduced greatly during the same period, from 41 per cent to 28 per cent of the population of Latin America. Witnessing a rapid social climb, the Latinos are changing their lifestyle. Child education is increasing, access to university is growing, consumerism goes beyond the products that serve basic needs. There are more cinema-goers, especially in the multiplexes whose number is multiplying tenfold in Mexico as well as in Brazil; the development of paid TV channels is also linked to the expansion of this social category. Henceforth, belonging to the middle class goes by two new symbols: access to internet and possessing a mobile phone. That is how the smartphone, combining both, is becoming the synopsis of the emergence of Latin America.
Mobility of the Brazilian middle class
‘The nightmare of the middle class is to be “Orkutized.”’ At the headquarters of the publishing and media group Abril on United Nations Avenue in Sao Paulo, Carlos Graieb manages the Veja site. This premier Brazilian news magazine interprets the lifestyle of the population every week. And though it is read by the cultivated and upper classes, it mainly observes the middle class. ‘Orkut was a pioneer site in Brazil. It is a social media like Facebook,’ explains Graieb.
Orkut was created by a Google employee in January 2004, that is, a little before Facebook. ‘It was an innovative site, very much the trailblazer,’ he says. ‘In Brazil, it had tremendous success. Available only in English in the beginning, it was adopted by the elite, before slowly being available in Portuguese. A massive number of the middle class soon took to Orkut and it became a major social networking site.’ In 2012, thirty-three million active users were still registered on the site, predominantly from Brazil, with a great penetration in India and Japan (on the contrary, most users in the United States are Brazilian expatriates). The site is now managed from the Brazilian city of Belo Horizonte, by Google Brazil.
I create an Orkut account to understand the singularities of this social network. The interface has been given a fresh outlook and the network is now connected to Google+ (Orkut could have been the mould for the development of Google+ but the Mountain View firm did not choose this option—this might have been a mistake). Adapted to use on computers, this social network is not made for smartphones. It is particularly more hierarchical than Facebook, more clannish. ‘All social classes mingle on Facebook. On Orkut, they are more distinguished,’ explains Graieb. Another difference: the user is informed of the people who visit his profile, like on LinkedIn.
‘Orkut’s problem was popularization. Though it came first, it slowly became obsolete. Having been adopted by the young from the popular classes, the network was seen as low-end, mediocre and less and less sophisticated. The upper classes abandoned it because it became cheesy. Therefore, the word ‘orkut’ itself became common parlance, slang for unfashionable. Today, the verb ‘orkutize’ is frequently used in a very pejorative way. And the Class C in turn, started leaving Orkut to migrate to Facebook,’ analyses Graieb.
In Brazil, the scholars generally identify five social classes, from the richest (A) to the poorest (E). In between is the Class C. It is defined by those who earn between $6.10 to $26.20 a day. This formula flourished and everybody now talks of Class C as the ‘Lula Class’, named after the former president, Lula da Silva. Dilma Rousseff, who succeeded him, increased the references, throughout her campaign, to the Class C and promised to transform Brazil into a ‘community of the middle class’.
‘Orkut was the site for the Class C,’ says Régis Andaku, one of the heads of the Brazilian portal Universo On Line (UOL). The head office of UOL is situated in Avenida Faria Lima in Sao Paulo, where I meet him. Andaku is of Japanese origin and grew up in a poor family in rural Brazil. ‘We created, in parallel to the UOL, a portal specifically designed for the Class C (bom.com.br). It has select content and gossip, and focuses more on sport. People speak a simpler language here, clarify more abbreviations here than on the mail UOL portal which targets the Class B,’ describes Andaku. He adds, ‘With the economic development of Brazil, a part of the Class E, which lives in shanty towns and depends on the government’s social programmes, has moved up into Class D. They are Brazilian people with a salary and a legal dwelling. As their income increased, the Class D itself was able to attain Class C, which is in turn considerably enlarged. Therefore, we consider that half the Brazilians are a part of Class C.’ Andaku says that there was an ‘incredible’ social ascendency but at the same time ‘everybody wanted to distinguish themselves from the lower classes’. ‘Orkut became the symbol of mediocrity. The result: the new Class C and a Class C+, the superior fringe of the group, moved to Facebook.’ (According to a study undertaken by TV Globo, Class A is evaluated to make up around 2 per cent of the Brazilian population, Class B 23 per cent, Class C 49 per cent, and D and E a combined 26 per cent.)
Other elements explain the debacle of Orkut. Firstly, the law of global ‘mainstream’—with the globalization of digital content, fans of Madonna, Justin Bieber or Lady Gaga are on Facebook, and rarely on Orkut. To follow these stars, the Brazilians need two accounts. A predominantly Brazilian social network, when the exchanges are international, would seem narrow and limited. And then, there is the law of ‘cool’—students and youngsters find Facebook to be more international, more intuitive and, particularly, more fashionable, even when they only contact other Brazilians in Portuguese. Finally, there is the law of market—due to a lack of means, in spite of the constant support from Google, Orkut was unable to adapt itself by developing its interface as rapidly as Facebook, especially when it came to media content and the number of applications. The Brazilian social network also failed in its migration to mobile. Two-thirds of Facebook users, out of a total of more than a billion users throughout the world, access their accounts on a mobile phone or a tablet. With the generalization of smartphones, Facebook is oriented towards mobility—it is becoming, in its own words, a ‘mobile-first company’. In the medium term, the American company wants to replace emails with its collective messages, SMSs by its direct messages, contact lists on the phone by its friends’ lists. Soon, according to the plan of the Menlo Park firm, it will not be necessary to have someone’s telephone number, nor their email address, if one is on his friends’ list on Facebook. It is the generalization of social media on mobile, to the point where one now calls the mobile a ‘social phone’. Not having anticipated this change, Orkut was edged out in the space of a few months (In the summer of 2014 Google finally announced the definitive closing down of Orkut).
The same fate befell the Brazilian search engine called ‘Cadê?’ (literally ‘where is?’). Effective in the early years of the millennium, it was bought in 2002 by Yahoo, before its decline and integration into the American portal. Today, Google, Facebook, and to a lesser degree, Twitter, have become dominant in Brazil, a country which, with its 200 million people and vigorous growth, represents a decisive market for the giants of the American digital scenario. After the United States, and now before India, it is in Brazil that Facebook has managed one of its best breakthroughs, with more than sixty-five million users. Brazil has the second highest number of Twitter accounts. And though less than 40 per cent of Brazilians have internet access at home, the mobile penetration of the internet is not less than that, even officially touching 125 per cent of the population. (The number of SIM cards sometimes exceeds the number of inhabitants, due to the multiplication of chips, especially in the countries where prepaid telephones are dominant. Many telephones are also multi-SIM, like those of Venko, a Brazilian manufacturer which accommodates four SIM cards at a time, automatically changing to the card that offers the best prices. According to a study undertaken for TV Globo, the real mobile penetration in Brazil would be 87 per cent).
One can think that the failure of Orkut and Cadê? ensures the victory of social networking sites, platforms and the American internet giants. And yet, is their content more globalized than territorialized? Not necessarily. It is due to the fact that Facebook was able to adapt to different languages and make conversations in Portuguese possible, and Google offers very satisfying search results to the innumerable local requests, they are used widely in Brazil. Their success is the result of this territorialization, and mobile yet again accentuates this process.
Régis Andaku of the UOL portal thinks that Brazil is on the brink of a fundamental mutation. ‘For the moment, mobile phones are essentially feature phones (basic models)—they are not yet “smart”. To a great majority these gadgets work with prepaid cards. But in five years, things would have changed,’ predicts Andaku. ‘Smartphones will dominate the market.’ According to him, Class C will adopt the smartphone and ‘Classes D and E will naturally follow’. However, Andaku asks himself, ‘How to attract this Class C? How to talk to them without infantilizing them? How to make it progress without obstructing it? That’s what we all want to do in Brazil. It is not easy. They don’t speak English and they are primarily interested in local content. The Class C helped make TV Globo’s and our success at UOL, but today it is reaching its limit. It is unable to reach Class B, which is better off. Therefore, it accumulates certain frustrations which come out as feelings of discontent and a concern for distinction, and that’s precisely what makes it reject the social markers of Classes D and E.’ A few weeks after this interview, the educated Brazilian middle class revolted because of a 20 per cent increase in the cost of bus tickets in Sao Paulo (around €0.06), it spearheaded major street protests—more than a million people protested in hundreds of cities, in July 2013, against poor public services, corruption and the cost of living.
Today, around seven billion mobile phones are in use throughout the world for a population which is only a little more than that (7.1 billion). Despite the fact that an individual, as we have seen, can have many subscriptions and pre-paid SIM cards, thus distorting the numbers, International Telecommunication Union (ITU), a United Nations Agency, estimates that mobile penetration has already attained 96 per cent on the international scale. ‘The numbers are even higher in developing countries than in the developed countries,’ says Hamadoun Touré, general secretary of ITU from Mali, whom I interview in Geneva. Internet access is in itself strongly rising, already reaching 2.7 billion people, that is almost 4 per cent of the world population, according to Touré. Developed countries, unsurprisingly, are ahead of the rest of the world when it comes to internet, but the rates are rising everywhere. As for mobile internet, it is also rising at a rhythm of 40 per cent per year—more than two billion people have access to it. Here again, the inequalities are strong, with 70 per cent penetration in Europe and hardly 11 per cent in Africa. According to the predictions of ITU, a major portion of the world population will have internet on smartphones by 2025. Wireless would become the norm and the wired an exception. And thus, we will go from 2.7 to more than six billion people connected to internet—a spectacular revolution.
It is estimated that 300 million people already belong to the middle class in India and that another 300 million would be joining them. In China, the middle class comprises 400 million people. In Brazil, almost 100 million. In Indonesia, Columbia, Mexico, Turkey, and even in Egypt, the numbers which are as impressive, are rising. The future of technology is evident through these numbers. And the future is mobile.
Three Chinese manufacturers—TCL, ZTE and Lenovo—are already working towards manufacturing a low-end smartphone priced at $50. For its part, the British Datawind is testing an Android tablet in India that is around $30. In 2011, the average price of a smartphone was $443. Even if the prices of the products of the American Apple, Korean Samsung and even the Chinese Huawei will not be less than $100 for many years, the spectacular decrease in the prices of basic smartphones will galvanize the market. In 2013, a billion new smartphones were sold around the world.
In many ways, a certain digital optimism reigns today in emerging countries. From Mexico to Beijing, from Mumbai to Dubai, from Moscow to Rio, the people I have met, during this survey of ‘emerging’ digital capitals, believe in digital development. Alejandro Ramos Saavedra, director of digital strategy for Telmex, says, as I interview him in Mexico, ‘Nobody sees internet as a threat here in Mexico, but as an opportunity.’ For his part, Hamadoun Touré, at the office of the United Nations, is glad, about the ongoing changes: ‘In 2000, there were 500 million mobile subscriptions in the world; there are seven billion today. In 2000, there were 280 million people with internet access; there are 2.7 billion today.’ The others are more sceptical: the billionaire Xavier Niel, the all-powerful head of Free, the French mobile and internet operator, interviewed in his personal hotel at the headquarters of his company in Paris, tells me, ‘if I knew what the mobile phone would be in ten years, I would be rich’. Others are surprised that they are still underestimated: ‘“A developing country?” Isn’t that a bit condescending to Brazil?,’ asks Roberto Irineu Marinho, director of TV Globo. As for Carlos Slim Jr who is also optimistic, he sees the future of his empire through the prism of demography, ‘A problem that became an opportunity’. And he repeats, ‘The demography is no more an obstacle for a country like Mexico, it is an asset.’