Mexico's Congress Blesses New Telecommunications Overhaul

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By Emily Pickrell  

July 9 — The much-awaited implementing laws for a new telecommunications regime in Mexico were passed by the lower house of its Congress, paving the way for President Enrique Pena Nieto to sign them into law.

The 318-107 vote July 9, which followed the Senate's approval late July 5, ends months of debate over a telecom overhaul that supporters say will take on current monopolies in the telephone, internet and broadcasting sectors. The regulations are designed to lower the relatively high prices Mexicans pay and remove barriers to competition in a sector that lags behind most of the developed world for the quality and provision of services.

“The telecommunications reform is devoted to opening the sector for more competition,” Pena Nieto told journalist and commentator Charlie Rose in a July 1 interview on PBS, noting that the increase of competition would take place “in television services, in telephony services, and especially more internet coverage throughout Mexico.”

Implementing Laws Build on Constitutional Changes

The legislation builds on earlier constitutional changes passed at the end of 2013 that gave a newly created regulator, the Federal Telecommunications Institute, or IFETEL, the power to limit the market share of Mexico's duo telecom monopolies, America Movil and Televisa. America Movil, owned by billionaire Carlos Slim, controls 80 percent of the fixed-line market and 70 percent of mobile phones. Televisa controls more than 70 percent of the free-to-air broadcasting network.

Under the new rules, America Movil will be required to share access to its lines with new competitors and limit interconnection fees. The rules also remove some of the roaming charges within Mexico for mobile phone service. America Movil announced July 8 that it plans to sell certain holdings in order to no longer be considered a monopoly player, which the legislation has defined as a 50 percent or more market share.

Critics Say Pay TV Rules Favor Televisa

More controversial have been the new laws governing the television sector, which critics say fail to limit the monopoly powers of Mexico's leading broadcaster. While IFETEL had identified Televisa, which controls more than 70 percent of the market, as having preponderant power earlier this year, under the latest regulations it will still be able to compete in the pay-television market.

Humberto Castillejos, a telecommunications lawyer for the Mexican government involved in the legislation's development, explained to journalists in a July 7 press conference that because of industry trends toward bundling services into packages of Internet, pay-TV and telephone services, the legislation defines competition using this broader approach, rather than limiting it by individual service.

Improvements to the country's telecommunications infrastructure are considered as critical to Mexico's further growth, which slumped to a one-percent near-recession rate in the first half of 2014. For example, better access to Internet services in rural areas could create access to credit for millions in Mexico through Internet banking—a growth method that has been used effectively in other developing countries.

“This is the impact of the telecommunications reform,” Pena Nieto said. “It's not really only opening competition but making sure that the competition will have an impact on the growth of the economy of our country.”

To contact the reporter on this story: Emily Pickrell in Mexico City at correspondents@bna.com

To contact the editor responsible for this story: Heather Rothman at hrothman@bna.com