By Dow Jones Business News,
February 13, 2014, 01:43:00 AM EDT
By Juan Montes and Anthony Harrup
MEXICO CITY--Mexico's new telecommunications regulator suffered its first legal setback, postponing a decision
Wednesday on rules under which broadcasters must offer their channels to pay-television systems following a court
A Mexico City judge Monday notified the Federal Telecommunications Institute, or IFT, that it doesn't have the
power to order the free transmission of certain broadcast channels, the IFT said. The court's opinion stems from a 2011
legal dispute between Grupo Televisa SAB, the country's biggest broadcast company, and satellite-TV provider Dish
On Wednesday, the IFT's seven commissioners had been scheduled to determine guidelines under which broadcasters
must make their channels available free to cable and satellite-TV operators and those pay-TV providers must distribute
the channels to their customers.
The IFT said its commissioners agreed unanimously to reschedule the discussion of the "must offer" and "must carry"
rules to study the judge's opinion.
Mexican telecommunications and media companies have used drawn-out legal processes to avoid regulatory actions.
This week's court ruling was seen by some as a sign the new regulators will continue to face dilatory legal challenges.
"This is a trial by fire for the telecom body. We'll know soon of what the commissioners are made of," said Javier
Corral, a senator with the opposition National Action Party.
The IFT was created last year under a telecommunications overhaul and given the power to determine dominant
companies--specified as those with market shares above 50%--and to impose measures to establish competitive conditions.
Measures can include special rules to curtail the advantages of dominant players and even forced asset sales, if deemed
At issue is whether the IFT can make resolutions before laws are in place to implement the changes made to the
Constitution last year. The enabling legislation, initially expected in December, has yet to be presented to Congress,
which is now expected to pass it by the end of April.
IFT President Gabriel Contreras said Tuesday he is convinced the regulator has sufficient powers to act before the
laws are passed, given the explicit backing of the Constitution.
The institute has a March 9 deadline for determining which companies are dominant players in their markets and
ordering measures to address competition issues. That deadline might arrive before the laws are in place.
Mexico's$40 billion-a-year telecommunications and broadcast markets have been led by billionaire Carlos Slim's
America Movil SAB, which has around 70% of the mobile market by subscribers and 80% of the fixed lines, and by Televisa,
which has around 70% of the television broadcast market and is the biggest pay-TV provider. Both are being investigated
by IFT for dominance
Televisa isn't the only broadcaster in dispute with Dish Mexico, which is a joint venture between Mexico'sMVS
Comunicaciones and EchoStar Corp. of the U.S.
TV Azteca SAB, Mexico's No. 2 broadcaster with two network channels, has called on regulators to consider Dish a
dominant company because of its relationship with America Movil unit Telmex, which would exclude Dish from free access
to Azteca channels.
Telmex, a former government monopoly that was privatized in 1990, is barred from offering TV service under its
concession, but the company has a marketing and billing agreement with Dish. Azteca and Televisa believe that via Dish
they are directly competing with Telmex and its vast resources, including millions of customers who can have the TV
service included on their monthly telephone bills.
Dish and Telmex deny allegations that Telmex has any equity interest or management involvement in Dish.
Azteca said Dish's use of its channels, which the satellite-TV operator started distributing, along with Grupo
Televisa's broadcast channels, in September, is a violation of intellectual-property rights.
Dish said the amended Constitution not only allows it to use the signals free of charge, but requires it to carry
them without charging its customers.
"We understand that there can be readings or interpretations, but we think that the constitutional norm is very
clear," said Peter Bauer, a lawyer for MVS and Dish Mexico, in an interview last week. "Every Mexican, if they can
receive those channels with a rabbit-ear antenna should be able to receive them on their systems," he added.
Eduardo Ruiz Vega, head of regulatory compliance at Grupo Salinas, which includes Azteca, said last week that Dish
is taking the Azteca signals from Mexico City and distributing them across the country, whereas the Constitution refers
to local broadcasts. Dish argued that since the signals covered more than half the national territory, it had the right
to use them.
Write to Juan Montes at email@example.com and Anthony Harrup at firstname.lastname@example.org
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