A new bill proposed by Mexican President Enrique Pena Nieto
early this week highlights several measures to reform its telecom
and television industry. The main objective of introducing this
bill is to bring greater uniformity and transparency in the
sector and to curb the concentration of power lying with
predominant players who dictate market
A major highlight of this bill is to introduce a new
regulatory body -- Federal Telecommunications Institute -- that
replaces the existing body -- Cofetel (Comisión Federal de
Telecomunicaciones). The bill also proposes to remove the
antitrust agency -- the Federal Competition Commission -- by
allocating its responsibilities to the Federal Telecommunications
Through these amendments, the government expects strong
participation in controlling industry activities. The bill
demonstrates several key points that the Mexican government
intends to undertake. One of these include barring operators from
pushing regulatory rulings through injunctions during court
appeals. Further, the bill imposes stringent action for unfair
trade practice through stiffer penalties and may require
fragmenting a company to promote fair competition.
However, the proposal has struck a discordant note on the
Mexican telecom and television industry as it unfavorably targets
giant corporations --
Grupo Televisa S.A.
). The proposal stresses on implementation of the asymmetric
regulations that faced severe condemnation by America Movil.
The rule implies that predominant players who control majority
of the market share as in the case of America Movil will have to
pay higher mobile termination rates (MTRs) to smaller peers while
receive less from them for network interconnection. Through
Telcel and Telmex,
commands about 70% market share, while the Spanish wireless
) controls nearly 22% of the Mexican market share.
The rule has also cast the cable company Televisa under
examination as it controls over 73% of the market share in the
television business, according to market reports. The proposal
includes the creation of two new digital broadcast networks that
would compete with Televisa and TV Azteca.
In addition, it highlights creation of a non-profit television
company that would provide cable services across the country.
Further, these companies would be prohibited from participating
in any government-related spectrum auction in the future to
expand national television networks.
This is not the first time that the company has been hit by
regulatory interventions. Earlier, in 2010, Televisa abandoned
its wireless venture with Nextel de Mexico, a subsidiary of
NII Holdings Inc.
) due to prolonged legal battles.
Given the nature of the Mexican telecom and television market
characterized by extreme level of competition and
quasi-monopolistic practices, the proposed reform comes as no
surprise. The bill, if approved, would mark a pivotal role in
shaping the telecom industry in Mexico and decide the prospects
for these carriers in Mexico who have so far reaped large profits
and grown as market leaders throughout Latin America.
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