Mexico proposes telecom reforms aimed at increasing competition

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Mexico’s president, Enrique Peña Nieto, yesterday announced a range of reforms for the telecommunications sector designed to promote increased competition. The country’s telecom sector is currently controlled by América Móvi, leader in both mobile and land lines, and Grupo Televisa.

According to the proposed reforms (check Spanish version here), there were three main aims of the initiative:

  1. The strengthening of the rights associated with freedom of expression and information and the establishment of the right of access to technology information and communication, and broadcasting and telecommunications services, including broadband.
  2. The adoption of measures to promote competition in broadcast and pay-TV, radio, fixed and mobile telephony, data and telecommunications services in general, in order to ensure effective competition in all segments.
  3. Creating conditions to substantially increase infrastructure and the requirement of making more efficient its use, which has a direct impact on the reducing prices and increased quality of service.

The proposed bill also eyes to strengthen Mexico’s anti-trust regulator fines (Comisión Federal de Competencia – CFC); to create a specialized court focused on competition; to reinforce the autonomy of telecom regulator Federal Commission of Telecommunications (Cofetel); to develop a robust backbone for telecommunications; to promote a digital agenda and broadband access in public buildings; and to promote the competition in radio, television, and in telephony and data services.

In addition, the awarding of concessions to provide telecom services will no longer be a federal decision, and will be based on technical rather than political criteria, according to the president.

Luca Schiavoni, policy and regulation analyst at Ovum, noted the proposed reforms should be welcomed by almost all stakeholders. “While still at the proposal stage, the objective to create a stronger, more independent regulatory body is something the Mexican telecoms sector urgently needs, and directly addresses the problem of the lengthy and confusing regulatory process that the industry faces at present,” Schiavoni highlighted.

In his speech, Peña Nieto said that the reforms present challenges to companies in the sector, but also new opportunities to grow.

As pointed out by Forbes, the new bill grants regulators the power to break up phone and TV providers that control more than 50% of national market share. Companies that are deemed monopolistic could be required to rent parts of their network to rivals. The initiative will also allow an increase of foreign participation share in television from 49% to 100% and from zero to 49% in radio.

According to Ovum’s recent Regulatory Scorecard 2013, Mexico ranks poorly across the board compared to neighboring countries as a result of an unclear regulatory framework in which multiple bodies come together to create regulation, slowing down the process and often overlapping or conflicting one another.

“Mexican telecoms markets are highly concentrated, and this has affected users’ uptake and ability to benefit from lower prices both in the fixed and mobile sectors. Mexico is a rank outsider compared to other Southern and Central American countries, which generally have good levels of competition in mobile; concentration has also resulted in a recent slowdown in mobile penetration. The dominance of Telmex has not been adequately addressed by regulation so far, with the incumbent still holding a share of mobile subscribers close to 70%,” Schiavoni noted.

According to the latest numbers from the Telecommunications Sector Production Index (ITEL), Mexico’s telecommunications sector grew 15.1% during the third quarter of 2012 compared to the same period of 2011. The report, released Cofetel, showed that mobile subscribers in Mexico totaled 98.9 million in September 2012, which represented a penetration rate of 85.8%.

>>>To better understand what is happening in the Mexican wireless market, download the free RCR Wireless News feature report in both English (download here) and Spanish (download here). The report presents a great overview with insights from several specialists about the telecommunications sector in Mexico.

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