More Mexico IP Communications Stories

A new bill to be considered by the Mexican legislature would replace the current communications agency with a new entity that would have the power to make fines, introduce price controls and enforce asset sales on dominant players – as well as restrict the appeal process to any agency decisions.

According to “Ley de Amparo,” (Constitutional Protection Law), large companies can challenge government laws and regulations. The new bill reportedly calls for changes to the “Constitutional Protection Law” that would amend those rules.

The proposed Federal Telecommunications Institute would oversee both mobile and fixed telecoms markets, as well as the country’s television services, and would replace the existing regulator, called Cofetel.

It never seems to be an unusual move for a governmental agency to create a brand new agency to oversee big changes in policy, and Cpofetel is a viewed as a way to foster more competition in a market dominated by one leading provider, America Movil.

AT&T might also see implications, as it is an investor in America Movil, which operates Telcel (News - Alert), the leading mobile service provider with 70 percent market share.

As always with proposed legislation, the issue is whether the bill can pass, and whether substantial modifications might happen. Odds appear to be good.

According to EconoMonitor, legislators from the three major parties—PRI, PAN and PRD—appear to support it. But as always, entities harmed by the law will lobby to defeat it.

Mexico’s telecommunication sector, however, has been highly monopolized since its inception in the early 20th century, with privatization and competition only recently a reality, some would note.

Even if the bill does pass, other institutional barriers will remain in place, such as foreign investment rules.

Replacement of the existing regulatory regime is seen as advantageous for the same reason it might be reasonable to update and rationalize regulatory frameworks in the United States.

As in Mexico, different segments of the communications and entertainment business are governed by different laws. Television and radio are governed by the Federal Radio and Television law of 1960, while telephony, mobile services and Internet are largely governed by the Federal Telecommunications Law of 1995.

Whether or not the new bill can compel Telmex (News - Alert) to provide wholesale access at significantly lower rates is one part of the bill’s potential impact.

It is not so clear whether investment in separate new networks is so likely. Some might note that foreign investment up to 49 percent already is allowed for fixed networks, and for mobile networks that can exceed 49 percent.

The new bill apparently will attempt to unify telecom and media regulation, and replace Cofetel, viewed by some as ineffective as it is captive to the telecom industry.

Just as important: the bill is expected to simplify the process of creating new facilities-based networks. 

Telmex probably would see heavier regulation as well. For observers who wonder why Silicon Valley companies now spend so much money lobbying, the current Mexican bill indicates why such spending is deemed necessary.