Monthly Archives: July 2014

TELECOMS IN MEXICO

Mexicox telecom

 

Last week, the House of Representatives approved the last set of regulations of the telecommunications reform launched by President Enrique Peña Nieto. This law is only part of structural changes that the current administration started in 2013. In recent visits to Mexico, the Managing Director of the IMF, Ms Christine Lagarde and the Secretary General of the OECD, Mr. Jose Angel Gurria praised the initiatives started by President Peña Nieto, with the support of the Pacto por México coalition (see previous post). Both representatives agreed that this will transform Mexico’s economy and will improve living standards in the medium term.

The main objective of the reform is to foster fair competition and to increase the productivity of the Mexican industry, especially of micro, small and medium enterprises (SMEs). According to the 2009 economic census (INEGI), SMEs represent 98% of the economic units, produce 52% of GDP and employ 72% of labour force in the country. This means that SMEs are the corner stone of the Mexican economy and therefore it is vital for the country to create conducive conditions for SMEs to flourish. In practical terms, the telecommunications reforms seeks to lower prices and increase quality and coverage of services.

The Senate passed the bill on the 4 July, while the House of Representatives ratified it on the 8 of July. In both chambers, PRD vote against it. Critics argue that there was not any real debate and that there are major gaps in the regulation. It is believed that major corporations were able to protect their interests and that is why the law took more than eight months to be finalised. However, the strength of the reform is that it is embedded article 6 of the National Constitution, which related to the freedom of speech.

While there are many other elements that can be highlighted, for those who have lived in Mexico would agree that these are significant steps that if fully implemented will bring large benefits to telecommunications users. So here are only a few of the practical aspects of the reform, but as experts would notice the extent and technical details of the reform are far beyond the scope of this post. To start the law establishes the Federal Institute of Telecommunications (Instituto Federal de Telecomunicaciones or IFETEL), replacing the old Federal Commission. IFETEL is an autonomous government body that will function as an anti-trust agency in the sector.

Regarding phone and mobile phone services we can underline the elimination of long distance call and roaming charges, refund of fees for early termination of contracts, mobile devices will be sold unlocked, possibility for mobile phone users to transfer their number across to the carrier of their choice. As for television and radio broadcasting, there will be two new national open television broadcasters and a new state radio and television broadcaster with national coverage and private televisions (pay TV) will be able to telecast free-to-air television for free. Moreover, parental services will be implemented to restrict adult content to young users, any discrimination based on gender or race will be monitored and sanctioned, access to people with disabilities will be enhanced and illegal use of personal data will be strictly penalised. For further details see here.

The success of the reform is still to be seen. Mexico’s telecommunication sector is dominated by few powerful actors, so the challenge for Peña Nieto administration is to actually ensure that the telecoms law is fully implemented and that hegemonic competitors are dismantled to allow fair competition in the sector. Nevertheless, right after the approval, telecommunications mogul Carlos Slim, unexpectedly announced that he will sell part of its business. It seems perhaps that dominant players are one step ahead of the game. Will the new IFETEL (and  Peña Nieto’s government) be up to the test?

The full text of the telecoms reform can be accessed here (Spanish version only).

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