In an unusually direct report, the U.S. government said that
“enhancing competition in Mexico’s telecommunications sector continues
to be a challenge.” The Office of the U.S. Trade Representative’s new 2013 National Trade Estimate Report on Foreign Trade Barriers points out that telecom tycoon Carlos Slim’s America Movil
(NYSE:AMX), the parent company of wireless carrier Telcel and wireline
carrier Telmex, “dominates both the fixed and mobile segments of the
Mexican telecommunications market .”
Released April 1st, the report states that a combination
of weak regulatory oversight and an “inefficient court process” in
Mexico has meant that disputes involving America Movil with respect to
the terms of competition in the market “have lingered for years.” It
also notes that a 2012 decision by Mexico’s Supreme Court making it more
difficult to stay regulatory decisions on interconnection was “a major
step forward, however, and should result in smoother implementation of
such orders in the future.”
The report does not address directly the new anti-monopoly telecom
reform bill that seeks to end Slims’ dominance of Mexico’s phone market
(it only covers 2012 developments) , but observes that as of 2012,
Telcel had approximately 70 % of Mexico’s mobile subscribers, while
Telmex accounted for approximately 80 % of Mexico’s fixed line users.
According to the report Telcel’s closest competitor is Movistar, which
claims 20 % of mobile subscribers, while Axtel trails Telmex with only 6
% of fixed line users.
The document favors greater foreign investment in the
phone industry. It says that although there have been several recent
legislative attempts to open the Mexican fixed line telecom sector to
increased foreign investment, which could increase opportunities for the
emergence of additional competitive providers, “prospects for
legislation are unclear.” Currently, Mexico’s Foreign Investment Law
limits foreign ownership in the wireline segment to 49 %. “The
restriction deprives new entrants of capital that a foreign entity could
provide and hinders the development of the Mexican telecommunications
network.”
The report also addresses Mexico’s TV “duopoly” –billionaires’ Emilio Azcarraga’s Televisa and Ricardo Salinas Pliego’s
TV Azteca– and calls for greater participation from others . It
observes that in Mexico, pay television, which is the primary outlet for
foreign programmers, is subject to significantly more stringent
advertising restrictions than free-to-air broadcast television, which is
supplied by domestic operators. “The two national broadcasters,
Televisa and TV Azteca, control about 90 % of the national broadcast
television market.” It points out that in 2012, after a decade in
which pay TV programmers were allocated up to 12 minutes per hour for
advertising (without exceeding 144 minutes per day), and with no
official change in law or regulation, Mexico’s Radio, Television and
Film General Administration, known as RTC, notified certain cable
channels that the programmers were now limited to six minutes per hour
of advertising. On the other hand, free-to-air broadcasters may allot
their permitted 259 minutes per day of advertising with no hourly
limits. Mexican authorities have indicated, it notes, that they are
working on new regulations’ “to establish a clear legal framework” for
pay TV advertising.
Aimed at addressing unwarranted or overly burdensome standards that
make it difficult for American manufacturers to sell their products
abroad, the yearly report was sent to Congress for its review.
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