188体育

0.1 Detail

On 14 July, President Pe帽a Nieto signed into law the secondary legislation for telecoms reform, one of the remaining milestones in his economic agenda. The legislation, which follows the Constitutional reform of last March, defines the scope and power of the new regulatory agency, the Federal Institute of Telecommunications (IFT), and details a range of regulatory measures designed to promote greater competition. A key measure introduced by the legislation is its definition of a 鈥榙ominant player鈥�, which it designates 鈥榓n entity which amounts to more than 50% of the market share in a specific part of the telecoms or broadcasting sector鈥�. The law also establishes tighter regulation for any dominant players, including outlawing interconnection fees and forcing firms to share infrastructure. Whilst the new regulation does impose conditions on the television sector, most of the impact will be felt by the telephony sector.

Impact of the Reforms

The reform will bring some rapid concrete benefits to users in the mobile sector, including lower charges resulting from the abolition of some interconnection fees. Whilst this ruling only applies to dominant players, the fees of smaller players will also decrease gradually, as a result of a market competition effect. But the reform will not transform the telecoms market as comprehensively as originally expected. The main drawback of the legislation is that it defines dominance as a greater than 50% share of the whole sector e.g. telecoms overall, rather than of any one service, e.g. fixed line, mobile or internet services. This means that a company can own a 49.9% share in the whole sector and have a greater than 50% share in one or more the individual services whilst still not being considered dominant. A further disappointment is that the new rules on mobile interconnection fees and shared infrastructure will only be applied to 鈥榙ominant players鈥�, which will allow non-dominant players (albeit with a potential 49.9% of the market) to still charge all other companies for calls outside their networks.

Whilst the secondary legislation will reduce the dominance of one player to less than 50% in each of the two sectors (broadcasting and telecoms), its design will potentially allow existing players to increase their overall market concentration across both sectors. Since there is no cross sector regulation, we may see dominant players reducing their share of one sector down to just under 50% and by selling these assets to another company with a significant market share, in effect, creating a duopoly. The Economist has seen this, in an article welcoming the reform, as a sign that the legislation does have teeth. But there are only two competitors in the mobile sector who can take advantage of its infrastructure to make the acquisition profitable: Iusacell (owned by Televisa) and Telef贸nica (the Spanish telephony giant). In the longer term, if America M贸vil complies with the new federal regulation and ceases to be dominant in telecoms, it could have access to cable TV within 18 months which will allow it to become a major player in domestic TV. Sceptics fear a well intentioned reform may end up creating a duopoly across the two sectors.

Impact on UK Business

The final reforms may not be as comprehensive as had been hoped when the draft legislation was originally published, but there are still some opportunities for foreign investment.

0.2 Comment

The overall reform will improve Mexico鈥檚 competitiveness and is a key milestone in the Government鈥檚 economic agenda. As such it is welcome: the previous, PAN administrations had wanted to introduce telecoms reform for the twelve years that they held the Presidency but could never get the legislation through Congress as they did not have sufficient support.

The passage of the telecoms reform leaves only the energy reform to be finally approved. That has always been the big one, with a much greater potential to promote real competition in the longer term and which will open up huge opportunities for UK Plc. We expect the energy reform legislation to be approved in the next three weeks or so.

0.3 Disclaimer

The purpose of the FCO Country Update(s) for Business (鈥漷he Report鈥�) prepared by UK Trade & Investment (UKTI) is to provide information and related comment to help recipients form their own judgments about making business decisions as to whether to invest or operate in a particular country. The Report鈥檚 contents were believed (at the time that the Report was prepared) to be reliable, but no representations or warranties, express or implied, are made or given by UKTI or its parent Departments (the Foreign and Commonwealth Office (FCO) and the Department for Business, Innovation and Skills (BIS)) as to the accuracy of the Report, its completeness or its suitability for any purpose. In particular, none of the Report鈥檚 contents should be construed as advice or solicitation to purchase or sell securities, commodities or any other form of financial instrument. No liability is accepted by UKTI, the FCO or BIS for any loss or damage (whether consequential or otherwise) which may arise out of or in connection with the Report.