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  HOME | Mexico

Mexican Regulators Declare America Movil, Televisa to Be Dominant

MEXICO CITY – America Movil will face asymmetrical regulation in areas including interconnection and infrastructure sharing after being declared the dominant player in Mexico’s telecommunications sector, the company said.

Friday’s announcement by the Carlos Slim-controlled company came just hours after Grupo Televisa said it was named “preponderant economic agent” in the broadcasting market, a label that latter company said would imply a series of “substantial and restrictive measures, terms, conditions and obligations.”

In a press release Friday afternoon, America Movil said IFT’s resolution determined that it and its operating subsidiaries – Telcel (Mexico’s wireless market leader) and Telmex (the dominant fixed-line player) – constituted a dominant economic interest group in the telecommunications market.

The Slim-controlled interest group deemed “preponderant” also includes the tycoon’s conglomerate, Grupo Carso, and his financial arm, Grupo Financiero Inbursa, America Movil said.

The asymmetrical regulations imposed only apply to the telecommunications services and audiovisual content Slim’s companies provide.

They include “imposition of asymmetric (interconnection) rates to be determined by the IFT” and the sharing of infrastructure at rates to be negotiated among the operators.

In cases where no agreement on infrastructure-sharing rates can be reached between America Movil and its competitor, the IFT will determine them.

Other asymmetrical regulations that will affect Slim’s companies will include local loop unbundling and elimination of national roaming charges.

Earlier Friday, Grupo Televisa, which like America Movil is based in Mexico City, said in a statement the IFT had declared it a dominant operator in broadcast television and published an invitation to a public auction in which companies may bid to obtain frequencies to set up at least two additional national digital broadcasting networks in Mexico.

Televisa said that under the tighter regulatory regime it also would have to “make its broadcasting infrastructure available to third parties on a non-discriminatory and non-exclusive basis.”

Televisa has a nearly 70 percent market share of Mexico’s broadcasting industry, while Telcel controls a roughly equal share of the cellular business and Telmex’s share of the fixed-line business stands at about 80 percent.

In 2012, the Organization for Economic Co-Operation and Development released a study saying the lack of competition in Mexico’s telecoms sector has resulted in overcharging to the tune of $25.8 billion annually, as well as low penetration rates in services and infrastructure.

Slim discredited the study by saying it was using outdated data and that the $25.8 billion figure was “totally exaggerated” because it exceeded the combined annual revenues of Telcel and Telmex.

The OECD fired back, saying the estimate represented “the opportunity cost of the lack of competition in Mexico” not the profits or sales of any company in particular.

The IFT was created last year as part of a telecommunications and broadcast media overhaul proposed by President Enrique Peña Nieto’s administration and approved last year.

The overhaul established, among other things, that dominant operators in any sector would be subject to asymmetric regulation to avoid market distortion.

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