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 2
013 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 1
st, 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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