Last week IFT, telecom antitrust and regulator in Mexico, issued a resolution declaring that Televisa is not dominant in paidTV. The resolution was controversial to many, of course. However, it threw some legal precedents on OTT, for subscription video-on-demand (SVOD).
According to IFT, SVOD is not, in terms of relevant market for antitrust proceedings, substitute to paid TV, based on the facts that content is not enough, the audience is limited and internet access is not universal.
Netflix is betting high on good original content, but live sports and prime time is still keep audience on traditional TV, according to official data form IFT. However in OTT-SVOD, Netflix has 55.7% of Mexican market, with Slim´s Claro following with 39.7%, according to Daxis. Audience is expected to grow with 4G mobile tenders happening this year.
Then, if you double-read the resolution from a telecom-media-antitrust-legal-regulatory point of view: This resolution is a space of freedom that Netflix can enjoy to grow. A victory that Uber, another icon of on-demand services, only can wish for its own market.
The Netflix app is displayed alongside other streaming media services on the homepage of a Roku Streaming Stick. (Photo credit: Matthew Keys / Flickr Creative Commons
Photo credit: Infinitum box by Alberto Esenaro
#HackTelecomMexico is a series of posts exploring the new Telecom Bill, in discussion at the Mexican Congress. Follow the series here http://mexicanlawblog.com/tag/hacktelecommexico/
“In Law, deadlines are fatal”, you learn that in Law School. No matter what type of process, they are fatal. Here is another one. “Due process of law”. Any act of authority has to follow rules according to statutes.
I do not have big data validation to back this up, but due process of law is the first cause of rants for non-lawyers in Mexican telecom industry.
Now, the proposed telecom law is in debate at the Congress, and there should be also a debate on the process itself. Here is why:
1. According to the new telecom law, any legal gap in process would be fulfilled by the following laws: General Ways of Communications Law, Administrative Proceeding Law, Code of Commerce, Federal Civil Code, Federal Code of Proceedings, in that particular order.
2. On the other hand, the authority and proceedings for telecom antitrust are relied on the recently published Competition Law (to be in force next July 7, 2014).
3. Then, the new Competition Law, fulfills its legal gaps on the Federal Code of Civil Proceedings. The Administrative Proceeding Law expressly excludes antitrust matters from applicability.
4. To add elements, the IFT is the exclusive telecom regulator and telecom antitrust body. Cofece, as transversal antitrust body, constructs the antitrust regulation, except for telecom. However, at some point, its construction will still influence construction of IFT on telecom antitrust. Litigators will sure invoke that.
5. It also means that IFT cannot accumulate cases that have regulation and antitrust components so easily. Such accumulation would require neurosurgeon precision for following due process of law for both.
6. Now, courts specialised in telecom and antitrust are constructing law and could decide up to what extent IFT has to follow Cofeco criteria and resolutions. Case law will increase at fast pace.
7. Finally, new competition law provides for a mechanism to define jurisdiction on matters that could fall into telecom or general antitrust, i.e. Media and other tech convergent industries. In this age, most businesses are tech convergent. Controversies between those bodies are ultimately decided by specialised courts.
Are you following this maze?
Now imagine issuing an antitrust opinion for participation in tenders (TV tender dates were revised today), which would follow antitrust proceeding, and the granting of the respective title, which would follow telecom regulation proceeding.
Then, add up the construction for determining and applying preponderant, dominance, essential inputs and entry barriers regulations to the tender. This is not an easy ride.
Maybe is time for STEM lawyers to step up. Trust me, it will be fun and there will be profit.
Photo credit: The power of television by Clemens v. Vogelsang
A couple of weeks ago, I wrote about the titanic tasks that the Mexican telecom regulator had to achieve according to the recent constitutional telecom reform. One of those tasks was to declare preponderant operators for telecom and broadcasting, and imposing asymmetric regulation or ordering separation and/or disinvesting. Despite the markets were nervous, the later did not happen. Televisa, Telmex, and many of their strategic partners, are on two legs, with regulation, but on two legs.
The asymmetric regulation cover many aspects in detail, so I plan to write about consequences and opportunities later in many posts. Nevertheless, here is a nutshell summary of what was resolved, and that took affects last March 21:
1. Televisa, some of its subsidiaries, re-broadcasters and partners, were declared preponderant, and subject to the regulation (jointly Televisa).
2. Televisa must have a public offer to allow broadcasters access to passive infrastructure under the principles of no discrimination and no exclusivity.
3. Public offer will cover every new civil construction.
4. Televisa cannot acquire relevant content on an exclusive basis. Televisa cannot join buyer´s clubs. IFT will determine what content must be considered relevant by May 31, 2014, and every two years thereafter.
5. Televisa must offers its channels to competitors of other technologies operators (CATV, VOD, etc.)
6. Televisa cannot invest on Telmex, or have shared directors or high executives.
7. IFT will review and revise the regulation every two years, and could apply, as necessary, functional or structural separation, disinvesting of assets.
1. Telmex and some of its subsidiaries and partners, were declared preponderant, and subject to the regulation (jointly Telmex).
2. In mobiles, Telmex is bound to interconnect, sell capacity and render transport and termination of calls, as well as co-location. This includes access to passive wholesale and MVNO.
3. In mobiles, Telmex is bound to provide tariff information to end-users, customer service, unblocking of phones and elimination of national roaming. Exclusive agreements for distributing mobile phones cannot be longer than 6 months.
4. In fixed service, Telmex is bound to render interconnection, allow passive infrastructure, co-location and transport. Telmex must guarantee minimum speeds and delivery times for T1s and other connections.
5. In mobiles and fixed service, Telmex must allow access to any content/service/app.
6. In mobiles and fixed service, must have a public offer to allow access to passive infrastructure under the principles of no discrimination and no exclusivity. Public offer will cover every new civil construction.
7. Telmex must unbundle its local loop.
8. Telmex cannot acquire relevant content on an exclusive basis. IFT will determine what content must be considered relevant by May 31, 2014, and every two years thereafter.
9. Telmex cannot invest on Televisa, or have shared directors or high executives.
10. IFT will review and revise the regulation every two years, and could apply, as necessary, functional or structural separation, disinvesting of assets.
The analysis of the legal process deserves another post, as IFT has a complex dual function as regulator and competition authority, and therefore is subject to two different process laws that requires surgeon hand to operate. It also would requiere STEM lawyer skills to make a successful challenge.
This is a new beginning for the Mexican telecom industry, but it is a good start for planning telecom business strategies.
Do you think this was enough, or something essential was left out? Let me know.
IFT started a process to declare which telecom operators are preponderant and could be subject to assymetric regulation or de-invest rulings.
Recently, Telmex announced a spin-off of some real estate and leasing corporations.
A Televisa subsidiary, obtained an injunction from a Federal judge to stop the spin-off, as it considers it is a maneuver to evade the preponderance rule, supposedly to be issued by IFT next March 9.
MVS (Dish Mexico) requested IFT to declare Televisa preponderant player in TV and CATV markets, which in turn, is a partner to TV Azteca in mobile operator Iusacell.
Soon, IFT is expected to issue a ruling on must carry – must offer on TV contents (MC-MO)
Dish Mexico has been re-broadcasting in CATV the Free-to-air signal of Televisa and TV Azteca, under a transitory article of the Constitutional Reform in telecom.
For some years now, Dish Mexico, has is force a billing and collection contract with Telmex for managing subscriptions of CATV.
So, TV Azteca requested IFT to declare that Dish Mexico is preponderant and is not eligible to free TV content for re-broadcasting in CATV.
Now, Televisa presented an injuction before a local judge to order IFT to stop the MC-MO discussion. IFT already stopped the public discussion on this, until its in-house analyzes the extent of it.
General Counsel to the President announced that will take this injunction to the Supreme Court.
This happens while the Congress is getting ready to receive the new telecom bill for discussion. Apparently next week.
Mexican telecom industry could seem very hostile to outsiders. However, all of them are bound by interconnection and open infrastructure obligations.
You, know what they say: You do not choose your domestic co-operators in a public network. Their reactions are just tough love on-court and off-court.
So, the only way to get through this is to understand that the new economy is collaborative. After all, everything converges to a 1 and 0.
And you? How are you spending this day?
Photo credit: DSC_6391 by Jeff Meyer
Last January 30, 2014, Mexican telecom watchdog, IFT, revised the tender program for 2 national digital-TV networks. The new program revised 8 locations based on comments from interested parties.
The revisions are for coordinates in: a) location 123, channel 42 (638-644 MHz) in Toluca, b) location 124, channel 47 (668-674 MHz) in Toluca, c) location 137, channel 23 (524-530 MHz) in Cuernavaca, and d) location 138, channel 24 (530-536 MHz) in Cuenavaca.
The revisions are for channels in: a) location 143, channel 15 (476-482 MHz) in Agualeguas, b) location 195, channel 18 (494-500 MHz) in Agua Prieta and Cananea, c) location 196, channel 15 (476-482 MHz) in Agua Prieta y Cananea, and d) location 221, channel 20 (506-512 MHz) in San Fernando.
The call is expected to be published by March 9 2014, on the same deadline when IFT must determine whether Televisa is “preponderant” player in the TV market (50% of more of the TV market). A process that has already started, as confirmed by Televisa and IFT. As a consequence, IFT could apply asymmetric regulation to Televisa, or force de-investing.
What other conditions precedent should IFT meet before launching the call? Can IFT pitch TV market to investors?