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.
According to research from Futuresource Consulting, consumer spending on video and TV entertainment in Mexico reached USD 4.2 billion in 2013, recording a 9% growth. The company is also optimistic and expects more growth this year, enabling the market to reach USD 4.5 billion in 2014.
The company’s senior market analyst Joanna Wright commented, “2013 was an extremely strong year for pay-TV in Mexico – growing by almost two million subscribers (+14%), with consumer spend reaching USD 2.9 billion and a further 10% growth expected in 2014.” She later added, “This has been driven by an increase across all platforms, as digital cable grew by 790,000, satellite homes 630,000 and IPTV 60,000.”
The Mexican government takes pride in its creative industries as they contribute to the country’s economic development, producing over 500 billion USD annually. The industries also provide numerous job opportunities while making use of state-of-the-art technology before introducing them to parallel industries.
A 2011 ProMexico report called the Roadmap for the Creative Industries predicted this growth earlier. According to the document, the film subsector will grow due to the increase and implementation of 3D titles whereas online and mobile device games will display the highest growth. Meanwhile, the music market will improve due to more digital distribution. Combined, this subsector was expected to grow at 4% between 2009 and 2013.
As for television, TV advertising was expected to be slow since it is recovering and adapting to the new, very young consumers. Despite falling at a rate of 11.9% by 2009, the subsector was expected to recover by 2013. On the other hand, the internet was expected to thrive thanks to higher download speeds, richer content, and better upload speeds. As a result, the subsector’s global market forecasts predicted a growth of 9.2% until 2013.
Unfortunately, while the packaged video market is a significant Mexican sector that has held up well so far, it’s starting to suffer. It recorded its first two-digit decline last year. One of the reasons behind this is Blu-ray’s enhanced performance, which led to a 15% growth rate by 2013 and the title of the fifth largest market globally.
Digital video also performed extremely well in the past year, growing by 91% to USD 86 million. Come 2018, the industry is expected to double its worth to reach USD 360 million, especially due to the high demand for subscription video on demand services (SVOD).
Wright says, “SVOD accounted for 66% of overall digital spend in 2013 and with 70% growth expected in 2014. Key drivers of this growth were the introduction of Netflix in 2011 and new entrants to the market in 2013 helping further raise awareness of the service. As the broadband infrastructure improves, SVoD services have the potential to generate significant consumer spend in Mexico.”
The predicted numbers can either go higher or down depending on the changes the Mexican telecom reforms will create. However, even then, due to the increased competitiveness in the market, the creative industries will thrive.
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: christmas by Joe Buckingham
Christmas wish list of many had the enacting of Mexican telecom legislation on time (December 9, 2013). By now, we know for sure that the Congress missed that important date set in the transitory articles of the Telecom Reform. The legislation is in discussion and could be approved by Q1 2014.
So what are the legal consequences for the Congress or the market to miss that date? NONE, but provides some time for interested parties to revisit their strategies.
The Congress still has constitutional authority to enact telecom laws, the transitory articles are substantially in force, the foreign investment caps are still increased, TelecomMexico has a license and the backbone tender is on its way, the must-carry/must-offer is in process of being implemented by IFETEL, as well as the relevant player rule and the unbundling of local loop.
Have a wonderful holiday season. So don´t worry and have some family time, as telecom market will still be there when you return.
Photo credit: DSCN0107.JPG by James Stewart
Telecomunicaciones de Mexico (TelecomMexico) obtained a telecom license on September 5, 2013, and the title has been published on the Federal Official Gazette on December 20, 2013. This license has the purpose of operating a 15,000 miles of optical fiber from a government-owned public backbone. TelecomMexico will co-operate with private operator through a PPP, but only for wholesale. A tender for this co-operation is expected during first half of 2014. The license has the following features:
1. Duration: 30 years (expires September 4, 2043).
2. Services: SMS, voice, fixed and mobile data services (through local rural network based on cellular technology and satellite backbone). TelecomMexico will only be allowed to render services to population of less than 5,000 people that do not have other equivalent services on public telecom networks.
3. Satellite Bands: Extended C-Band 3.4 to 3.7 / 6.425 to 6.725 GHz and Extended Ku-Band 11.45 to 11.7 / 13.75 to 14.0 GHz, through any authorized satellite in Mexico.
4. Other Services: TelecomMexico may render any other services with the authorized infrastructure, except broadcasting.
After all, it seems that TelecomMexico will become a market incubator. Do you think it will take the underserved market by storm? What would happen if population grows over 5,000 people or other operators arrive? Will TelecomMexico be permitted to stay or go?