#HackTelecomMexico Telecom Antitrust: The devil is in the due process

#HackTelecomMexico Telecom Antitrust: The devil is in the due process

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.

#HackTelecomMexico Telmex on TV: Damned if you do, damned if you don’t

#HackTelecomMexico Telmex on TV: Damned if you do, damned if you don’t

Photo credit: Mr Carlos Slim Helu, Founder and President, Carlos Slim Foundation, speaking at Aldea Digital, Mexico City, Mexico by itupictures

#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/

 

For over 20 years, Telmex has been restricted from the TV services. During last 6 years, this debate grew in importance, but the dilemma remains intact: Should Telmex be allowed to enter TV market? If so, under which conditions?

During privatization, Telmex was granted with an “Amendment of Concession Title” setting special conditions to prevent monopolization of the legacy telecommunications market, some sort of asymmetric regulation for an uncontested market.

In specific, Clause of 1.9 of Amendment, prevented Telmex from broadcasting free-to-air TV signals, directly or indirectly in Mexico. Yes, this was way back before convergence or internet took off, so the lock was fair enough considering that Telmex had an exclusivity time-window. This restriction did not included CATV.

With the age of telecom convergence, Mexican Government issued a Decree, allowing telecom operators to provide triple-play. Telmex was left behind this Decree, as back then, authorities considered harmful for competition the entrance of Telmex into TV market (broadcasting and CATV), and arguing non-compliance to telecom regulations.

Even though, Telmex challenged resolutions in court. Ultimately, authorities handled the lawsuits and prevented Telmex from becoming a TV or CATV operator.

This loops us back to the same dilemma under a different technological era: Should Telmex be allowed to enter TV market? If so, under which conditions?

Transitory Article 9 of the Bill, provides that Telmex needs to comply with asymmetric regulation imposed by the IFT, and then apply for the universal telecom license. This could take over 2 years, considering verification of compliance and other regulatory and technical aspects.

Damned if you do: Telmex has been preparing for entering the TV/CATV industry by purchasing exclusive content like past Pan American Olympics, Sochi Winter Olympics, Rio Olympics, a couple of Soccer teams (and broadcasting rights thereof), a content syndication company, has partnered Larry King in Uno TV (internet-based news) and is experimenting in streaming live events and providing VOD through Claro Video. If Telmex gets TV, it will have a fair market share, but hardly actual substantial power, as Televisa´s brand and content have traction with advertisers and audience. It seems distant a case for additional asymmetric regulation. IFT, telecom watchdog, will have a real hard time overseeing asymmetric regulation for Telmex rendering TV services, and at the same time, watch Televisa in parallel. Small and regional independent CATVs could become casualties in a price war.

Damned if you don´t: TV Networks tender is a hard pitch for heavy weight investors, as you need to find companies integrated vertically into the business, with experience on producing attractive content to get advertisers. Nowadays, US broadcasters are trying to live by with advertising model, but Aero is getting into the way. Televisa, under must-offer/must-carry ruling, has to allow access competitors to its passive network. Telmex would deploy fast with current passive infrastructure and to advertise companies of its own group for fast cash-flow. Interested parties need to face Televisa, TV Azteca and the digital TV migration. Telmex is a heavy weight already here. If Telmex complies with all regulation, the Law should grant it a TV/CATV license, because rule of law must prevail.

To add a time constraint to this conundrum, IFT already called for the two TV networks tenders in June 2014. Hardly, there will be a third one any time soon. Maybe EPC model could become handy this time for faith-leapers.

CATV seems a good fit for Telmex, considering its vast network. CATV industry grew 16% during Q413, according to IFT. Telmex, has been acquiring billing experience from its Dish deal. Most probably, Telmex already ran some big data analytics tools on subscriber’s behaviour.

Any tender or regulation are pitches to the market, but need to follow rule of law. Now telecom law is being discussed, and therefore regulation could change accordingly. Will allowing Telmex to enter the TV market scare or attract investors?

Maybe it is time for changing the dilemma: Is Mexico ready for prime-time trade-off? If so, What risks are we ready to take? What benefit are expected?

Televisa and Telmex on two legs after Watchdog resolutions

Televisa and Telmex on two legs after Watchdog resolutions

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:

Televisa
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.

Telmex
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.

Atlas Shrugged: Mexican reg to carry the weight of telecom industry this week

Atlas Shrugged: Mexican reg to carry the weight of telecom industry this week

Atlas 1 by Fly Navy

Clock is ticking on IFETEL, the new telecom regulator. According to the telecom reform, It needs to comply with five big challenges by this Sunday, March 9, 2014.

1. It will publish the Tender Rules for two new TV networks with national coverage. This Tender will exclude current broadcasters (TV and radio) who own 12 MHz in any of the zones of coverage.
2. It will declare preponderant operators in broadcasting and telecommunications, and will impose regulation in relation to information, offers and quality of services, exclusive agreements, limitations to the use of terminal equipments between networks, assymetic regulation on tariffs and infrastructure, unbundling of essential resources, and accounting, functional and structural separation.
3. It will order the unbundling of the local loop for preponderant operators and dominant players with substantial power.
4. It will verify all telecom concessions to validate compliance to all terms and conditions.
5. It will gather information and integrate the Public Registry of Telecom Concessions.

Easier said than done. Now you may add that telecom bill is not yet presented to the Congress for discussion and approval, which increases the decree of dificulty, as IFETEL needs to carry on new proceedings and enfoce new authorities using current law and telecom reform. It is a STEM lawyers cue in.

IFETEL is under the spotlight right now and carries the weight of heavens on its shoulders. Do you think it will succeed?

As expected, Mexican telecom operators are showing tough love

As expected, Mexican telecom operators are showing tough love

a phone in love #<3 #bychance #haphazard by Franz Schuier

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?

 

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