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?
Photo credit: BT Screens by Jeremy Keith
Last December 20, 2013, the IFT, Telecom regulator, published the tender program for two TV broadcasting networks with the location of the TV stations and frequencies to be granted under license. The call is expected by March.
IFT acknowledges that commercial free-to-air TV (FTV) has a high concentration with Grupo Televisa (GTV) and Televisión Azteca (TVA), which jointly have, directly or indirectly, 95% of the licenses, 96% of the audience and 99% of the advertising incomes. As a consequence, the tender will prevent companies with 12 MHz in any locality to participate.
The program is set to tender 246 localities/frequencies throughout Mexico for Digital FTV service. However, any interested party could request additional localities or frequencies by January 18, 2014.
Public tenders are pitches to the market. FTV in Mexico is a very hard project to pitch due to concentration. There is not an easy elevator speech for that. On first sight, the entrant conditions of FTV seem hard. However, some factors could diminish that power:
1. Participants could ask adding locations and frequencies. This means that entrants can design its own network architecture for deploying at low cost or preparing for providing additional services.
2. IFT is in process of determining relevant operators for FTV markets. As a result, relevant players who have more than 50% of a given market could be forced to share its passive infrastructure. This could bring down deploy cost for entrants.
3. New networks are set for providing D-TV. However, the licensor could provide any new service, as long as it complies with FTV services. Broadcasting has always been the hard node to interconnect in Mexico. Most of the time because of isolating regulation. Maybe it is time to leave legacy technology behind and mix it with some IP, double screen marketing, interactive systems, VOD, big data mining, and many other models that could make FTV profitable.
4. IFT launched last month, a public consultation on must-carry and must-offer rules, which soon will be in force. Under those obligations, signal of FTV will be repeated into CATV systems, including advertising. This is an automatic upgrade to any infrastructure of FTV network for free, which could bring on more value to sponsors.
5. Operators having broadcasting licenses accumulating 12 MHz or more in a given locality are not elegible for participating into the tender. Under a legal definition of the current Radio and TV Law, broadcasting includes both TV and radio. Technically, this is restricting radio and/or TV groups in Mexico. Also, it does not impose restrictions to participants for bidding on both new networks for the moment.
There are many other factors to consider for assessing whether this tender has real market value. Who knows? Maybe the TV revolution will be televised after all.
Photo credit: Technology is a given by Scott McLeod
It happened. MVS announced that, as from September 16, 2013, it would start broadcasting the free-to-air TV (FTA TV) channels to Dish subscribers. Televisa and TV Azteca shows have some of the biggest ratings among TV (and Cable) viewers. In some towns, people buy cable service just to watch FTA TV.
Under the Mexican Telecom Reform, must-carry and must-offer (MC/MO) is mandatory, finishing years of litigations between broadcasters and Dish. These are the terms of the Reform:
1. It would start as from integration of the Mexican telecom regulator IFETEL, that happened on September 10, 2013;
2. FTA TV broadcasters must allow mirror broadcasting of its signal to cable (CATV) and sattellite (S-CATV) companies, within the same coverage area. All of that free of charge;
3. The must-carriers cannot surcharge their users for the FTA TV channels;
4. S-CATV companies are only forced to must-carry signal from FTA TV that have a coverage of at least 51% within Mexican territory;
5. CATV and S-CATV must-carry Government TV channels;
6. Telecom or Broadcasting TV companies declared dominant or preponderant by IFETEL will not be eligible for free must-carry. They must agree tariffs and terms for the contents, but are not able to surcharge their users. IFETEL will decide any controversy. Dominant or preponderant operators could have their licenses cancelled if bypass the paid must-carry provisions through third parties.
7. If IFETEL makes a declaration of conditions for competition, MC/MO obligations will cease. Operators will agree tariffs based on costs, then.
Now, Televisa just asked IFETEL review the rules for MC/MO, as difers from Dish legal construction. Televisa argues that IFETEL must declare the starting date and applicability of MC/MO for Dish.
Right now, IFETEL has the chance to unleash the unseen power of free. Not only by deciding on the case at hand, but resolving on topics that lie beneath it.
1. If the signal of FTA TV is free of charge for viewers, and in some cases, for operators, can anyone opt-in for must-carry and make a business out of it? There are no technical issues for implementing a similar business to Aero or make mirror broadcasting over smart objects or the IP. Would companies such as Netflix, self-declared as a movies & TV Network, could opt-in too? Would it be allowed under net neutrality grounds? This suddenly has a deja-vu from the COFETEL (old telecom body) discussion on whether Skype should be or not considered a voice service.
2. Content has an indirect regulation within telecom, in particular in value added services and in antitrust analysis for M&As. As IFETEL now has authority for declaring essential resources, would content qualify for it, considering that high ranked FTA TV shows are important for competition in CATV and S-CATV? This is not a plain and simple answer, as FTA TV has an uneven coverage through the country for calculating dominance and predominance. Also, would this be applicable per show, channel or time? Big data analytics could play a good role on overseeing.
3. FTA broadcastes use third parties for mirror broadcasting. New ones could use them as well. Will all they must comply with MC/MO? Will they be considered essential resources or passive infrastructure of an extended network for FTA TV, even if they are outsourced?
4. There was a time during 2011, when IFETEL tried to pull the tender for the new TV network. Back then, there was a debate on what should be the content on the new network: culture or entertainment. Culture could be perceived as a higher good, as well as free by right. However, the right of the viewers to choose content should not be decided upfront and must be revisited. What is culture anyway? The definition and limits matter as current Telecom Law provides a special treatment for cutural TV and radio. Must they be covered under MC/MO as they do not participate in the advertising market? Should there be no damages for re-broadcasting these channels?
5. Yesterday, the new organizational for IFETEL was published. Value added services still on the roadmap of the telecom regulation. Will IFETEL have attribution for regulating services that carry on content over the internet such as social networks, SAAS, IAAS, and other? The hardware, software and internet businesses have converged for a very long time with telecom. As they former have succeeded in free business models (open hardware, open source, free internet services), would FTA TV still succeed free? Could new TV network bring on VOD and mixed models to the FTA TV market?
IFETEL is starting engines. There are too many questions on how IFETEL will take over antitrust authority and proceedings rules. For now, interested parties in the sector must follow the developments, as they are coming faster last quarter of the year.
However, IFETEL has the unique opportunity to set the scope of its authority. Would it choose telecom only or technology and media?