Photo credit: Wataniya Telecom Antenna by Shafiu Hussain
According to the Mexican Telecom Reform, by December 10, the Congress will enact a law to uniform the current telecom concessions and permits, which could be commercial, public, private and social use. Furthermore, those concessions could be used for rendering any type of service (universal telecom license or “UTL”).
Currently, there is a mosaic of telecom concession titles, according to the date of granting. During last decade, Ministry of Communications (SCT) used renewals of titles for standarizing them into a uniform and convergent title. This UTL was originally pointed out by the 2012 OECD “Review of Telecommunication Policy and Regulation in Mexico”, to remove entry barriers.
As we speak, the Congress is working on the provisions of the Telecom Law to land the concept of the UTL. I hope that some of these questions arise on the Congress, as they arise everyday to the people of the industry.
1. Severability. It is customary in Mexican telecom market that operators have concessions for commercial use and permits for non-profit use. As early telecom law regulated technology, not services, many long-time operators have diverse type of licenses with diverse obligations. This landscape forces the Congress providing for severability on events of default and partial revocation, specially for companies who own licenses associated to spectrum.
2. Cross-ownership. As IFETEL inherited antitrust authority for telecom matters, regulation on cross-ownership becomes relevant tool, and provisions for a License Registry will be crucial. “Groups of interest” might not seem relevant issue for telecom law, but for antitrust telecom will be essential. Will IFETEL implement cross-default on affiliates? It makes sense considering the operation of converging technologies and the blind spot of the authority while verifying on-net breaches to law. Under antitrust logics, one of the relevant markets is broadcasting was advertising. Would this market be inherited to IFETEL for analysing concentrations?
3. Private Use Licenses. It comes to my attention that the Reform mentions that IFETEL will uniform licenses for private use. Will private networks be forced to apply for a license to operate as such? Why? There is no public interest in them if they are not available to the general public. This is an issue that needs to be followed-up on.
While these issues are quite challenging for the Congress and exceptionally challenging for IFETEL to implement, the biggest issue on the Mexican Telecom Reform remains this: Would Telmex get a UTL that includes CATV and/or broadcasting TV?
Last Tuesday, Mexican Senate confirmed appointment of the 7 commissioners for IFETEL, the new telecom authority in Mexico replacing the COFETEL. Now that the IFETEL has been officially integrated as an autonomous regulator, it is time to catch up with major challenges that have been somehow left behind. Here are some of them.
1. For years, value added services have been sub-regulated, as traditional voice and data transport services have been on the spotlight of the Regulator. However, as internet services, apps and social networks are merging voice, data and video services, it is necessary to deregulate them enough to make them grow, but regulate them to avoid illegal activities, like abuse of dominant position and by-pass.
2. TV and Radio Law and Regulations were originally published on 1960, and many of their provisions got stuck in time despite the several amendments that have suffered, as well as vast case law from the Supreme Court and Federal Courts. With the recent Telecom Reform, foreign investment can have a participation up to 49%. This percentage could become handy for the upcoming tenders for Free-to-Air Digital TV and the radio frequencies. However, regulation needs to be designed for convergence and cross-ownership provisions with Congress collaboration.
3. Before 1991, telecommunication services were provided by the Government, mostly. Then, the industry was ruled by the Law of General Ways of Communications and the Regulations of Telecom. Thereafter, Telmex was fully privatised, and in 1995 the new Telecom Law was issued. However, the Regulations kept in force. On the text of the 2009 Telecom Reform, COFETEL was forced to draft new Regulations by August of that year. It has not happened yet and Regulations are very inconsistent with the new telecom services.
4. The 2013 Telecom Reform transfers telecom antitrust authority from COFECO (antitrust body) to IFETEL. Before that, the antitrust authority was shared. As COFECO was the leader of this partnership with knowledge, authority and specialists, COFETEL followed and executed such lead under the extent of the Law. However, as IFETEL is now the sole telecom antitrust authority, it will require to catch up, and avoid that operators challenges their resolutions in court.
5. Telmex is currently regulated by its Amended Concession Title. It contains several obligations for Telmex, as dominant player, as well as the prohibition to render TV services. Granting permission to Telmex for entering the TV industry would have a big impact on the service. Should it be granted? It depends whether the impact is good or not for the market. Should it be discussed? It must be.
Now that IFETEL is getting a fresh start with autonomy for redesigning the market, it is time to push forward the market. This time, let´s not forget that telecom remains a lawyers game.
Photo credit: VIA Telecom Booth by VIA Gallery
Maybe you have been following my latest posts on the approval process for amending the Mexican Constitution in relation to Telecom (and anti-trust). If not, I suggest you read How I Learned to Stop Worrying about Telecom and Love the Pact or Don´t Panic: The First-Mover Guide to the New Mexican Telecom Bill.
House of Representatives delivered the Bill with amendments to the Senate for second time, and Senate will vote minor revisions by April 30, 2013. If approved, it will go for approval to all 31 States of Mexican Republic. A minimum of 16 States will be required, and then Congress will declare the Constitutional Amendment going for publishing at the Federal Official Gazette.
Along will come secondary laws and regulations to update the regulatory framework and catch up with new technologies, which is expected to happen during next 6 months. This is the major overhaul on telecom regulation since early 1990´s, when Telmex was privatised and a Telecom Law was published for first time.
However, while our eyes are all over the Telecom Bill, there are other events shaping already the telecom industry like:
1. MVS is got a major victory at the Supreme Court versus recall of spectrum for 2.5 GHz band. Mexican Government, must likely, will negotiate a license to use a part of this band to MVS. Could MVS pitch Intel and Clearwire to launch its broadband project?
2. Digital TV is arriving earlier to Tijuana (May 28). While this will not move the calendar for other cities, it will certainly be an incentive for independent producers of HD content to hurry up. Also, a part of 700 MHz band will be recovered.
3. Comisión Federal de Telecomunicaciones (COFETEL) started public consultation on satellite services. Mexico has already launched Satellite “Bicentenario” last December 19, to become first of three satellites in the MexSat Fleet. Connectivity is on the rise.
4. COFETEL is retaking the project for consolidating 397 long-distance areas to 173. While this will hit the long-distance business, it will certainly open opportunities for local services.
5. COFETEL has finished the process for approving the Regulations for the Telecom Registry. These Regulations will simplify the process for acts to be registered (i.e. tariffs).
6. The Service Level Interconnection Agreement is in process of being discussed and approved. The approval will mean certainty for new entrants to the market.
Mexican telecom industry grew 15.1% during 2012 (in relation to 2011), so I am thrilled to see how these Reform and secondary regulation will soar this growth. How about you? Let me know what you think.