What if IFETEL Mexico unleashes the unseen power of free?

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?

About the author

Alberto Esenaro

I am a Mexican lawyer with experience in technology, energy, automotive, infrastructure and business. Worked for law firms, international companies and Government bodies on business advice, regulatory compliance and litigation.


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By Alberto Esenaro

About Author

Alberto Esenaro

I am a Mexican lawyer with experience in technology, energy, automotive, infrastructure and business. Worked for law firms, international companies and Government bodies on business advice, regulatory compliance and litigation.

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