Mexican Congressmen approve telecom reforms: a summary

By Alejandro Martínez

After 17 hours in session, the Chamber of Deputies of Mexico approved on Friday, March 22 a telecommunications reform law, one of the most hotly debated topics of recent weeks.

The reform, which will now move on to the Senate of the Republic, has been received with both praise and criticism. Its supporters have celebrated it as a necessary step to break up monopolies, encourage competition, and set rules for the sector. Critics have said that the law’s effectiveness will depend on the implementation of regulatory mechanisms, while others have said the law is a political instrument that will ultimately benefit TV broadcasting company Televisa and damage the continent’s telecom giant América Móvil, owned by multimillionaire Carlos Slim.

Below is a summary of some stories last week on the subject.

What it does

Animal Político offers an excellent (Spanish) summary of the proposals that were approved without modifications and of those changes made during the session.

The reform proposes to open bidding for two new open TV channels to compete with the two main channels (Televisa and TV Azteca), orders the creation of two new autonomous agencies (one to promote competition and prevent monopolistic practices, the other to regulate the sector and apply sanctions), and establishes the responsibility of the State to guarantee internet and broadband access.

CNN added that the reform could force some businesses to make disinvestments. The magazine Proceso noted that the reform would also allow foreign investment of up to 100% participation in the telecom and satellite sector, and up to 49% in open TV and radio broadcasting.

Must carry/must offer

The reform also includes and defines the so-called must carry/must offer rules, which require that pay TV operators transmit open TV signals that reach more than 50% of Mexico's territory, and that open TV broadcasters offer their transmissions without charge to pay TV operators.

However, Proceso said that a careful analysis of the details of the must carry/must offer rules suggest that they will mainly affect the interests of Carlos Slim.

Whereas most pay TV operators will receive open TV transmissions free of charge, the so-called “predominant economic actors” – those in the telecom sector with an important market control, like Carlos Slim – will not qualify for this benefit and will have to pay to retransmit open TV signals.

“In other words Carlos Slim has to decide to break his billing agreement with (pay TV company) Dish or pay to retransmit programs from Televisa and TV Azteca,” noted Proceso. “In this way, the ruling of the deputies puts Slim in a bind and benefits, finally, Emilio Azcárraga (president of Televisa) with this new phrasing.”

Slim is the man behind the lead telecom company in Mexico and on the continent, América Móvil. According to CNN, the company controls 80% of the landline market and 70% of the cellphone market in Mexico.  It also has a billing agreement with the pay TV company Dish.

Note from the editor: This story was originally published by the Knight Center’s blog Journalism in the Americas, the predecessor of LatAm Journalism Review.