New Rules to Reshape Telecom in Mexico

In a ruling intended to break virtual monopolies in Mexican telecommunications and television broadcasting, a recently created regulator issued tough new conditions for two of the country’s largest companies, the wireless carrier América Móvil and the media company Televisa.

The ruling promises to redraw the landscape of both industries as it takes direct aim at the core businesses of Carlos Slim Helú, whose control over telephony here has made him one of the world’s richest men; and Emilio Azcárraga, whose television channels play an outsize role in the country’s politics. Televisa and América Móvil confirmed that they had been notified of the ruling. Both companies said they were studying the measures.

The conditions imposed on Televisa “look very good in my opinion,” said Irene Levy, president of Observatel, a consumer advocacy group. They are aimed at “promoting effective competition and avoiding the abuses of such a large company.” Mony de Swaan, a former telecommunications regulator, posted to Twitter that it was a “very hard pill to swallow” for América Móvil, adding that it was a “tap on Televisa’s shoulder.” At the center of the rulings by the regulator, the Federal Telecommunications Institute, known as Ifetel, is the requirement that the companies share their infrastructure, eliminating the central barrier for new firms looking to enter or to grow in the market.

Slim, who owns a stake of about 17 percent in The New York Times Company, turned the high margins he earned from Mexico’s fixed-line telephone monopoly, Telmex, into América Móvil, a telecommunications giant with 270 million wireless subscribers across the Americas. But in Mexico, competitors complained that his control over telecommunications infrastructure made it too expensive to compete. Telmex controls 80 percent of the fixed-line business, and Telcel, the mobile carrier, has 70 percent of the wireless market.

The lack of serious competition in Mexico has kept prices high, has limited investment and has held back the penetration of new technologies. According to the International Telecommunications Union, only 26 percent of Mexican households had access to the Internet in 2012, compared to more than 45 percent in Brazil.

[March 10]