President Enrique Peña Nieto has signed into law a major overhaul of the regulations governing Mexico’s telecommunications sector that he expects to bring down telephone charges, widen Internet access and generate greater competition amongst radio and television broadcasters.
Above all, the new legislation is designed to reduce the market domination of telecoms magnate Carlos Slim and Televisa, Mexico’s principal broadcaster.
Under the new laws, all domestic long-distance phone charges from fixed lines will be eliminated from January 1, 2015. The president said this translates into savings of 19.6 billion pesos annually that will mostly benefit families and small- and medium-sized businesses.
The new telecommunications law effectively obliges Slim’s America Movil to reduce its market share to less than 50 percent, as well as lower connection costs for competitors and share infrastructure.America Movil controls more than 80 percent of Mexico’s fixed-line telephone market, and 70 percent of the cellphone market.
Prior to last week’s approval of the new telecoms bill, Slim announced that America Movil’s board of directors had voted to divest some of its assets to comply with the new regulations and avoid facing severe penalties.
According to the Wall Street Journal, AT&T is the frontrunner to purchase America Movil assets. Slim’s current competitors in the Mexican market – including Movistar (Telefonica), Iusacell and several smaller fixed-line firms and cable providers – are unlikely to be able to raise sufficient funds to make bids.
A spin-off for Slim, however, is that once he has sold off these assets, America Movil’s “dominance status” will be lifted, allowing his company to enter the Mexican TV market and compete with Televisa. (America Movil does provide television services throughout Latin America but has been barred from doing so in Mexico under its government concession.) Broadcaster Televisa has a 70 percent share of the free-to-air TV market and 60 percent of the cable market.
The new telecoms legislation also calls for the setting up of more than 250,000 free Internet “hotspots” throughout the country, encompassing all schools, libraries, hospitals and public squares. The government will also “implement the necessary measures” to bring Internet access to 70 percent of Mexican households and 85 percent of businesses.
Meanwhile, the federal government has been quick to refute accusations that the new law gives them free rein to censor the Internet and shut down telecasts whenever they choose. Only in times of “national emergencies” can any form of intervention be legal, they say.