Mexico proposes hard-hitting regulator to encourage more competition

The government of Mexico has taken aim at the country’s dominant operator America Movil with new proposals to encourage competition in the telecoms sector. Owned by the world’s richest man, Carlos Slim, America Movil has a 70% share of the country’s telecom market with 70.37 million subscribers at the end of Q4 2012.

To tackle the firm’s dominance, the government has called for the formation of a new regulator with far more power than the current body, COFETEL (Comisión Federal de Telecomunicaciones). Under the moniker of the Federal Telecommunications Institute, the new regulator would replace COFETEL while being granted a greater remit, covering mobile and fixed as well as television.

The proposed regulator would have the ability to impose fines, enforce price controls, and override the appeals process that has long hampered the introduction of new regulatory frameworks. In order to encourage competition, major telcos would even be obliged to sell assets at the behest of the regulator.

Larger firms are easily able to appeal regulatory changes, effectively stymieing a decision. The new bill outlines that such disputes would be handled by special courts to prevent the appeals process from being exploited by players such as America Movil.

Luca Schiavoni of analyst Ovum commented: “Mexico ranks poorly across the board compared to neighbouring countries as a result of an unclear regulatory framework in which multiple bodies come together to create regulation, slowing down the process and often overlapping or conflicting one another. The creation of a regulatory body able to decide autonomously and apply different measures to each operator is very likely to help the sector become more competitive.”

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