America Movil hit with sanctions for Mexican dominance

The Mexican regulator Ifetel has identified Telcel and Telmex, the mobile and fixed arms of Carlos Slim’s America Movil, as the most dominant in the telecoms sector.

Both operators have been hit with sanctions and will now have to submit to various new rules, including asymmetric interconnection rates and forced infrastructure sharing with other operators. In addition, national roaming charges will be abolished.

Operators have the option to negotiate rates for infrastructure sharing and wholesale roaming between themselves, but if they cannot reach an agreement then Ifetel will set the rates based on LRAIC (long-run average incremental cost). Telcel will also be obliged to let MVNOs access its passive infrastructure using the same terms.

The move is part of the Mexican government’s drive to tackle market domination. Luca Schiavoni, regulation analyst at Ovum, said: “This decision was largely expected, and is the natural consequence of the recent reforms passed by the newly appointed government.”

“Now that Ifetel has successfully met the deadline to decide which operators are dominant, and to impose the relevant measures, it is urgent that secondary legislation is passed to complete last year’s reform; Ifetel’s powers still need to be defined more in detail, and an updated telecommunications act that reflects the recent constitutional changes is necessary”, he added.

“While it is too early to assess whether the reforms will succeed in giving the Mexican market the competition it badly needs, this is should be seen as a promising start”, concluded Schiavoni.

 

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