The Supreme Court of Mexico has backed America Movil’s legal challenge against legislation intended to prevent the operator from charging its rivals interconnection fees.
The ruling follows the Supreme Court’s review of Mexico’s 2014 reforms to telecoms regulation intended to curb the market dominance of America Movil. The operator has argued that the reforms are unfair and constituted a loss of business rights, as well as claiming that they are asymmetrical as other companies are allowed to charge America Movil for calls made on their networks.
In a significant blow to the 2014 reforms, America Movil’s complaints have been upheld by the Supreme Court, which has ruled that the regulator IFT should set interconnection rates in a unanimous vote against the “zero-rated” tariff regulations. IFT will begin setting the fee from 1st January 2018, with America Movil welcoming the ruling and noting that the rate will “be based on international best practices, cost orientated methodologies, transparency and rationality.”
The Supreme Court noted that the implications of the ruling would not apply retroactively – i.e. America Movil would not be entitled to back payments from rivals such as Telefonica and AT&T. Bloomberg had previously reported that America Movil could be owed as much as $800 million in back payments if it won the backing of the Supreme Court.
Telefonica has criticised the Supreme Court’s decision, saying that there could be “serious consequences for the sustainability and makeup of the sector” as a result of it. Meanwhile AT&T, which entered Mexico largely as a result of the reforms, said that the “arduous” reform process would need “continuous dedication”, but noted that it was “trusting in the strong public support that the constitutional and legislative reforms of telecommunications received.”
While the reforms have strengthened its rivals, America Movil is still massively dominant in Mexico with a market share of roughly two thirds.
