IFT takes America Movil’s side in blow to 2014 Mexican reforms

IFT takes America Movil’s side in blow to 2014 Mexican reforms

Mexico’s regulator IFT has amended regulation that forbade market leader America Movil from charging termination fees to its rival operators.

The reinstatement of termination charges was approved by the Mexican Supreme Court in August. The ruling is a huge boon to America Movil, and marks the first significant repeal of regulatory reforms introduced in 2014 that were aimed at reducing the market leader’s dominance in Mexico in order to foster competition.

America Movil had argued in court that it had been unfairly targeted these measures, noting that they were asymmetrical in that rival operators were still able to charge termination fees to the market leader. The operator added that it had seen its margins adversely affected as well as losing certain business rights.

While the 2014 reforms were aimed at reducing America Movil’s dominance in Mexico, it still enjoys a market share of around 70%, and its rival operators – including AT&T – had been pushing for IFT to keep the interconnection rate at or around zero.

An AT&T spokesperson said: “We are disappointed because the new interconnection tariff is a step backwards on the path toward delivering on the objective of the reforms [which] helps the preponderant and harms consumers and competitors”.

Charges will be reintroduced from 1st January 2018, with rates set by IFT using a model derived from a consultation process that it began in 2016. It marginally favours America Movil’s rivals, who will be able to charge MXN0.112799 per minute for mobile calls terminated on their networks, while the market leader will be able to charge MXN0.038562 ($0.002) per minute.

IFT said in a statement: “The establishment of interconnection tariffs based on costs is a regulatory policy mechanism that aims to balance competition, reduce the disadvantages derived from the size of the network, and allow smaller companies to have tariff plans that position them competitively in the provision of the service.”

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