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Mexico telecoms bill has powers to tame Slim, Televisa

Mexico's President Enrique Pena Nieto speaks during the promulgation of the electoral political reform in Mexico City, January 31, 2014. REU
Mexico's President Enrique Pena Nieto speaks during the promulgation of the electoral political reform in Mexico City, January 31, 2014. REU

By Christine Murray and Tomas Sarmiento

MEXICO CITY (Reuters) - Mexico's government on Monday proposed giving a new regulator wide-reaching powers to police the operations of dominant telecommunications companies and TV broadcasters, right down to their prices and discounts.

The bill sent to Congress fleshes out a constitutional reform approved last year that seeks to curb the power of phone mogul Carlos Slim and the country's top broadcaster, Televisa.

The regulator, the Federal Telecommunications Institute (IFT), will have sweeping powers to order companies to sell assets, revoke concessions and share networks and infrastructure, according to the bill sent to the Senate.

Mexico's two main opposition parties, however, said in a joint statement later on Monday that the proposal would curtail the power of the IFT and instead empower the executive branch for "political purposes."

The statement was signed by the conservative National Action Party and the leftist Democratic Revolution Party, rivals of the ruling Institutional Revolutionary Party.

Under the proposal, the IFT will have the power to levy fines of up to 10 percent of revenue in Mexico in the case of a repeat offense. It will also be able to force companies to seek approval annually for interconnection and infrastructure-sharing terms, in line with a draft obtained by Reuters last month.

Major market players such as billionaire Slim's phone and Internet giant America Movil, his fixed-line operator Telmex and TV broadcaster Televisa have been declared dominant by the regulator.

"The most important part of this is more competition," communications and transport secretary Gerardo Ruiz Esparza told local radio. "What the (bill) says is that for there to be more competition, we need to ensure there is no dominance in the market."

The telecoms overhaul, a central plank of a wider raft of economic measures ranging from taxes to energy that Pena Nieto pushed through Congress last year, has raised hope the government is serious about finally breaking the stranglehold of a select few over Latin America's second-biggest economy.

Slim, who became one of the world's richest men after taking control of Mexico's former state telephone monopoly at the outset of the 1990s, controls around 80 percent of Mexico's fixed-line business and about 70 percent of the mobile sector.

Televisa has more than 60 percent of the TV market, and many Mexicans complain it exerts too much political influence.

Mexico's radio and television industry group said in a memo to members that some aspects of the bill imply "new and severe" regulatory burdens for the broadcast sector, according to a preliminary review.

It said some measures translated into over-regulation and could be subjective and editorial independence could be compromised by the imposition of a code of ethics. It also cited unduly harsh fines and legal uncertainty regarding concession extensions.

The IFT has ordered Slim's companies to present plans to cut rates for rivals using America Movil's mobile network, scrap roaming charges, open up the fixed-line network and share transmission towers as well as other infrastructure.

However, the IFT has not ordered a break-up of his operations, a step the regulator says should only be taken as a last resort.

(With reporting by Elinor Comlay, Gabriel Stargardter, Michael O'Boyle and Adriana Barrera; Editing by Simon Gardner, David Gregorio and Lisa Shumaker)

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