Mexico telecoms

Signal on Mexico telecoms regulation

By Richard Lapper and Adam Thomson in Mexico City

Published: April 3 2007 18:28 | Last updated: April 3 2007 18:28

Mexico’s new telecommunications and transport minister has launched a stinging attack on the country’s telecoms regulator, accusing it of playing more to the interests of corporate giants than to those of consumers.

The attack is likely to be seen as one of the strongest signs yet that the administration of Felipe Calderón, the centre-right president who took office in December last year, is intent on reining in the immense power wielded by many of Mexico’s largest companies.

With fears of political instability following last year’s contested presidential elections abating quickly, investors’ attention is now turning to the issue of competition and the need to increase economic productivity.

In an interview with the Financial Times, Luis Téllez, the telecoms minister, said one of the barriers to stimulating competition in the telecoms sector had turned out to be Cofetel, the industry regulator, which enjoys considerable independence from central government.

“The regulators have been captured by the regulatees,” he said. “They do not always respond to the public interest. I’m having a huge problem.”

The telecoms sector has long been dominated by Telmex, the former state-owned company now controlled by Carlos Slim, Mexico’s richest man. The company owns more than 90 per cent of the country’s fixed lines and América Móvil, its wireless communications spin-off, controls about 80 per cent of the cellular market.

Last week América Móvil joined forces with AT&T, the US carrier, in an attempt to buy a big stake in Telecom Italia, the Italian operator.

Mr Téllez expressed particular concern in two technical areas where he said Cofetel should have moved more quickly. One is interconnection – the mechanism by which other operators gain access to Telmex’s fixed-line network.

A handful of smaller telecoms companies have managed to strike deals with Telmex but Mr Téllez said progress had been slower than necessary. Without quick and easy access to this “backbone” other companies would be unable to compete effectively, he said.

The other area of concern is portability – the ability of consumers to switch companies without changing their telephone number. Mexicans have to change their telephone number whenever they change carrier, which experts say stifles competition.

The minister also expressed concern about Cofetel’s recent decision to place a cap on the tariffs Telmex is allowed to charge consumers, arguing that the regulator had been too permissive.

A recent study by the OECD pointed out that Mexico continued to have some of the most expensive telecommunications rates in the world.

Copyright The Financial Times Limited 2007