1. MEXICO
O
N March 11, 2013, the Executive Power presented a
bill to reform diverse provisions of the Mexican
Constitution (“Bill”), mainly in relation to
telecommunications matters. The Bill is a
consequence of certain commitments enclosed in the so-
called “Pact for Mexico”, which was executed by the
President and the three principal political parties one day
after Enrique Peña Nieto took office as the new President.
The current telecom regulatory framework was put
in place in 1995 through the publication of the Federal
Telecommunications Law (“FTL”), almost five years
after the privatization of Telmex and was the base for
the liberalization process.
The FTL has been amended a number of times, but
the most structural amendment was made in 2006
(“Televisa Law”), even though it was partially
challenged by one-third of the Senate and the Supreme
Court declared the unconstitutionality of some of its
provisions (2007). The Televisa Law was published
months before the presidential elections in which Lopez
Obrador (left-wing) was a potential winner.
The Bill is still in the process of being approved, but
it has been sanctioned (with some changes considered
herein) by the Deputies and the Senate. It is expected
that the Deputies will approve the changes proposed by
the Senate and that the State legislatures (majority) will
ratify the Bill. In addition, secondary provisions must be
issued in order to detail and implement the Bill.
WHAT ARE THE MAIN AIMS OF THE BILL?
According to the Pact for Mexico, the Bill has three
aims: (i) strengthen the rights related to the freedom of
speech and introduce the right to access a) information
and communications technology, and b)
telecommunications and broadcasting services,
including broadband and Internet; (ii) improve and
secure effective competition in the following markets:
open and paid television; radio; fixed and mobile
telephony; data services, and all telecommunications
services, and (iii) generate conditions to increase
infrastructure and its efficient use, in order to reduce
the prices and rise the quality of services.
Although everybody may celebrate the aims of the
Bill, there is no common agreement that the proposed
changes will actually generate the desired results.
HOW EXTENSIVE WILL THE CHANGES BE?
The changes can be divided into two categories:
(i) changes proposed to the constitutional text
(although with excessive detail), and (ii) provisions
contained in transitory articles that order the
implementation of different actions under certain
deadlines (uncommon for constitutional reforms).
However, most of the changes could have been
achieved through legal or regulatory provisions.
Generally, the constitutional changes include:
(i) Establishing as a human right the access to a)
information and communications technology, and b)
broadcasting and telecommunications services (as
public services), including broadband and Internet.
(ii) Creating the Federal Institute of
Telecommunications (“IFETEL”) as a constitutional
autonomous entity, in charge of the regulation of all
broadcasting and telecommunications matters.
(iii) Creating judges and courts specialized in
broadcasting, telecommunications and economic
competition matters, appointed by the Federal
Judiciary Council.
The main provisions of the transitory articles are the
following:
(i) The Federal Congress must amend the regulatory
framework according to the Bill (180 calendar days),
including the issuance of a convergent law to regulate
telecommunications and broadcasting together.
(ii) Foreign investment in: a) telecommunications and
satellite communications up to 100%, and b)
broadcasting up to 49% subject to reciprocity from the
country of the ultimate investor.
(iii) The transition to digital terrestrial television
(“DTT”) must finish on December 31, 2015 (as originally
stated) and the Deputies should grant the necessary
budget.
(iv) Must offer and must carry obligations will apply
on a free basis, subject to: a) the must carry obligation
is applicable to DTH operators if they cover 50% or
more of Mexico, and b) the gratuity of both obligations
do not apply x) to concessionaires with substantial or
preponderant power, and y) when IFETEL determines
the existence of competition in broadcasting and
telecommunications markets.
(v) IFETEL must issue (180 calendar days) the
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Q&A: TELECOMS REFORM IN MEXICO

2. MEXICO
bidding rules for two new
television networks with national
coverage.
(vi) IFETEL must determine (180
calendar days) the existence of
economic agents who hold a
market share greater than 50% of
users, subscribers, audience, traffic
or installed capacity
(“preponderant agents”), in order
to: a) impose measures to avoid
affecting free competition
(including unbundling of its
essential facilities); b) issue general guidelines to allow
them the provision of additional services, and c) issue
measures to enable the unbundling of the local network
of the preponderant agent.
(vii) The Executive Power and IFETEL shall secure
the installation (2014-2018) of a shared
telecommunications network for wholesale services,
which will use at least 90 MHz of the 700 MHz band.
HOW SIGNIFICANT IS THE CREATION OF A NEW INDEPENDENT
REGULATORY BODY IN THE TELECOMS SECTOR?
The current broadcasting (except content) and
telecommunications regulator is the Federal
Telecommunication Commission (“COFETEL”), which was
created as a governmental subordinated body in 1996,
although its independence was boosted through the
Televisa Law and other Supreme Court decisions. The Bill
proposes the substitution of COFETEL by IFETEL.
The main improvements of IFETEL are: constitutional
autonomy; management of its own patrimony and
budget; independence of resolutions, including its own
statute and general provisions; public deliberations;
powers to directly grant/revoke concessions; exclusive
powers in economic competition matters regarding the
broadcasting and telecommunications sectors;
legitimation for constitutional disputes and content
regulation (except electoral).
One controversial characteristic of IFETEL is that all
of its acts could only be challenged via indirect “amparo”
and could not be stayed through injunctions, although
the new Amparo Law (April, 2013) limits the injunction
only with respect to public goods (such as the spectrum).
Another point for debate is the process to appoint the
seven commissioners of IFETEL (on a staggered basis,
for nine years without reelection), as the Bill introduces
a new mechanism (i.e. evaluation process by a
committee; presidential proposal, and Senate’s approval
and appointment of the president for four years) and a
set of strict requirements to be complied with by the
individuals proposed as commissioners, but there is no
guarantee to avoid the political interests involved.
The Ministry of Communications and Transporation
(“Ministry”) and the Ministry of Finance and Public
Credit may issue (within 30 days) non-mandatory
opinions with respect to certain acts of IFETEL.
Fortunately, the Senate included various
accountability mechanisms to limit the power of IFETEL
(e.g. internal control body, summons, annual program,
quarterly reports).
IN WHAT WAYS WILL THE BILL MODERNIZE
TELECOMMUNICATIONS IN MEXICO?
If effectively implemented, the Bill could modernize the
telecommunications sector in Mexico basically through
more national (private and public) and foreign
investment due to: (i) the elimination of restrictions to
foreign investment in telecommunications activities and
up to 49% in the broadcasting industry (subject to
reciprocity); (ii) the possibility of providing all services
technically possible (convergence); (iii) the bid of two
new broadcasting national networks; (iv) the transition
to DTT; (v) a more independent and credible regulator;
(vi) the application of the competitive measures such
as: must carry, must offer, unbundling, preponderant
agents, and (vii) the installation of a wholesale
telecommunications network.
Assuming that the foregoing actions result in more
competition, notwithstanding the limitations of the Bill,
there is no doubt that telecommunications in Mexico
will improve as well as its social, political and economic
conditions.
WHAT OTHER HEADLINES DOES THE BILL PROPOSE?
The Bill sets forth the creation of a decentralized public
body with technical, operational and decision-making
autonomy, in charge of promoting non-profit
broadcasting services, in order to secure the access to
national, educational, cultural, civic, diverse and plural
content. Also, the Bill prohibits the broadcast of
publicity or propaganda to be presented as journalism
or news.
On the other hand, the Bill orders the Federal
Electricity Commission to assign its public
telecommunications network concession to
“Telecomunicaciones de México” (a body subordinated
to the Ministry), in order to secure an efficient and
shared use of the infrastructure (which is not
transferred).
Finally, the Bill also addresses the structure and
powers of the Federal Economic Competition
Commission (that will substitute the Federal
Competition Commission) – similar to what is proposed
to IFETEL. I
Author
Federico Hernández Arroyo
D. +52 (55) 5091-0164
fhernandez@bstl.mx
Barrera, Siqueiros y Torres Landa, S.C. (BSTL)
Paseo de los Tamarindos #150-PB
Bosques de las Lomas
05120 México, D.F.
T. +52 (55) 5091-0000
http://www.bstl.com.mx/hernandez-arroyo-federico
JUNE 2013 | FOCUS LATIN AMERICA
Federico
Hernández Arroyo
at BSTL