Fight to end telecom monopolies may be in trouble

A year ago, Mexico’s Congress approved a telecommunications overhaul that lawmakers said would end monopoly control of television and telephones and curb the power of some of the nation’s richest men.

Passage of framework legislation to enact the overhaul over the weekend has sparked fierce debate over whether the legislation is substantive or a sham.

Critics and opposition legislators said the proposed overhaul was turned on its head by lawmakers loyal to Emilio Azcarraga, head of the Televisa conglomerate, which is the world’s largest Spanish-language communications company.

The legislation will bring only limited competition to Carlos Slim, the telecom tycoon who is the world’s second-richest man, the critics said.

“It is a packet of gifts … for Televisa,” said Sen. Javier Corral, a member of the divided center-right National Action Party. “This turns back the clock.”

The government of President Enrique Pena Nieto dismissed the charges, saying Mexico’s 120 million citizens would feel a rapid impact in their pocketbooks.

“This reform is as deep or even deeper than was foreseen in the constitutional change,” Humberto Castillejos, the president’s legal counsel, affirmed in a briefing for foreign reporters Monday afternoon. “Don’t be fooled by strident voices that don’t represent the voice of the majority.”

The framework legislation passed the Senate on Saturday on an 80-36 vote and is expected to sail through the Chamber of Deputies later this week. The government cited the following impacts:

Carlos Slim, who has a fortune estimated at $74 billion, controls 80 percent of the market in Mexico for fixed-line telephones through his company Telmex and 70 percent of the cellular market through Telcel, a subsidiary of his America Movil.

Despite pumping hundreds of millions of dollars in investment into Mexico and struggling against Telcel for years, competitors Telefonica, Iusacell and Nextel have only obtained 19 percent, 8 percent and 3 percent of the market, respectively.

For its part, Azcarraga’s Televisa has 70 percent of the broadcast television market and enjoys more than half the market for cable and satellite television.

Slim and Azcarraga have become symbols in Mexico of powerful interests that mold public debate and policy to profitable ends.

Before enactment of the constitutional telecom reforms a year ago, “the Mexican state had lost the capacity to apply public policies in the telecom sector,” Undersecretary of Telecommunications Jose Ignacio Peralta said. Monopolistic companies would obtain legal injunctions blocking any attempt at regulation.

With the overhaul, a telecom regulator, the Federal Telecommunications Institute, came into existence, and in March the institute declared that Slim’s two companies and Televisa were dominant players subject to “asymmetric measures” to increase competition.

Yet monopoly-busting action remains dependent on the framework legislation, and the last several weeks saw intense lobbying by the telecom giants to protect their own areas while prying open areas controlled by competitors.

Both Slim and Azcarraga are interested in providing broadband service, telephone and television.

Some political analysts said the giants were able to alter the legislation to limit impact and open doors to new activities. While Slim’s Telcel will be forced to share its network infrastructure with other operators, and not charge them for calls to its own clients, the framework bill would let it enter the broadcast market after two years.

Televisa, for its part, will be forced to publish its advertising rates and apply them to all customers, but it may be allowed to capture a significant portion of the market for wireless services.

“At the end of the day, we thought the state was going to adequately regulate Carlos Slim and Televisa. But we see that the law ends up offering them privileges,” Denise Dresser, a columnist and commentator, told MVS Radio.

In September, the Pena Nieto administration is to auction off the rights to launch two new television networks.

Televisa must provide access to the winners of the two new networks on its cable and satellite systems.

Corral, the senator, lashed out at a group in his own National Action Party that backed the framework package, saying it was working on behalf of former President Felipe Calderon, a National Action politician who gets uncritical coverage on Televisa newscasts, and on the ruling Institutional Revolutionary Party, under whose tutelage Televisa grew to dominance in the final decades of the last century.

“It’s really grotesque that from the opposition, groups close to the ex-president continue to act in favor of private interests like the television monopoly,” Corral said.

Televisa did not respond to a request for comment, and Calderon could not be reached.