Mexico Readies Telecommunications Reform

MEXICO CITY: Mexico’s government is said to be proposing a new bill that would potentially break up its telecom and broadcast monopolies.

The bill, expected to be presented to Congress today, would create a new independent regulator that could designate firms as "dominant," and could possibly break up companies to improve competition. The legislation, which President Enrique Pena Nieto—who has been in office for 100 days—is due to present, would also establish specialized competition courts to settle disputes.

The overall goal is to create more competition in the Mexican communications industry, where smaller companies have struggled to compete against Carlos Slim’s America Movil. Slim currently controls about 70 percent of Mexico’s mobile market and about 80 percent of fixed lines. The bill could also affect Mexico’s leading broadcasters, Televisa, which is controlled by Emilio Azcarraga, and Azteca, owned by Ricardo Salinas Pliego. Together, the two television companies form a duopoly in the Mexican TV market.

The dominance by America Movil and Televisa has led to high prices for services and may be hindering the country’s productivity as a whole. This has left lawmakers pushing for the changes to lower prices for consumers.

Currently, Mexican law prohibits foreigners from owning more than 49 percent of a telecommunications network. Part of the proposals would see foreign companies allowed to wholly own telecoms firms. It would also increase the limit on foreign ownership of TV and radio broadcasts.