2014 Mexico City Blog: What's in the Telecom Reform Package?

In June 2013, as part of a major reform package launched during his first year in office, Mexican President Enrique Peña Nieto signed into law a reform overhauling the telecommunications industry. The reform’s objective is to increase competition, quality of service, and content in the Mexican market.

The legislation created a new autonomous regulator for the telecommunications industry, with the Federal Institute of Telecommunications (Ifetel) replacing the Federal Commission of Telecommunications. The new Ifetel would have the ability to revoke licenses for companies employing monopolistic practices. The reform also transforms the Federal Commission of Competitiveness into the Federal Commission of Economic Competition and gave it the power to declare “dominant” any company controlling more than 50 percent of the market share in any industry, including telecommunications.      

On top of that, the reform increases the allowance for foreign investment in telecommunications and satellite communications from 49 to a 100 percent, while foreign investment in radio remained at 49 percent. It also makes access to information a constitutional right; the reform contemplates the offering of two new network TV concessions and must carry-must offer policies.

Finally, the reform established a 180 day timeframe, which expired on December 9, to come up with the secondary legislation detailing implementation of the reform. Finally, months after the deadline, on March 24 the president submitted the proposal of the secondary legislation (The Federal Telecommunications and Radio Broadcasting Act) to the Senate.

Facts on the secondary legislation submitted by the administration:

• It was sent to three Senate committees for analysis and approval: Communications and Transportation; Radio, TV, and Cinema; and the Legislative Studies Committee.  
• The package presented amends eight constitutional articles (6, 7, 27, 28, 73, 78, 94 and 105).
• It contains 312 articles, 46 chapters, 16 titles, and 22 transitional provisions.
• The secondary legislation establishes regulations regarding telecommunications for Ifetel, the Ministry of Telecommunications and Transportation, the Ministry of the Interior, the Ministry of Finance, the Ministry of Education, the Ministry of Health, and the Attorney for Consumer Protection.
• The legislation classifies the radio electric spectrum in four ways: commercial, public, private, and social.
• Ifetel will also have final word on interconnection tariffs when these are disputed, and on changes in the corporate structure of companies tied to license holders.
• Concession holders who break rules could be fined up to 5 percent of their revenue in Mexico. The fines will be double that in the case of repeat offences. 
• Long distance call prices (roaming) will be eliminated within two years of approval of the legislation.
• The legislation gives the Ministry of the Interior the attributes to monitor and administrate content and advertisements.
• The deadline to complete the transition to digital TV is set to December 31 2015, with some exceptions.
• Article 146 establishes that Internet service providers will be able to differentiate the services they provide according to the type of clients and market.
• Article 197 establishes that the government can request temporarily blocking telecommunications services for matters of public safety and national security. 

The proposal has generated concern among open-internet advocates and others, and the administration has expressed its willingness to accept changes. Senator Javier Lozano, who leads the Communications and Transportation Commission, already presented draft legislation modifying the language in article 197. The legislation was expected to be approved before the end of the regular congressional session on April 30, but debate has been delayed for an extraordinary session that will, according to Senate leadership, most likely take place in June.