Mexican telecoms bill to raise pressure on Slim: draft

MEXICO CITY (Reuters) - Mexico will give its new telecoms regulator sweeping powers to police dominant telecommunications companies, right down to their prices and discounts, according to a draft bill that fleshes out a constitutional reform passed last year.

The spearhead of efforts to curb the power of telecoms mogul Carlos Slim, the Federal Institute for Telecommunications (IFT) will be able to force phone companies to seek approval every year for interconnection and infrastructure-sharing terms, according to a draft of the legislation obtained by Reuters.

It is part of a massive remit granted to the IFT that allows the watchdog to order phone and TV companies to sell assets, share networks and infrastructure and revoke concessions.

The local mobile and fixed-line units of Slim's firm America Movil as well as broadcaster Televisa are widely expected to be declared dominant by the IFT.

Slim, who became one of the world's richest men after taking control of Mexico's former state telephone monopoly at the outset of the 1990s, controls around 80 percent of Mexico's fixed-line business and about 70 percent of the mobile sector.

Televisa has more than 60 percent of the TV market, and many Mexicans complain it exerts too much political influence. However, the broadcaster's economic power lags far behind Slim.

The telecoms overhaul has raised hope that the government is serious about finally breaking the stranglehold of a select few over Latin America's second biggest economy.

Without naming America Movil, Marcela Guerra, a senator in the ruling Institutional Revolutionary Party, said a week ago Mexico had been left behind in the race to revamp its telecoms industry because one company had enjoyed "absolute" dominance.

"There has been no effective regulation," she said.

REFORM DRIVE

The 134-page draft proposal, which comprises hundreds of articles, combines two existing laws and reforms several others, is a working document and is subject to change.

Governing the implementation of last year's telecoms reform, the bill is expected to be sent to Congress in the next few days. The telecoms reform forms a central plank of a wider raft of economic measures ranging from taxes to energy that President Enrique Pena Nieto pushed through Congress last year.

Last year's constitutional reform already ensures Televisa will face more competitors due to the planned auction of new TV networks, but the secondary laws go into particular detail on how the government intends to cut Slim down to size.

A range of offers from the dominant telecommunications player, including promotions and discounts, will only be authorized with the express approval of the IFT, the draft said.

The dominant company could also have to "submit to the IFT annually for approval" a host of services for other companies connecting to their infrastructure and network.

The dominance ruling from the IFT, expected next week, will be critical to the implementation of the reform.

LAST RESORT

The regulator will also have the power to vet any plans by companies to divest assets if they are so ordered.

Still, a break-up of the companies looks unlikely in the foreseeable future, and the head of the IFT has said it is only likely to be used as a "last resort" to spur competition.

Many of the powers detailed in the draft existed under Mexico's old telecoms law. But the former industry regulator, known as Cofetel, was unable to apply them because companies were able to file injunctions preventing the previous antitrust watchdog, Cofeco, from declaring them dominant.

Mexican lawmakers were adamant this had to stop.

Pena Nieto's constitutional reform last year made the IFT the highest authority on antitrust issues in telecoms and broadcasting, while separate legal changes mean companies can no longer seek injunctions against decisions by the regulator.

Last week the IFT said Mexico's broadcasters must offer public channels to their pay TV competitors at no charge.

That would require dominant market players Televisa and TV Azteca to allow competitors like Dish Mexico to transmit their so-called free-to-air channels on its own satellite system.

New rules known as "must offer, must carry" oblige pay television services to offer the public channels.

(Additional reporting by Elinor Comlay and Christine Murray; editing by Jonathan Oatis and Matthew Lewis)

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