The Mexican government is taking aim at the system that enriched the countrys billionaires with a proposed reform of its telecommunications industry.
Backed by all three major political parties and President Enrique Pea Nieto, the reform would open the telecommunications market to greater foreign investment, create two new all-access television channels, and subject companies to tougher competition rules all with an eye on providing Mexican consumers with more choice and lower prices when it comes to phone and television services.
Carlos Slims Amrica Mvil dominates landlines and cellular phone service in Mexico through his companies Telmex and Telcel, which respectively claim 80 percent and 70 percent of those markets. Mr. Slim has ranked as the worlds richest person on Forbes list for four years running.
In television, Mexico's two free channels split local audiences, Emilio Azcrragas Televisa with 70 percent of viewers and Ricardo Salinas TV Azteca with the rest. Together they control roughly 90 percent of the television advertising market. Theyre competitors but partners, too: Televisa and TV Azteca each own half of cellular phone provider Iusacell.
Those three Amrica Mvil, Televisa, and TV Azteca have managed to derail many attempts at reform over the years with effective lobbying and legal challenges. But in a show of unity on the issue, political leaders of all stripes unveiled the proposal together on Monday.
The bad reputations the companies have generated for exploiting their dominant power for their own benefit has allowed all political parties to come together, says Eduardo Garcia, editor-in-chief of the business news website Sentido Comn. In principle, it looks very positive for the Mexican economy and not very positive for the companies involved.
If approved by legislators, the reform will dismantle the current largely ineffective regulatory structure that has one independent agency reviewing cases and recommending fines, and another government ministry subject to political whims rarely imposing them. The result of this divided responsibility is regulatory gridlock.
The top phone and television companies are known for their excellent law firms, says Alexander Elbittar, economist and telecommunications expert at CIDE, a public university in Mexico City. …