U.S. Federal Communications Commission Upholds Permit for Telmex to Offer Services in U.S. Market

SourceMex Economic News & Analysis on Mexico, August 12, 1998 | Go to article overview
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U.S. Federal Communications Commission Upholds Permit for Telmex to Offer Services in U.S. Market


In early August, the US Federal Communications Commission (FCC) upheld a permit for the Mexican telecommunications giant TELMEX and its US partner Sprint Communications to begin offering long-distance service to US customers.

TELMEX had originally received the FCC permit to operate in the US market in October 1997, but final authorization was delayed because of strong opposition from US long-distance providers AT&T and MCI. The two US companies argued that TELMEX should not be allowed to operate in the US because of the company's monopolistic practices in Mexico's long-distance market.

AT&T and MCI contend that TELMEX is charging their subsidiaries Alestra and Avantel excessively high interconnection fees. Earlier this year, the US companies asked the US Trade Representative's office (USTR) to bring their complaint against TELMEX before the World Trade Organization (see SourceMex, 03/04/98).

Following the ruling, AT&T expressed its strong disappointment in the FCC decision. "Telmex continues to drag out negotiations to lower its domestic interconnection charges, which are among the highest in the world," AT&T said.

US rivals to continue to push for fair treatment in Mexico

MCI and AT&T said they would continue urging US President Bill Clinton's administration to pressure the Mexican government to force TELMEX to reduce interconnection fees.

The Comision Federal de Telecomunicaciones (COFETEL) has attempted to mediate between TELMEX and its long-distance competitors during the past several months. But TELMEX, which has refused to accept any substantial reduction in interconnection fees, contends the high charges are necessary to pay for installation of a fiber-optics network and other infrastructure, which in the long run will benefit all long- distance carriers in Mexico.

COFETEL also intervened in the dispute between the US long-distance companies and TELMEX regarding access to the US market. Javier Lozano, who became director of COFETEL in May of this year, appealed to FCC Chairman William Kennard to uphold the permit.

In announcing the permit for TELMEX, Kennard expressed concern about the company's monopolistic practices in Mexico. But he also pointed out that the FCC could no longer block TELMEX from operating in the US, since the TELMEX-Sprint partnership had met all the requirements to offer long- distance services in the US.

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