Mexico supreme court ruling undermines telecoms reform

Ruling by Supreme Court undermines reforms intended to weaken billionaire Carlos Slim's hold on market


The Mexican Supreme Court has ruled that Telmex, a fixed-line unit of Carlos Slim-controlled telecommunications giant America Movil, should not be barred from charging rivals for calls to its network. The Suprema Corte de Justicia de la Nación (SCJN) decision follows a similar ruling from the Supreme Court in August that opened the door for America Movil’s mobile unit Telcel to begin charging its rivals for use of its network.

Undermining reform
The rulings undermine attempts to reform the telecoms market in Mexico. The court found the 2014 telecommunications law's Article 131, stating that dominant operators like Telmex and other Slim companies could not charge rivals for completing calls on their networks, was unconstitutional. Article 131 was a key pillar of reforms intended to loosen billionaire Carlos Slim’s hold on a market he has dominated since taking control of former state phone monopoly Telmex in the 1990s. The Supreme Court said it was up to the regulator, the Federal Telecommunications Institute (IFT), and not lawmakers to establish interconnection fees and Congress had exceeded its authority.

Rule set for 2019
The IFT will set the rates, which will become effective on Jan. 1, 2019. The IFT had ruled in November that America Movil could resume charging local rivals for mobile calls to its network. In March, the IFT then approved a plan to separate part of America Movil’s fixed-line units into new companies. This month, America Movil submitted a plan for the separation, which is intended to open its infrastructure to competitors. Telmex will likely to be subject to asymmetric regulation so they cannot collect interconnection fees as high as those charged by smaller competitors.

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