Claro TV: route towards a greater competitive imbalance

It has been reported in different media that, in the coming days, América Móvil (Telmex-Telcel) will obtain authorization, via its subsidiary Claro TV, to provide pay TV service in the country. This, after three decades of express prohibition when granting it its concession title in the fixed telecommunications segment.

With this, a route of market reconcentration and strengthening of the preponderant economic agent in telecommunications (AEP-T) would be enabled, in contravention of the role of effective competition and balance of competitive conditions between players that is in charge of the Federal Telecommunications Institute ( IFT).

To date, there are manifest antagonistic circumstances to this regulatory task and that will undoubtedly translate into greater operating advantages for the dominant one and will generate a greater competitive imbalance.

Preponderance Measured in Users. According to the metric used to define preponderance, that is, the aggregate of telecommunications users in the Mexican market, América Móvil provides mobile and fixed services (telephony and broadband) to 58.6% of the total as of December 2020 , a proportion only 7.5 percentage points (pp) lower than that registered at the beginning of the period of application of asymmetric regulation measures (March 2014). This means practically a reduction of 1 pp per year, since AEP-T was determined.

Despite having reduced its weight in the fixed segment, it continues to hold a large market share in mobile, as well as in the deployment of telecommunications infrastructure that will allow it to support the pay TV service in Mexico.

Preponderance in Infrastructure. In the case of fixed broadband networks, Telmex is present in 97.8% of the municipalities (1,624) that have deployed capacities to provide this service. At the same time, it holds a monopoly position in practically all (96.3%) of the 950 municipalities in which only a single operator is present, these represent 57.6% of the total in which the operator has coverage (1,588), according to IFT figures.

The availability of fiber optic networks of this operator reaches an extension of 320 thousand km. deployed, level 3.3 times higher than the installed capacity of the second place in this metric (Totalplay) and 6.3 times higher than the magnitude of the Mexican government’s backbone network managed by CFE.

Regarding mobile network coverage, Telcel has a predominant position in terms of guaranteed 3G and 4G coverage throughout the national territory of 88.7% and 81.7%, respectively, which is significantly different from its competitors.

Extraordinary Profits and Greater Competitive Imbalance. This preeminent positioning in different metrics is a consequence of the historical generation of extraordinary profits that amounted to 29,691 million pesos in the third quarter of 2021, a level only 0.4% lower than the one recorded in March 2014.

The decision to approve the entry of Pay TV to América Móvil would be taken at a time that was strictly unfortunate for the competition, given the conditions described. Therefore, if confirmed, the competitive imbalance would be exacerbated and a route of greater market reconcentration would be enabled in favor of this operator.

It would constitute the worst scenario for competition, competing players and consumers, due to the potential effects of an imperative lack of competition in the telecommunications sector in Mexico.

@ernestopiedras

Ernesto Piedras

Director General de The Competitive Intelligence Unit

Competitive intelligence



Reference-www.eleconomista.com.mx

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