In 123 of the 125 municipalities that make up the Mexico state, That is, in 98.4% of the Mexican territory, there are barriers that affect competition and the presence of companies interested in selling. Internet services of fixed high-speed broadband to consumers of that entity, which is home to 17 million inhabitants and which also represents 8.92% of total Mexican GDP by 2021.
They are barriers to competition that are not driven by any economic agent in that sector, as could occur in other markets of telecommunications. At Mexico state they are normative barriers built at all levels of government, political ideologies and at different dates, which end up complicating the deployment of the network and the offer of that particular service.
A report of a hundred pages from the Investigative Authority of the Federal Institute of Telecommunications (IFT), based on file AI / DC-001-2018, finally decided a few days ago that the cumbersome regulations, rates and resolution times of the State of Mexico, at the state and municipal level, to obtain licenses that protect the construction of networks in that land, they represent barriers to the entry of new actors and are also barriers to the growth of operators that are already established in the state there.
In that state there are indications of the existence of barriers to competition that restrict the deployment of passive infrastructure and, consequently, the provision of fixed telecommunications services, ”said the IFT Investigative Unit.
“They are regulatory barriers that restrict the entry and expansion of bidders, since they raise the costs of deploying their own network, since providers must allocate greater resources to the management of various procedures, requirements, resolution times and payment of rights, which which in turn causes bidders to take longer to reach a critical mass of subscribers that allows them to enter or compete profitably ”, summarized the AI.
The penetration of the Internet in the Mexico state It was 78.6% in 2020, one of the highest degrees in the national comparison, but also indicative that 22 out of every hundred Mexicans still lack an Internet connection.
At Mexico state, 99.95% of the accesses to the fixed Internet service is provided through wired networks, be they infrastructures based on copper, fiber optic or coaxial cable. In more detail, the fixed Internet in the State of Mexico runs 44.43% on copper networks; another 32.26% travels by coaxial cable network and only 23.26% travels by advanced fiber optic networks. The rest, 0.05%, are fixed Internet products that are offered wirelessly.
The issue for Mexican consumers is not so much that the provision of their fixed Internet service travels through the copper network and at average speeds of 256 kbps to 320 kbps, very contrary to neighboring CDMX where the minimum average copper is 5 megabytes. .
The serious problem is that the fiber optic networks that allow operators to offer powerful Internet packages are practically installed in the municipalities that allow a greater and sooner return on investment, and also because the regulations of the government of the State of Mexico hinder that the industry can expand with more evolved networks towards municipalities with a less profitable market, resolved the Investigating Authority of the IFT.
In addition to the fact that Mexicans can think little about starting a digital business or a social service on the network due to the quality of their Internet connection, the regulations maintained by the government of the Mexico state It affects the human right of its citizens, since access to the Internet and its dignified connection is a human right enshrined in the Political Constitution of the United Mexican States, after the telecommunications sector reform enacted by a Mexican in 2013.
The Mexican municipalities do not facilitate the industry to advance soon on their territories with network improvements or with the construction of the same for the first time, because just as the state government deploys its own policies in the matter, the mayors also have their own regulations and times to resolve requests from companies in the sector.
It happens, for example, that some authorities establish three minimum requirements to initiate procedures, but others require 16. And the charges for procedures range from 47 to 29,000 pesos, depending on the authority and the municipality. Resolution times are even more noticeable: up to 126 business days to solve a work expert registration procedure.
The problem grows when a network crosses the neighboring municipality and there the same permit loses validity or validity, or because there is no procedure equivalent to that established by the other municipality. In addition, all the procedures must be followed in person, in times of pandemic. Almost no municipality offers a digital window, said the Investigating Authority.
And almost no municipality also discerns what procedure to follow as a local permitting process or as a tax collection. The clear example is told by the municipality of Amanalco and its now legendary attempt to collect local taxes from Telmex for building a network, when the company already paid federal taxes.
All this has had repercussions in a local fixed Internet market in a context with few players and fewer offers and attractiveness for a populous entity such as the State of Mexico, the most populated in the country.
This context has therefore allowed that in 53 relevant markets or municipalities of the 123 indicated, there is only one provider of a broadband Internet service; and of the 123 municipalities, the leading player in the market, whatever the brand, this operator has at least 35% of the Internet business and if this player was a leader in 2015, it was also in 2018, due to the barriers that mean government regulations.
At Mexico state brands operate massively Totalplay, Telmex, Megacable e Izzi Telecom. And although the denomination of preponderant economic agent that corresponds to Telmex should support third companies to be interested in the passive infrastructure of that operator to expand throughout the State of Mexico, it happens that it is not of interest because it is a copper network or because despite being fiber optic the passive infrastructure, the regulations They again complicate the rollouts of new offers.
“There are no effective competition conditions in 123 relevant markets (…) The existence of entry barriers consisting of high investments in network infrastructure was detected; difficult access to financing; high levels of concentration; but above all, the legal provisions that restrict the entry and expansion of fixed broadband service providers ”, said the Investigating Authority.
The Investigating Authority summoned and issued various recommendations to different authorities of the State of Mexico, competent in the matter, including the office of Governor Alfredo del Mazo.
These authorities did not attempt to distort the AI’s diagnoses, but their responses were ineffective and with little echo to improve competition and attendance in the Mexican fixed Internet business.
“The Investigating Authority proposed to take advantage of the existing mechanisms in the State of Mexico, in order to make transparent and simplify the requirements, procedures and administrative processes (…) Although, the governor points out that there is a State Catalog of Regulations, Procedures and Services, which facilitates regulatory compliance and provides legal certainty, by foreseeing the services, requirements, deadlines and tax burdens of the state and municipal agencies, also recognizes that this catalog must be integrated and updated by the obligated subjects ”.
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Reference-www.eleconomista.com.mx