The Telmex concession and the scrambled river

On Friday of last week, América Móvil released a notice to investors in which, playing with language and taking advantage of their little or no familiarity with the legal aspects surrounding the process to extend a concession for a public network of telecommunications, affirmed that the Federal Institute of Telecommunications (“IFT”) resolved to extend for an additional 30 years the validity of Telmex’s concessions, counted from 2026 and that for that reason they will expire in 2056. According to América Móvil, all that remains is that they deliver, in 2023, “the draft concession title with the conditions and operating terms thereof.”

The first thing to note is that for now, said extension has not taken place formally, because although Telmex intends to minimize the last step, the IFT still has to inform it in 2023 of the latest conditions to which it must commit itself if wants to be authorized a new term of the concession, among which there must undoubtedly be specific, asymmetric conditions, in the context of its market power, and that only until it has agreed to commit to compliance with those conditions, the regulatory body will proceed to deliver the new validity for your concession title.

It is therefore, once again, the customary public statement of América Móvil with which it intends to confuse or surprise more than one authority. Already in the past they have tried to slide more than once, the imminence of some regulatory decisions, such as the very specific case of the last frontier that they have pursued for several years: entering the video market or the distribution of audiovisual content. Only this year the IFT itself rejected a request for Telmex to be authorized to operate the restricted television service.

In a consistent manner, América Móvil intends to set on the public agenda, either through ambiguous statements such as the one I refer to at the beginning or through its various spokespersons, the supposed need and convenience for Mexicans to be authorized to enter the restricted television market , the only one in the telecommunications sector that does not dominate today, precisely because it is not present in it.

In the simplistic analyzes with which they try to surprise the highest authorities, they forget to point out that the direct consequence of a poorly studied authorization will be to condemn the telecommunications sector for many years to return to that stage in which that economic group not only dominated the entire sector telecommunications, but imposed its will on the rest of the operators, on the authorities, and mainly, on the users.

It is an economic agent, or economic interest group, that in its eagerness to contain competition in our country, has invested – since it was privatized by the government of President Salinas de Gortari – far below what they did historically similar operators in other countries, a behavior that can be clearly observed in the statistics published by the OECD over many years. The foregoing, despite the generous tax treatment it received in the years following that privatization, which allowed it to credit investments against the payment of a certain percentage of taxes.

In fact, it is also easy to observe that it is a group that prefers to invest more in other Latin American countries, measured that investment as a proportion of its income, than what it invests in our country. In order to enter the restricted television market, it ventures to promise that its arrival will allow prices to be lowered, in a market in which the rising cost of content has systematically pushed prices up, as has been observed in a sustained manner in the United States market in the last 18 years.

For this reason, it is essential, for the healthy development of the telecommunications sector, that neither authorities, investors, nor media, be surprised by the customary ambiguous messages of the preponderant agent.

* The author is an economist.


Gerardo Flores Ramírez

Telecommunications expert

Economic Momentum

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