Court ruling will bolster Mexico telecoms reform

Subject

Telecoms ruling.

Significance

The Supreme Court on August 16 ruled unconstitutional a law requiring Carlos Slim’s America Movil -- Mexico’s largest wireless provider -- to permit other operators to use its network free of charge. Though positive for America Movil, the ruling gives the government’s telecoms regulator, the Federal Telecommunications Institute (IFT), the power to set its fees, meaning that recent reforms to open up the telecoms sector are unlikely to be adversely affected.

Impacts

• Any new entrants to the Mexican market will require major investment, having to confront deep-pocketed competitors.
• The Pena Nieto administration may publicly lobby for Telcel to be unable to change competitors’ interconnection fees.
• The regulator will need to face down powerful lobbying from the Slim telecoms empire to enhance its credibility.