Telecommunications Reform in Mexico: Regulation, Market Structure and Social Coverage

27 Pages Posted: 16 Aug 2014

Date Written: August 14, 2014

Abstract

The study explores the effects on social coverage of services that will potentially be brought about as a result of Mexico's recent Telecommunications Reform. Specifically, the Reform (a) aims to introduce regulation to boost competition, and thereby bridge the market efficiency gap; (b) propose a significant shift in policy on digital inclusion, with the aim of bridging the access gap. It thus represents the most significant shake-up of the telecommunications industry in the last 20 years, ever since the privatization of public telecommunications firm Telmex (1990) and the introduction of the Federal Telecommunications Act (1995).

In relation to the first of these, boosting competition, an assessment of the situation as of 2014 reveals that the Reform and its institutional embodiment in the form of a new regulatory body, the Federal Telecommunications Institute, has begun to bear fruit by way of declarations of dominant economic agents in both the telecommunications and broadcasting sectors, and the proposal of specific asymmetric regulation measures to be imposed on these economic agents. In addition, investigations are underway into illegal market concentrations in relation to the provision of certain services, with a view to issuing a declaration of significant market power in relation to the provider in question in the very near future. The telecommunication service markets in Mexico have seen a rise in their contestability, attributable to the institutional strength of the new regulatory framework. The broadcasting service markets are contestable too as a result of the Reform; he announcement that two new TV channels would enter the market, along with the “must carry, must offer” requirement, levels the playing field and ensures greater competition for the future. Unlike the previous case, which is essentially regulatory, the digital inclusion case lies in investment in construction, in the expansion of infrastructure and in the human capital needed to operate this infrastructure and guarantee the benefits of digital inclusion. With regard to the “Mexico Connected” program, an increase of approximately 500% is reported in the number of public Internet access points in public places, but there is a lack of information on the extent to which these access points are equipped with the necessary infrastructure for developing digital skills that would foster the adoption of such technologies and trigger a process of economic development.

Keywords: Mexico, regulation, competition, digital inclusion, public telecommunications policy

JEL Classification: I31, L13, L43, L55

Suggested Citation

Casanueva-Reguart, Cristina and Bacilio-Avila, Erik, Telecommunications Reform in Mexico: Regulation, Market Structure and Social Coverage (August 14, 2014). Available at SSRN: https://ssrn.com/abstract=2480773 or http://dx.doi.org/10.2139/ssrn.2480773

Cristina Casanueva-Reguart (Contact Author)

Universidad Iberoamericana ( email )

Reforma 880
Lomas de Santa Fe
Mexico City, Mexico DF 01219
Mexico
+52+55 23 00 77 78 (Phone)

Erik Bacilio-Avila

Universidad Iberoamericana ( email )

Prol. Paseo de la Reforma, #880
Lomas de Santa Fe
Mexico, Distrito Federal 01210
Mexico

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