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Save Mexico: Stop druglords, violence ... and that DRATTED MOBILE DUOPOLY

Watchdog orders mega-firms: share infrastructure with rivals

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Mexico's government was told that next to the country’s endemic level of organised crime and associated violence fuelled by the drug trade, its mobile duopoly was one of the major hindrances to its economic growth. So it decided to act against both.

Mexico’s sensational growth in pay TV and telecoms has been distributed largely between two dominant players, Televisa and America Movil.

To combat the duopoly, the government – led by President Enrique Pena Nieto – took the key step in June 2013 of abolishing the relatively toothless longstanding telecoms and pay TV regulator Cofetel and replacing it with the Federal Telecommunications Institute (IFT). IFT was given new powers to force companies to share infrastructure, sell services at fixed prices and even in some cases enforce an asset sale or breakup.

Th new regulator has not taken long to unleash these weapons against Televisa/America Movil, which the government sees as concentrating commercial power too greatly in the hands of two oligarchs, Televisa’s Emilio Azcarraga and America Movil’s Carlos Slim – even if the latter is a noted philanthropist.

While no asset sales have yet been mooted, IFT has ordered both companies to share their infrastructure with competitors in a bid to stimulate competition. America Movil will also have its phone prices regulated, while Televisa, the nation’s biggest broadcaster, will have to let competitors share its DTT towers for a set fee. It must also publish its advertising prices.

Such measures will not have an immediate impact on market shares and it is doubtful whether this will be significant even in the longer term, without other measures to dent the power of the big two.

Calculating market shares in Mexico is notoriously difficult because methods of counting vary between operators. America Movil has traditionally reported chiefly in RGUs (Revenue Generating Units) in what looked like a deliberate attempt to obfuscate the situation and exaggerate its pay TV numbers by counting some homes twice or even three times. At any rate it made it hard to break numbers down into pay TV, broadband and mobile.

It is clear that in pay TV Televisa is highly dominant, with almost 70 per cent of the 14.6 million total subs reported by IFT for Q3 2013. This includes the circa 4 million DTH subs for Sky Mexico, which is 58.7 per cent owned by Televisa and 41.3 per cent by DirecTV – the rest is made up of cable TV companies such as Cablevision that are wholly owned.

America Movil’s main strength in Mexico is in fixed-line telecoms – with 80 per cent of the market via its Telmex unit – and in mobile: with 70 per cent through its Telcel subsidiary.

Across Latin America as a whole, its pay TV business has been soaring to overtake the leader DirecTV by some counts. America Movil says it had 16.4 million pay TV subs in Latin America at the end of 2013, a 22 per cent year-on-year increase, with 5.5 million of those through its cable TV subsidiary Net Servicos of Brazil.

Copyright © 2014, Faultline

Faultline is published by Rethink Research, a London-based publishing and consulting firm. This weekly newsletter is an assessment of the impact of the week's events in the world of digital media. Faultline is where media meets technology. Subscription details here.

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