Mexican Telecom Industry: (Un)wanted Monopoly?

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Mexican Telecom Industry: (Un)wanted Monopoly?

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“Part of Cofetel’s problem in implementing effective regulation arises from its inability to convince the courts that its regulations are reasonable and necessary. An important aspect of judicial review in Mexico is the amparo.”29 An amparo30 can result in obtaining a stay order in the implementation of a court decree for years. Even if the party, which filed the amparo, loses the lawsuit, much time elapses by then. In 1997, for example, CFC determined that Telmex had substantial power in five telephony markets namely, local telephony service; national long-distance service; international long-distance service; access or interconnection to local networks; and interurban transport. In August 1998, Telmex filed an amparo. Telmex successfully challenged before court the authority of CFC to declare it dominant in five telecommunications markets. Time and again Telmex filed many amparos challenging the decisions of CFC and Cofetel, and this amparo abuse has costed Mexican economy dearly. Karina Duyich, former head of AT&T Mexico’s legal department remarks, “Since 1998, Slim has made use of more than 60 amparos to thwart decisions by Mexico’s antitrust agency, the Comisión Federal de Competencia, ordering Telmex to reduce its interconnection rates – the fees rivals must pay to use Telmex trunk lines. Telmex’s very aggressive use of the amparo has ended any hope of an open telecommunications market in Mexico.”31

In 2000, CFC once again came down on Telmex for its refusal to deal with the competitors. For instance a customer who called a toll free number (an 800 number) operated by other longdistant operator using Telmex public phone, had to buy its prepaid cards. But the toll free numbers operated by Telmex were accessible without any charges. Telmex refused to deal with the competitors regarding the issue. Because of this, a case was filed against Telmex and it was ordered to enter into an agreement with its competitors. As a result Telmex provided a free toll free number to competitors who concluded an agreement with it. But by then competitors had lost considerable amount of business.

In the same year, Cofetel ordered a 63% reduction in interconnection fees, which Telmex charged its competitors for international calls. However, Telmex took advantage of Cofetel’s weakness and delayed in complying with the order by filing injunctions in various courts. In the meantime, there was a significant progress in the reduction of Mexican domestic interconnection fees, but international long-distance interconnection fee remained mostly unchanged. Mexico failed to address concerns of US telecom companies in regard to the high interconnection fees, which Telmex charged US carriers. In 2002, US requested a WTO panel to take up the matter. In 2004, US won the WTO telecommunications case against Mexico – in particular against Telmex. It was estimated that Mexico’s artificially high interconnection charges resulted in excess payments by US companies and consumers well over $1 billion since 2000.³²

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29] “Priorities for Telecommunications Reform in Mexico”, op.cit., page 20
30] An Amparo is a proceeding established in Articles 103 and 107 of the Mexican Constitution to provide citizens with protection against unconstitutional acts of the government. An action for amparo can be filed whenever a fundamental human right provided under Federal Constitution is allegedly infringed by any government agency. Parties can attack the government agency decisions in an amparo because the due process clause in the article 16 of the Mexican Constitution requires that agency orders articulate the ‘legal basis and justification for the actions taken’.
31] Roberts M. James and Ortega Israel, “How Reforms in Mexico Could Make the U.S More Secure”, http://www.heritage.org/Research/ LatinAmerica/bg2135.cfm, May 13th 2008
32]“US wins WTO Telecommunications Case Against Mexico”, http://www.america.gov/st/washfile-english/2004/March/ 20040312162758ASrelliM7.784671e-02.html, March 12th 2004