High Court backs Telemex on network usage charges

23 April 2018 | Natalie Bannerman

Mexico’s High Court has ruled in favour of Telmex, the fixed-line division of Carlos Slim’s America Movil, over its plan to charge for access to its network.

Starting in 2019 the new rules will give Telmex licence to charge operators for access to its wholesale network, of which Telmex currently owns two thirds of. 

The news comes after the company won its appeal against the 2014 telecommunications Article 131, under which Telmex and other Slim companies cannot charge for access to network, and any attempts to do so were ‘unconstitutional’. The law was introduced to try and create more competition and an even playing field in a somewhat monopolised market.

The high court has said that the responsibility for setting the tariffs used by Telmex as of 01 January 201, falls to the telecommunications regulator the Federal Telecommunications Institute (IFT). It added that lawmakers should not be involved in deciding interconnection fees and therefore Congress had exceeded its authority.

Although the ruling came out in support of Telmex, the company will still be subject to a number of other regulations. The 2014 legislation implemented a number of other restrictions on operators who have a market share of 50% or more, such as: access and use of passive infrastructure such as wireless towers, elimination of mobile roaming charges and regulation on interconnection. In addition, Telmex not be able to charge interconnection fees that are as high as those charged by smaller competitors.

At the time publishing, the zero interconnection rate rule as part of the 2014 legislation supported by a number of local operators who jointly made a statement saying it: “has made it possible for alternative operators, both mobile and fixed, to invest in their own networks and offer attractive plans to boost competition, so their removal would cause damage to the competitive environment in Mexico," according to a report in El Economista.

Signatories to the statement include Telefonica’s Movistar, Virgin, True, weex, and cable companies such as Megacable, Izzi Telecom, Grupo Televisa, Totalplay and AT&T.

The new market rules, spearheaded by Mexican president Enrique Peña Nieto, has led to a drop  in the price of telephone services, although the market shares of the key market players has not been affected.