Mexican operators left concerned as judge proposes backing Slim appeal

By:
James Pearce
Published on:

Carlos Slim's América Móvil is looking to block laws that prevent it from levying interconnection charges, with rival operators warning this will have a negative impact on competition

A dispute is brewing in the Mexican telecoms market after a judge backed a legal challenge from América Móvil over zero interconnection rates that are supported by 21 Mexican operators.

The operators, made up of fixed, mobile and cable TV companies, have expressed concern at Carlos Slim’s attempts to render unconstitutional a pillar of the 2014 telecommunications act that helped increase competition in Mexico.

Last week, Supreme Court justice Javier Laynez Potisek proposed backing Slim’s legal challenge over the law, which cut to zero what América Móvil can charge rivals to complete calls on its network. Slim’s firm controls about two thirds of the Mexican mobile market.

The zero interconnection rate rule “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," said the operators in their joint statement, according to a report in El Economista.

Signatories include the likes of Telefonica’s Movistar, Virgin, True, weex, and cable companies such as Megacable, Izzi Telecom, Grupo Televisa, and Totalplay. AT&T, which entered the market after Mexico’s Congress passed the law changing interconnection rates, also signed the statement.

A majority of Supreme Court Justices must approve the proposal from Justice Laynez Potisek, with arguments set to take place later this week.

Since the rule change came into place, mobile prices in Mexico have dropped by more than 40% and fixed line prices by about 5%, although América Móvil has defended its position, saying the law interferes with the functions of the regulator.

América Móvil units Telmex and Telcel, "accustomed to making extraordinary profits, don't want to adapt to competitive pressure of other operators," the rival operators added.

It comes just days after a Colombian court that has imposed a $1.55bn fine on Claro and Telefónica offered to let the operators pay in instalments.