Background on Altán Redes and its Significance
Altán Redes, a public-private telecommunications company in Mexico, has been the recipient of substantial support from the federal government over the past five years. Rescued from bankruptcy and infused with nearly $490 million, Altán Redes has regained its competitive edge in the market. The company is currently directed by the state-owned CFE and has a strong presence in urban markets, though it still lacks access to the retail market.
Content of the New Telecom Law
The proposed telecommunications law in Mexico explicitly allows the federal government to provide internet services directly or through public-private partnerships, ensuring that the state maintains control and direction of such projects. This provision raises concerns about potential preferential treatment for Altán Redes, as it enables the government to acquire radiofrequency spectrum without cost and allocate it to Altán Redes, where state entities already hold significant influence.
Implications for the Telecom Market
- Preferential Treatment Concerns: Analyst José Felipe Otero warns that preferential treatment for Altán Redes could negatively impact the telecom market. The director of ICT Development Consulting suggests that the government might strengthen Altán Redes by directly assigning spectrum and mandating federal agencies to contract its services without public bidding or competition.
- Benefits for BAIT (Walmart’s Telecom Subsidiary): The new law could also benefit BAIT, Walmart’s telecom subsidiary. If Altán Redes gains access to frequency bands in the 600 MHz, 1.5 GHz, 2.5 GHz, and 3.5 GHz ranges through the new law, BAIT would secure access to these valuable bands as Altán Redes’ primary cellular customer.
- Market Distortion and Reduced Private Investment: Competitors of Altán Redes and BAIT are concerned that the new law could harm private investments and distort the market. Jorge Fernando Negrete, president of DPL Group, states that the law may encourage private operators to become virtual providers and work over Altán Redes’ network, as it offers a real possibility of receiving valuable spectrum at a low cost.
Regulatory Impartiality and T-MEC Compliance
The proposed telecom law’s wording reveals more than just spectrum allocation without cost; it indicates that the regulatory authority may not be impartial, as it falls under the umbrella of the Executive Power. This situation involves CFE Telecom and decisions regarding Altán Redes’ direction, which could violate the USMCA (United States-Mexico-Canada Agreement).
“The proposed law grants more favorable treatment to a telecommunications service provider based on its government ownership, which is not considered a monopoly according to the 2024 reform. Consequently, the regulator loses its competitive neutrality, regulatory, and public policy stance. In other words, the new law violates the USMCA,” says Jorge Fernando Negrete.
Altán Redes’ Growth and Legal Framework
Fernando Borjón, a senior consultant at Access Partnership, acknowledges that Altán Redes’ growth under government or private leadership is beneficial to the sector and users. However, he emphasizes that such growth must be based on a legal framework ensuring equal opportunities for all market actors.
“The new law opens the possibility for this wholesale operator to have additional services, altering market conditions and creating an unfair competition. This is possible because spectrum is given without charge; government actions are not considered monopolies, and they have the votes to approve it,” Borjón explains.
“The issue is that this reform does not incentivize private sector investments, as companies will see Mexico as an unfavorable time to invest.”
Key Questions and Answers
- What is Altán Redes? Altán Redes is a public-private telecommunications company in Mexico, supported by the federal government with significant financial infusions.
- What does the new telecom law propose? The proposed law allows the federal government to provide internet services directly or through public-private partnerships, ensuring state control and direction of such projects.
- How could this law impact the telecom market? Concerns include preferential treatment for Altán Redes, potential market distortion, and reduced private investment.
- What is the regulatory impartiality issue? The proposed law’s wording suggests that the regulatory authority may not be impartial, as it falls under the Executive Power, which could violate the USMCA.
