Background on Key Players
The new telecommunications law in Mexico has sparked a potential conflict between the National Antitrust Commission (CNA) and the Telecommunications Regulatory Commission (CRT), primarily due to asymmetric regulation for Telmex, especially concerning the “last mile” of their local network.
The CNA and CRT are the successors of the Federal Economic Competition Commission (Cofece) and the Federal Telecommunications Institute (IFT), with the latter being responsible for regulating, sanctioning, and overseeing economic agents with significant market power, such as América Móvil, which holds 33% of the fixed-line market through Telmex and 56% in the national mobile market via Telcel.
However, a 2024 organic reform mandated the dissolution of the IFT and Cofece, along with existing economic competition and telecommunications and broadcasting laws. This new legal framework no longer allows the IFT to regulate Telmex independently, as it did previously.
New Legal Framework and Potential Conflicts
The new Ley en Materia de Telecomunicaciones y Radiodifusión (LMTR) grants the CRT, in article 10, fraction XXIV, the authority to design a regulatory policy for the “effective disaggregation of the local loop” of the dominant economic agent, Telmex.
Meanwhile, amendments to the Federal Economic Competition Law empower the CNA to establish measures and impose specific obligations for Telmex’s “effective disaggregation of the local loop.” This dual regulation in the two laws may lead to confusion and potential conflicts between the CNA and CRT, as both entities are set to begin operations in Mexican telecommunications shortly.
Implications for the Telecom Industry
The disaggregation of Telmex’s local loop is crucial for the rest of the industry, as it allows national competitors like Megacable, Izzi, and Totalplay—as well as regional or local competitors—to access Telmex’s optical fiber infrastructure and offer services directly to consumers, including those restricted by Telmex.
Fromow Consulting Group commented that the revised telecom law designates the CNA as the regulatory body for asymmetric rules and sanctions against dominant economic agents, while the CRT would monitor compliance. However, the wording in the mentioned sections of both laws suggests possible disputes between the new entities regarding who should regulate access to Telmex’s last mile.
Time for Clarification
The government of the Fourth Transformation has pledged that any regulatory policy mandated by the IFT will not disappear when the institute is dissolved. Instead, regulations will remain in effect for as long as they are valid, and the IFT’s last asymmetric regulation for Telmex, implemented in November 2024 with a two-year validity period, would theoretically continue to apply until 2026.
Key Questions and Answers
- What is the potential conflict between CNA and CRT? The new telecommunications law in Mexico has created a situation where both the CNA and CRT may regulate Telmex’s local network, leading to potential conflicts over who has the authority.
- Who are the key players involved? The National Antitrust Commission (CNA) and the Telecommunications Regulatory Commission (CRT) are the main entities involved, succeeding the Federal Economic Competition Commission (Cofece) and the Federal Telecommunications Institute (IFT).
- What is the significance of Telmex’s local loop disaggregation? Disaggregating Telmex’s local loop allows other telecommunications companies to access its optical fiber infrastructure and offer services directly to consumers, fostering competition in the industry.
- When will the new regulatory framework take effect? The new Ley en Materia de Telecomunicaciones y Radiodifusión (LMTR) has been approved, but the CNA and CRT still have time to clarify their roles in regulating Telmex’s local network until the IFT’s last asymmetric regulation expires in 2026.
