Overview
On 13 October, Deputy Ricardo Monreal, leader of the ruling Morena party, announced that reforms to eliminate the Federal Telecommunications Institute (IFT), the Federal Economic Competition Commission (Cofece), and other autonomous entities would be completed before December 2024. Monreal noted that seven of the 18 Constitutional Reforms proposed by former President López Obrador have already been passed.
Key developments
- Legislative Progress: Morena and its allies have sufficient votes to pass these reforms with minimal opposition, despite concerns raised by industry bodies.
- Constitutional Reform for Internet Access: Last week, the lower chamber passed a Constitutional Reform making internet access a strategic activity for the state, such as electricity or petrol extraction. This move allows the government to provide internet services without violating competition laws, a significant shift that could enable monopolistic practices. This reform is expected to be approved by the Senate shortly.
Implications
- Restructuring of Regulatory Bodies: There is limited clarity on the structure of new regulators that will replace IFT and Cofece. It is anticipated that competition regulation will fall under the Ministry of Economy, while telecommunications regulation will be overseen by the Ministry of Communications, Infrastructure, and Transport. These bodies may resemble the pre-2013 structures of Cofeco and Cofetel.
- Impact on Internet Market Competition: The government entity CFE Telecomunicaciones e Internet para is poised to expand its role, potentially absorbing Promtel’s stake in the Red Compartida and exerting increased influence over Altán Redes. This could lead to a government-controlled entity dominating the internet service market, raising concerns about competitive neutrality.
USMCA considerations
The proposed changes in regulatory and competition frameworks may conflict with Chapter 18, among others, of the United States-Mexico-Canada Agreement (USMCA), particularly in terms of competition policy and fair market access.
Next steps
As these reforms continue to progress rapidly, tech and telecommunications companies should monitor developments closely, especially given the potential regulatory and competition changes and the possible market implications.
Access Partnership closely monitors regulatory reforms affecting competition and telecommunications in Mexico. To learn more about how these changes may impact your business, please contact Geusseppe Gonzalez at [email protected] and Fernando Borjón at [email protected].
