Peña Nieto’s Telecommunications Reform Initiative

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As Elba Esther Gordillo marshals her defense against the government’s charges of embezzlement and organized crime, President Peña Nieto’s administration has begun to do battle with another challenger to executive authority: the telecommunications monopolies. This week, the President presented his reform initiative which proposes breaking up the monopolies in fixed and cellular phone service, television and internet.

 

The bill was approved on Thursday by a congressional committee on constitutional matters and has received broad political support. Shares of América Móvil – the behemoth owned by Carlos Slim which controls 80% of Mexican land lines and 70% of cellular service – fell 9% in the days following the announcement of the reform bill. According to a 2012 report, Slim’s companies have had nearly double the OECD (Organization for Economic Cooperation and Development) average in profit margins and Mexico has the lowest rate of telecommunications investment per capita out of the 34 member nations. Mexican consumers pay more for broadband internet service than citizens of most other OECD countries. The same report concluded that this mismanagement in the telecommunications sector cost Mexico’s economy at least $25 billion dollars a year

The reform bill proposes adding two new television networks and opening up broadcasting to foreign ownership. A new autonomous regulatory institute would be created to monitor market competition and to impose fines on companies with non-competitive practices. The institute would also be responsible for enforcing compliance with limitations on commercial television content.

The democratization of Mexican communications has been a cause célèbre for many politicians and vocal citizen movements for years. Former president Calderón attempted to push through antitrust legislation during his term and ironically, was effectively blocked by the PRI. This indicates that Peña Nieto’s motives are tied to consolidating the power of the presidency and of his party more than the eradication of corruption. There has been a widespread perception that Peña Nieto was a tele-fabricated candidate whose soap opera star wife and positive coverage on Televisa and TV Azteca contributed to his victory; yet the efficiency of his administration’s political maneuvering is undeniable. Even his enemies are having a difficult time arguing against this bill; it may only be a first step, but at least it is in a new and positive direction. “There are times when one doesn’t get to choose…now is the time to democratize the communications system. The television providers and Slim are still two extremely powerful monsters. Do we unite against them or try to go it alone?” asked blogger Vladimir Chorny, an activist and member of the anti-Peña Nieto youth movement #YoSoy132.

An article in The Economist made a insightful comment on Peña Nieto’s telecommunications reform momentum: “Mexican consumers may see more competition under Mr Peña. The opposition will have to work hard to ensure that Mexican voters do not see less.”

 

Sources:

Animal PolíticoLo peor que pudo pasar (Mar 15)

The Economist, Mexico’s new president: Sacred cows no more (Mar 16 edition)

El Economista, Competitividad, eje de reforma en telecomunicaciones (Mar 10)

GRAPHIC CREDIT: El Economista