Mexico. As part of the implementation of the modifications made in the Second Biennial Resolution on the asymmetric regulation imposed on the Preponderant Economic Agent in Telecommunications, AEPT, the Plenary of the Federal Institute of Telecommunications, IFT, approved in its XIV Ordinary Session, the Criteria and Thresholds of the Parameters to determine the Tariff Freedom for the service provided by the wholesale companies of the AEPT to their competitors and which consists of indirect access to a part of your network, known as the local loop.
In this biennial review, issued in December 2020, and in order to continue generating conditions of competition, the Plenary determined to modify one of the more than 200 measures imposed on the AEPT, the Thirty-Ninth of Annex Three, which indicates that the IFT would use a methodology of long-term incremental costs to establish the rates of the indirect access service to the local loop (SAIB), as well as to determine whether there are geographical areas for which these rates may be freely determined by the AEPT wholesale companies, without prejudice to their obligation to provide the regulated wholesale services in non-discriminatory terms and in accordance with the terms and conditions that the IFT reviews and determines annually.
The SAIB is access to the local loop through which AEPT wholesale companies make available transmission capacity between the end-user and an interconnection point of the requesting concessionaire, thereby enabling the latter to provide its end-users with the broadband access service.
It is important to remember that the biennial review and the measures to be complied with by the preponderant are the result of an exhaustive comprehensive study that considered an analysis of the impact on competition of the measures applied to date and the results of the implementation of the obligations to which the AEPT is subject.
In this way, based on a detailed analysis of the information collected mainly from the Telecommunications Information Bank (BIT), the IFT determined the criteria and thresholds, resulting in 52 municipalities in which it will apply tariff freedom for the SAIB.
In these municipalities, derived from a dynamic of competition, product of the reform in telecommunications and regulatory measures imposed by the IFT to the preponderant operator in the telecommunications sector, this ceased to be the main provider of fixed broadband service, so that its competitors Grupo Televisa, Megacable and Total Play are the ones who maintain the largest market shares.
Characteristics of the group of 52 municipalities:
- There are 5.9 million fixed broadband accesses.
- From 2015 to 2020, the market share of the AEPT has decreased by 16.9 percentage points, from 52.6% to 35.7%.
- In 26 municipalities, the operator with the largest market share is Megacable, while in 23 it is Grupo Televisa and in 3 it is Total Play.
- In 25 of the 52 municipalities Megacable and Total Play have a market share of total fixed broadband access of 51.5% and 12.6%, respectively; while Telmex's is 35.9 percent.
- In another 25 municipalities Televisa has 47.2% and Total Play with 16%, and Telmex 36.8%.
- In the two remaining municipalities, where there is a presence of 4 operators, Megacable, Televisa, and Total Play have a participation of 41.4%, 26.4% and 3.9% respectively. Telmex has 28.4 percent.
- Likewise, in these 52 municipalities the AEPT registers 21.3% of its fixed broadband accesses in the country; while for Megacable it represents 41.6%; for Total Play, 31.8% and for Grupo Televisa 28.8% of its total fixed broadband accesses.
Impact of the SAIB on competition dynamics
In this evident positive and successful evolution of competition in the provision of fixed broadband service, which has benefited users by having greater alternatives, the IFT analyzed the impact of the indirect access unbundling service to the local loop, on which tariff freedom in these areas is determined.
The result found is that the AEPT reported a total of one thousand 453 SAIB of the almost 22 million access of BAF contracted at the national level, that is, a marginal figure with respect to those offered in the country. Of these services, only 205 are in the 52 municipalities in which the tariff freedom will be applied to the AEPT, of which only 5 have been contracted by the companies that offer fixed broadband, and the other 200 by Sky, of the Televisa Group, which offers restricted television with satellite technology.
The wholesale companies of the preponderant must comply with the obligation to continue offering the SAIB under non-discriminatory conditions in a context of functional separation, parameters of quality of service and delivery times defined in the reference offer, tariff control through the mechanism of economic replicability, as well as make available information on their infrastructure, among other obligations provided for in the Preponderance Regulation.
In this way, what was approved by the IFT Plenary is part of a broad set of obligations for the AEPT, so that, although one aspect of the Thirty-Ninth Measure of Annex 3 is modified, the asymmetric regulation established to the AEPT prevails in all its scope and integrity, including the tariff restrictions derived from the obligations of economic replicability. This means that other measures imposed on the preponderant in terms of infrastructure sharing remain intact, such as dedicated links, access to passive infrastructure, the provision of local loop unbundling services, such as resale of services and the SAIB.
It is a provision aimed at continuing to promote competition, for the benefit of users, which allows to observe a decrease in prices, a higher quality of services and diversity of them, taking into account the variety of conditions in terms of competition and users that exist in the different municipalities. In addition, the dynamics observed in the last five years are respected, in which alternative operators to the AEPT have grown rapidly with their own infrastructure, which allows them to offer their services in a differentiated way depending on the technical characteristics that they themselves define, while promoting investment in telecommunications infrastructure. The AEPT must continue to comply with the obligation associated with economic replicability in the determination of its rates.
This is regardless of the fact that the Thirty-Ninth Measure itself establishes that the Institute may determine the exclusion of geographical areas with tariff freedom in case of finding evidence that the conditions of competition varied.
The resolution of the IFT Plenary is consistent with the validation recently carried out by the Supreme Court of Justice of the Nation (SCJN) regarding the power to establish an asymmetric regime for the preponderant economic agents, in order to eliminate barriers to competition and the free competition of markets.
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