Mexico. We are facing a new bidding process for radio spectrum frequencies that is invariably giving something to talk about. The Federal Institute of Telecommunications (IFT), the sole body in charge of the allocation and administration of spectrum since the Telecommunications Reform of 2013, will reach its fourth anniversary of life with a history of three of four tenders that have been characterized by their carelessness and failure to fulfill their mission that places the industry in a scenario of uncertainty, lack of transparency and regulatory incapacity.
This is the case of the tender of frequencies for the provision of AM and FM radio, in which the regulator ignored (or did not really complete its verification work) the composition and shareholding link of the economic agent Tecnoradio. Bidder who won the largest number of frequencies (34 FM and 3 AM) and offered the largest amount of economic consideration of around $288 million pesos, but which turned out to be related to the largest radio group in the country (Radiorama) and intended to benefit from a 15% incentive granted to "apparent" incoming bidders for this, outperform your competitors.
This pushed up the economic offer of the participants and displaced the entry of other important radio groups and independent bidders. Therefore, the design and development of the tender does not comply with the principles of efficiency as it is a process that leaves out any possibility of creating a more competitive environment in radio content, as well as contravenes the legality of the tender by not having truthful information about the shareholding composition of Tecnoradio.
This episode becomes that of the tender of two new television networks in which the only winning bidder was Grupo Imagen Multimedia, after Grupo Radio Centro lacked the financial muscle to meet the amount of consideration it had offered for a second channel to which it would have been credited. At that time the IFT argued that according to its analysis Radio Centro could cope with its offer, when the reality was the opposite.
The other case is that of the AWS tender, in which, however, to the risks of concentration and imbalance in spectral holding warned by the industry, the regulator allowed Telcel to make a higher portion of optimal frequencies for mobile telecommunications thus ahead of its competitors.
It seems that the constant here is the absence of a regulatory authority that complies with the basic principles of a tender, by not having or not enabling mechanisms for monitoring, reviewing and evaluating competitive conditions, financial muscle and structure of the economic agents participating in the aforementioned processes.
These benchmarks set a precedent of mistrust and uncertainty for tenders to come, which can definitely elude the participation of new entrants or generate disincentives for current bidders. A circumstance that added to the already documented cases of counter-reform places us in a situation in which the IFT moves us further and further away from a scenario of conditions of competition, quality, plurality, among others.
'What happens is that' (a phrase that we inevitably use when there is no other way to justify itself) we have a regulator disinterested in fulfilling the task of promoting the efficient development of telecommunications and broadcasting in Mexico.
Text written by Ernesto Piedras of The Competitive Intelligence Unit
