Mexico. One of the pending issues for this year is the specific regulation to Grupo Televisa (GTV) after having been defined with substantial power in the Pay-TV market by the Federal Institute of Telecommunications (IFT).
An issue that has been very controversial because the same IFT previously determined that GTV did not have substantial power and due to an amparo filed by several companies before the Collegiate Court Specialized in Economic Competition, Broadcasting and Telecommunications, the Institute changed its resolution despite the fact that several commissioners did not really sew it with substantial power. Thus, the Tibunal ordered the IFT to carry out a new analysis. The latter contained very old information that may have led them to erroneous conclusions.
But then, is there Substantial Power in Pay TV? A recent analysis by The Competitive Intelligence Unit concludes that this segment registers an accelerated growth in several variables that position it as the most dynamic segment in the Telecommunications sector.
The segment records double-digit average growth year after year. It grew 53.0% over a three-year period (third quarters from 2014 to 2017), with an average annual growth rate of 15.2%. To put it in context, the mobile segment grew 9.7% and the fixed segment contracted 8.9% in the same period.
It is the only segment that faces the Preponderant Economic Agent in Telecommunications (América Móvil) which had a market share of 68.9% in terms of subscriptions to fixed services in the second quarter of 2014, while its competitors (mainly cable operators) the remaining 31.1%. Three years later, they have managed to pay 8.7 percentage points to their subscription accounting to reach a share of 39.8%, but still a considerable distance from the preponderant (60.2%).
In terms of investments, between 2013 and 2016 investment in infrastructure by Pay-TV operators and converged services increased 149.0%, representing an average annual growth rate of 35.5%. In absolute terms, the amount of investments amounts to $28,038.6 million pesos in 2016.
Finally, it should be remembered that currently none of the players in the Pay-TV segment can block the purchase of content from another player and that as a result of the Telecommunications Reform, GTV is obliged to offer its Open TV content (Must Carry-Must Offer) to any operator that requests them in the Pay-TV segment.
By definition, asymmetric regulation is imposed when there are market failures and seeks to create conditions of competition in it. Introducing regulation in a segment that registers a marked dynamism, growth of competitors and constant increase in investments in infrastructure could end up breaking down something that did not require repair.
Text written by Gonzalo Rojon of The Competitive Intelligence Unit.
