Mexico. The intention of the IFT to implement a symmetrical regulation of preponderance for the benefit of Telmex-Telcel alone, which holds two thirds of the total revenues and which, with this measure, will expand its market share, threatens the telecommunications sector.
Everything arises from the fact that the regulatory authority is close to approving the tariff freedom in the provision of the wholesale service of disaggregation of the local network in a group of municipalities, after its unnecessary public consultation in recent months. In addition to the fact that it turns out to be categorically unconstitutional and violate the USMCA, it contravenes its mandate to promote competition.
Tariff Freedom and Reconcentration. Indeed, this initiative proposes to deregulate the rates of the preponderant in some municipalities where it argues the existence of competition and abundance of competitors who can offer services under conditions similar to that of that dominant agent. Precisely in the consultation, it is evident that precisely in these demarcations, this player would reconcentrate, with the consequent anti-competitive effects on its national market share and in adjacent markets.
In this regard, Dr. Andrés Aradillas-López demonstrates in his analysis (bit.ly/3wVBH9S) that this regulatory decision would lead to an increase in the market share of the preponderant not only in the municipalities, but also at the national level. Specifically, an increase of one percentage point (pp) in market share in 20% of the 63 municipalities proposed by the IFT, would generate, a 6.5 times greater increase in that set of municipalities and whose national aggregate impact would be considerably greater, due to the competitive interdependence at the national level.
If tariff freedom is granted in the provision of a wholesale service in the fixed segment, and the same main operator is the mobile, statistically significant and superior impacts would be generated in the mobile internet market. Specifically, "an increase of five percentage points in the level of concentration in the fixed internet segment would produce an increase of up to 8.9 percentage points in the level of concentration of mobile internet service."
In turn, the reconcentration of 1 pp in the fixed internet segment affects the adoption of mobile internet service of up to 4.6 pp.
The Pennsylvania State University academic categorically demonstrates that these "markets do not meet the conditions of competition to deregulate", so the IFT should not give channel to its initiative.
A inevitable question is why does the IFT not devote its efforts to the promotion of competition instead of seeking to deregulate the preponderant?
Above all, in light of the fact that the SCJN confirmed the constitutionality of the preponderance and its asymmetric regulation.
Even so, the regulator seems to be urged to proceed with its extinction, but why, what are its anti-competitive incentives?
Even, América Móvil boasts full confidence that it will be deregulated and enabled to enter the Pay-TV market.
It is only the preponderant and the IFT who work in that direction, opposed to that of academia, industry, analysts, consultants and, above all, also opposed to the interest of the consumer.
Indeed, if it continued with its efforts, it would not only contravene its mandate and the basic right to connectivity, both set forth in our Constitution, but it would condemn the country to the pernicious effects of the lack of competence.
Text written by Ernesto Piedras of The Competitive Intelligence Unit, CIU.
