Mexico. The Constitutional Reform on Telecommunications of June 2013 celebrates a decade of commitment to effective regulation that results in effective competition, efficient market development and optimal social use of Information and Communication Technologies (ICT).
Indeed, the resulting legal and institutional corpus that took shape in the Federal Telecommunications and Broadcasting Law (LFTR) and in the Federal Institute of Telecommunications (IFT), gave way to the figure of preponderant economic agent in telecommunications (AEP-T) and its asymmetric regulation, the elimination of long distance and national roaming, the prohibition of on-net and off-net tariff discrimination, among other important provisions.
Adoption of Services. During the decade of the #ReformaTelecom, there was an acceleration and intensification in the adoption and consumption of telecommunications services among people, households and companies in the country, which in a significant proportion have resulted in lower prices, greater availability, better quality, based on an expansion of the alternatives of offers.
In terms of adoption, the advance of mobile and fixed connectivity stands out, registering an increase of 65 and 32 percentage points (pp), respectively, to reach a coefficient per hundred inhabitants of 87/100 accesses per inhabitants in the case of mobile broadband (BAM) and 70/100 households in the case of fixed broadband (BAF). as of September 2022.
Similarly, the adoption trajectory of restricted television reaches 61% among households, mobile telephony with high accessibility (99.4%) among the population and fixed telephony with a ratio of 71 per 100 households in the country.
Prices. In this regard, accumulated inflation between June 2013 and May 2023 amounts to 56.9%, while the corresponding fall in prices in Mexican telecommunications was -30.8%. It must be considered that it started from a level that in international comparisons, placed Mexico among the most expensive countries in the world and definitely the most expensive among its main trading partners.
Indeed, the high asymmetry of call termination rates between the AEP-T and its competitors, as well as the prohibition of price discrimination between services originating inside and outside the networks, in force since September 2014, with the entry into force of the LFTR, gave pattern to that tariff adjustment of mobile services and in general of all telecommunications.
What about the competition? Despite the advances described, there is still an excessively concentrated market structure in favor of the AEP-T that hinders the development of its competitors and slows down its better positioning in the market, in terms of spectrum tenure, infrastructure deployment, evolution to new technologies, offer of value-added services, among others.
As of September 2022, its participation in users remains well above (57.2%) the border that demarcates the preponderance. After some competitive profit margin in the first years of the application of asymmetric regulation, in recent years these measures do not show sufficient effectiveness and consequently profits in this field have been frozen.
Even more worrying is that the revenues of the AEP-T in the same comparison period even register an upward trajectory of market reconcentration in the last two years, with an advance of 0.6 pp, to monopolize 57.5% of total sectoral revenues.
A decade after the Telecom Reform, the great pending issue is the achievement of effective competition. It is imperative to continue with the review of the regulatory framework to comply with the constitutional mandate of the IFT to eliminate barriers to competition and free competition in the telecommunications sector.
Text written by Ernesto Piedras of The Competitive Intelligence Unit, CIU.
