Mexico. The initiative to extinguish the Federal Telecommunications Institute (IFT) and the implementation of a model in which its powers would remain in the hands of the Federal Executive could result in an institutional regression that would place the sector not only before the Constitutional Reform of 2013, but before 1996, a time in which a private monopoly market structure prevailed and without a body with powers to regulate competition in the market telecommunications in Mexico.
The Role of the Sectoral Regulator. As in the beginning of the privatization era, prior to 1996, there was no sectoral authority.
The creation by decree of the Federal Telecommunications Commission (COFETEL), in a simple act in August 1996, responded to the need to open markets and regulate the sector, although it lacked regulations and sanctioning powers at the outset.
Almost two decades later, the need for a body with incremental powers and autonomy was identified to move towards an effective competition structure, reduce barriers to entry and eradicate anticompetitive practices in the markets.
The convergent character that the Federal Telecommunications Institute (IFT) gained as a result of the evolution of COFETEL, has allowed, as the agency itself points out in its most recent positioning, not only the reduction of prices of 32.1% in telecommunications services in the last 11 years, but also an expansion in the availability and accessibility of connectivity that makes 81.2% of the population internet users.
Likewise, the more efficient and transparent management of the radio spectrum has meant that today we have 5G networks and the promotion of investments in network infrastructure has resulted in most fixed broadband connections exceeding speeds of 50 Mbps.
Although the path towards effective sectoral competition requires continuous improvement of the current regulatory and normative frameworks, it is recognized that the way forward must be the preservation of fundamental powers hitherto granted to the IFT.
What Should the Institutional Model Be? In the face of the imminent organic simplification, the institutional model to be followed must preserve five essential powers.
In the first place, autonomy in decisions, agnostic to the ups and downs and political decisions. Two, the promotion of effective competition with temporary asymmetric regulation mechanisms until the elusive effective competition is achieved and that ensure its effectiveness, in the face of the persistent and excessive concentration of América Móvil in various markets. Three, the granting of concessions and licenses of the spectrum under the principles of transparency and efficiency. Four, the implementation of sanctions in the case of the commission of anticompetitive practices in telecommunications markets. And five, the supervision of efficient sectoral development.
The institutional transition without the preservation of these powers could result in a regression to a monopolistic structure, fewer alternatives and higher telecommunications prices for consumers, fewer incentives to invest in infrastructure and, consequently, technological obsolescence in the provision of services.
Today more than ever, it is necessary at all costs to preserve the specialization and autonomy of the regulatory authority to meet specific sectoral needs and combat distortions in the markets. We cannot afford to reverse three decades of the progress so far obtained by the duo, first by COFETEL and more recently by the IFT, in this strategic and essential sector for the economic and social development of our country.
Analysis by Ernesto Piedras of The Competitive Intelligence Unit, The CIU.
