Cofetel instructs operators to stop ‘bypassing’ practice

28 Apr 2003

Mexico’s telecoms regulator, Comisión Federal de Telecomunicaciones (Cofetel), has told the country’s long-distance operators to stop the practice of ‘bypassing’ connection fees from the US, in a move which could effectively swell the coffers of incumbent telco Telmex. Cofetel is reported to have contacted each of the long-distance carriers. including WorldCom-backed Avantel and AT&T affiliate Alestra, ‘exhorting’ them to desist the practice with immediate effect and help it resolve how to reach an agreement to eliminate bypassing. Telmex says that evading payment of international fees has hit its long-distance revenues for many years and could cost it USD160 million in 2003 alone. It has long petitioned Cofetel to grapple with the problem, which it claims affects 20% of all calls between the two countries; the regulator has maintained that it has been unable to stamp out the practice due to the inadequacy of the state’s telecoms legislation, which fails to make provision for bypassing in its wording.

Bypass operators sell cheap phone cards to Mexicans in the US and then compress voice calls to pass them through lines reserved for data transmissions. The calls are then converted back into voice signals as they enter Mexico and routed onto Telmex’s PSTN disguised as a local call. Cofetel’s initiative has been welcomed by smaller players such as Marcatel which says the resolution will help legitimate telcos by only cracking down on ‘contraband’ operators which do not hold an official concession. It also comes at a time when the Mexican long-distance market is in upheaval and ready for change. Avantel and Alestra are in poor financial state and have shifted their strategic focus away from long-distance toward broadband services. The country’s operators are also in talks to overhaul the existing billing system which has been in place since the mid-1990s.