Cofetel sets interconnection rate for Alestra to Telcel calls

17 Mar 2011

The Mexican telecoms regulator Comision Federal de Telecomunicaciones (Cofetel) has ruled on a dispute over interconnection rates between Latin American mobile giant America Movil (AM) and local alternative fixed line provider Alestra. According to Dow Jones Newswires, the watchdog’s five-member board unanimously set the rate at which AM’s Mexican wireless subsidiary Telcel should connect calls from Alestra at just over MXN0.39 (USD0.03) per minute. Cofetel said that the rate was cost-based and ‘allows the companies efficient recovery of their costs, and at the same time sends correct signals to the market regarding the use of resources and investments needed to provide service.’ Telcel, however, had pressed for an interconnection rate of MXN0.95 per minute, offering Alestra and other smaller operators the option of taking up the higher rate which it currently charges fixed line incumbent and sister company Telefonos de Mexico (Telmex) for terminating calls on its wireless network. Neither Telcel nor Alestra have commented on the ruling, although it has been confirmed that it can be appealed, a course of action that Telcel may yet consider.

Earlier this week however, and prior to the announcement of the ruling, AM’s chief financial officer, Carlos Garcia Moreno, had claimed that lower interconnection rates would have an impact on Mexican operators’ level of investment. Further, the executive also claimed that studies have shown that in Latin America the cost of mobile calls for end users has declined regardless of whether interconnection rates have been reduced, noting: ‘What causes prices to fall is an increase in capacity…an increase in supply.’