Telmex fined for blocking access

2 Jun 2011

Mexican billionaire Carlos Slim’s week got a little worse yesterday amid reports that the Federal Competition Commission (Cofeco) had fined his local fixed line operator, Telefonos de Mexico (Telmex), for blocking a competitor from accessing its network in 2007 and 2008. According to the Associated Press, Cofeco has handed down a MXN91.5 million (USD7.86 million) penalty, after complaints by Movistar Mexico, a subsidiary of Spanish telecoms giant Telefonica, that Telmex had refused to connect it to its landline network for seven months in the two aforementioned years. Commenting on the judgement, Cofeco cited Telmex’s refusal to connect the alternative operator as a monopolistic practice, stating: ‘The behaviour was intended to, or had the effect of substantially impeding access [for a competitor] … The refusal to provide a connection impedes access to the telephone market and damages free competition, to the detriment of consumers.’ Just prior to the announcement of the decision, Arturo Elias Ayub, one of Telmex’s directors, was reported as having denied that the telco had refused to connect rival carriers, with the executive saying: ‘There isn’t one (company) that has requested interconnection with Telefonos de Mexico that hasn’t been granted it. Telmex now has 30 working days in which to appeal the fine.

The ruling comes just a few days after it was announced that Telmex had seen its request to offer television services rejected, having been told that it did not meet federal requirements for connecting other carriers to its network efficiently by the country’s telecoms regulator. The Secretario de Comunicaciones y Transportes (SCT) also noted in turning down the incumbent’s bid that Telmex had failed to provide enough information for the government’s consideration of the matter. Rounding out the trio of bad news for Slim, Telcel, his Mexican wireless operator, at the end of last month was fined MXN12 billion (USD1 billion), the largest ever penalty levied by Cofeco in its 18-year history. The competition watchdog said it had found Telcel as having engaged in ‘relative monopolistic practices’ by overcharging its competitors to connect calls to Telcel subscribers, with the regulator claiming that Telcel charged its rivals higher interconnection rates than those related to connecting calls between its own clients. Further, Cofeco went as far as noting that the interconnection rate for other operators was, in fact, higher than the full price Telcel charged its subscribes to make a call. According to Cofeco, Telcel abused ‘its substantial power in the market to unfairly displace its competitors and thus affect the competition process in the landline and cellphone markets, hurting the consumer.’