Cofeco drops Telcel fine as Cofetel revises interconnection regulations

25 Jun 2012

According to TeleGeography’s GlobalComms Database, Mexico’s antitrust watchdog, Comision Federal de Competencia (Cofeco), has dropped the USD1 billion fine it imposed on America Movil’s domestic mobile arm Telcel. Cofeco originally issued the record fine in April 2011 as Telcel was found to be overcharging competitors to connect calls to its subscribers. In exchange for the agency’s revised ruling, Telcel has agreed to stop giving its customers discounted rates on calls to other Telcel users, a policy that other wireless providers find difficult to compete with. Telcel is also required to reduce its interconnection rates for calls placed into its network by outside mobile users through 2014, and has pledged to work with regulators on further rate reductions after that time.

Telcel’s sister company, fixed line incumbent Telefonos de Mexico (Telmex), is experiencing similar impositions. In March, Comision Federal de Telecomunicaciones (Cofetel) launched a public consultation regarding a proposed cost model for lowering both fixed and mobile interconnection rates. The move stems from Cofeco’s 2009 and 2010 findings that Telcel and Telmex hold dominant positions in several market segments. America Movil initially challenged the findings to avoid tougher regulations, winning a Supreme Court ruling that forced the watchdog to review the carrier’s supposed dominant status. However, Cofeco was able to confirm its findings on the market dominance of Telmex and Telcel in September 2011 and November 2011 respectively. America Movil appealed against the ruling for Telcel, but its case was rejected in March 2012.

‘While Telcel and Telmex disagree with Cofeco’s market dominance findings, their market shares are far greater than those of any competitors,’ said TeleGeography analyst Richard Faber. ‘As of Q1 2012, Telcel claimed nearly 67 million, or 70%, of Mexico’s mobile subscribers, while Telmex accounted for around 75% of Mexico’s more than 19 million fixed line users. Telcel’s closest competitor is Movistar, which claims 20% of mobile subscribers, while Axtel trails Telmex with only 6% of fixed line users.’

The interconnection consultation closed at the end of May, and Cofetel has since approved a draft plan on new regulations for mobile interconnection rates. The plan is currently being reviewed by Cofemer, Mexico’s federal regulatory improvement commission.

TeleGeography’s GlobalComms Database is the most complete source of data about the wireless, broadband and fixed line telecom markets, covering over 180 countries and more than 1,400 service providers.