Mexico: Broadcasting And Telecommunications Reform 2014

In order to adequate the legal regime to the constitutional reforms in telecommunications published on June 11, 2013, last July 14, 2014 the Federal Broadcasting and Telecommunications Law was published (the "FBTL"), and the Federal Telecommunications Law (the "FTL") and the Federal Radio and Television Law were abrogated (the "Executive Order"). It will become effective on August 13, 2014.

Below are some of the relevant provisions and/or modifications in the subject that we considered of the most transcendence, which, mostly, will be applied by the Federal Telecommunications Institute (the "FTI").

1. Relevant modifications to the general provisions and FTI functioning.

Purpose

The FTBL extends its purpose in order to regulate the use, development and exploitation of the radio-electric spectrum, the public telecommunications network, the access to the active and passive infrastructure, the orbital resources, the satellite communication, the providing of the telecommunication and broadcasting general public interest services, the convergence between those, the user rights and the audits, and the free competence process in this sectors.

Under this same line of thought the FBTL establishes the competence and express faculties of the FTI and its various internal agencies, establishing such autonomous constitutional Institute as the regulator of the sector, providing it with the faculties to grant concessions, declare an preponderant economic agent and monitor media content, among others.

Resolutions

The Federal Executive through the Communications and Transport Ministry ("CTM"), may require the president commissioner that certain matters be ruled in a priority way.

All the plenary sessions resolutions will be public and will only reserve the parts that contain confidential or reserved information. In this same way the votes of each of the commissioners will be public and published in the official site of the FTI, including the issued particular votes.

2. Concessions Regime

Unique Concession

The FBTL foresees a unique concession model, defined as an act by which the FTI habilitates a particular to provide in a convergent way, any type of broadcasting or telecommunications services.

The unique concession does not gives the right to exploit, use or develop the radio-electric spectrum or any orbital resources, but only fixed services through the installation of wired networks. In order to provide mobile services, the provider needs to have a concession title for the radio-electric spectrum or orbital resources exploitation, in the terms of the FBTL. Notwithstanding the foregoing, if the provider has not said concession, it will be granted in the same act.

The FBTL does not provides any provision for acquiring a concessions for a public telecommunications network -as the FTL did-, so it is inferred that such services will be provided (i) through the full force and current concessions, or (ii) through a unique concession.

Possibility to request new orbital resources

Jointly with the possibility to obtain a concession to exploit or benefit the orbital resources, via public tender –as provided by the FTL- the FTBL provides the possibility for any person interested in obtaining one, to file a justified petition to the authority, for it to manage the correspondent arrangements before the international competent entities, for the Mexican State to obtain the new orbital resources. Such procedure, if considered admissible by the CTM will be at the expense of the interested person, and in the case the petition is granted, the orbital resource will be directly adjudicated, prior to the payment of the corresponding consideration.

Modification and Rescue of the Radio-electric Spectrum or Orbital Resources

Unlike the previous legislation, for the modification and rescue of the frequency bands the FTBL regulates (i) whom may request a modification, (ii) the exchange between concessionaires; (iii) the acceptance of the modifications by the concessionaire and the no extension of the term of the concession; and (iv) the no indemnification in the modification subject.

In the same way, when the frequency bands or the orbital resources are rescued, the FTBL provides the possibility that the prejudiced party, whom do not agrees with the determined indemnification, may turn to the Specialized Federal Courts in order for it to determine the correct indemnification amount.

Secondary Markets

In order to extend the possibilities for secondary markets, the FTBL provides the assignment of the rights also regulated by the FTL -with some refinements-, and adds the possibility of the concessionaries of the commercial use frequency bands or for private communications, to lease the bands that were granted. Being that one of the purposes of the telecommunications reform was to protect the competition, in order for the FTI to authorize an assignment of rights or a leasing, it will analyze the effects of said act in the competition of the market.

Shareholders Control

The FTBL statutes the obligation for a company to file before the FTI, their capital structure or equity interest, including the percentages of participation, and a description of the shareholders that possess the 5% or more of the social capital, including the companies that directly or indirectly participate with the 10% or more of the social capital.

In any subscription or direct or indirect stock or equity interest purchase (when there is no obligation to notify it in the terms of the Federal Competition Act), a notification must be filed before the FTI for the authorization of such act, unless: (i) it is a neutral investment; (ii) the ones subscribing are the same shareholders, when their percentage of participation stays invariable; or (iii) in the case of merger, split-off or corporate restructure is under the same control group or economic agent.

3. Network and Telecommunication Services.

The FTBL provides that the concessionaires that operate a public network of telecommunications ("PNT") must, among others, (i) abstain to charge long distance for the calls made by the users to any national destination; (ii) in the case there is no other concessionaire that provides similar services in a determined locality, the concessionaire that provides the service in such locality, has to continue providing the services; and (iii) they must adopt the open architecture designs for the network to guarantee the interconnection and inter-operation of their network.

Concessionaires that have public telecommunications networks that provide mobile services, will freely execute agreements regarding the visitor user service, freely establishing the terms and conditions under which the connection between their platforms will take place, in order to make or receive voice and data communications.

If the PNT concessionaries provide broadcast television services, they are required to enable the concessionaires that provide restricted television services to retransmit their signal, free of charge and without discrimination, within the same geographic coverage area, in full, simultaneously and unmodified, including publicity and with the same signal quality with which it is transmitted; on the other hand, the concessionaires that provide restricted television services are required to retransmit the broadcast television signal, free of charge and without discrimination, within the same geographic coverage area, in full, simultaneously and unmodified, including publicity and with the same signal quality with which it is transmitted and included it at no extra cost in the hired services by subscribers and users.

The concessionaire of the restricted television via satellite, only must re-broadcast the radio-broadcast signals of the coverage of the fifty percent or more of the national territory. All the concessionaires of the restricted television must re-broadcast the radio-broadcasted signals by public federal institutions.

The television channels must have an electronic guide of the channels, and must provide the subtitles services or the dubbing to Spanish and in the Mexican signs language for the access of people with weak hearing. These services must be available in at least one the news programs of the higher national audience rates.

The FTBL foresees for universal coverage for the access of the general population to the telecommunication services under availability, affordability and accessibility characteristics.

Various specific obligations are imposed to the economical preponderant agents or with substantial power.

4. Rights of the audiences.

The FTBL establishes as users rights, among others, the protection of personal data, the portability of telephone numbers, to receive telecommunications services according to the parameters of quality determined by the FTI, to demand the mandatory fulfillment of the agreed conditions, even if these are modified; and to have access to the information.

5. Justice Collaboration.

The FTBL provides that the private communications are inviolable. Exclusively the Federal Judicial Authority, at the request of a Federal Authority with the legal attributions or the head of the corresponding Public Prosecutor of any State, can grant authorization to intervene any private communication. Notwithstanding the aforesaid, the FTBL establishes certain obligations to the concessionaires for justice collaboration, which are, among others: (i) to maintain a registry and control of the communications made from any line, own or leased, preserving the data for a period of twelve months; (ii) collaborate with the geographic localization in real time, of the mobile communication devices; and (iii) collaborate, from the operating scope, the cancellation of the signals within the perimeter of social rehabilitation centers.

6. Audio-visual Contents.

Contents

The FBTL foresees the concessionaire's obligation to re-broadcast the broadcasted signals for federal public institutions freely. Additionally, the concessionaires shall reserve channels to re-broadcast the television signals of such institutions being obligated to reserve from one to three channels, depending on the number of channels from which the mentioned concessionaire services are stated.

Advertising

The maximum amount of time that the concessionaires that provide broadcasting services with commercial purposes will be able to use for commercial advertising is 18% of the total broadcasting time for each channel, and the maximum amount of such time for radio stations shall not be greater than 40% of the total broadcasting time for each channel. Additionally, the maximum amount of time that the concessionaires of restrained television will be able to use for commercial advertising is of 6 minutes for each hour of broadcasting.

Those concessionaires that cover with national production at least a 20% of their broadcast programming may increase the advertising time percentage abovementioned up to a range within 2% and 5% if it involves independent national production, applied proportionally for each case to the percentage of national production used.

The FBTL establishes that those concessionaires that provide services involving radio broadcasting shall offer, in market terms and without discrimination, the services and advertising spaces to any person or corporation that requires them. For said purposes they will have to observe the terms, packages, conditions, and rates found valid at the moment of the request. Additionally, the FBTL establishes that the concessionaires shall not restrict, deny, nor discriminate the access or hiring of advertising services, even when the concessionaire had opted, at any moment, for another advertising space or mean.

Regarding the rates, the FBTL establishes that the radio broadcasting concessionaires will determine the rates for advertising services and spaces freely, being obligated to not restrict the access to advertising when it involves anti-competitive practices in terms of the applicable law.

Rights of Audience

The concept of rights of audiences is introduced, such rights include (i) the reception of contents that reflect the ideological, political, social, cultural, and lingual pluralism of the Nation, (ii) the clarity of the differentiation of the noticeable information of the opinion of who presents it, (iii) the respect for the programs schedules and the advertisement of its changes opportunely, and the parental advises inclusion; and (iv) to exercise the right of reply, in terms of the regulatory law; among others.

The audience defense is also created, in order to attend complaints, suggestions, and claims of audiences regarding contents and programming.

7. Asymmetric Regulation.

Preponderance

The FBTL regulates the "preponderant economic agent" figure, both in the broadcasting sector and in the telecommunications sector, as well as the applicable procedure for such assessment. The preponderance was originally introduced by the constitutional amendment in telecommunications which motivated the issuance of the FBTL. In terms of the constitutional amendment and the Law, it is considered as preponderant the economic agent who has, directly or indirectly, a national market share of more than 50% in the broadcasting or telecommunication sectors.

The FTI may impose asymmetric measures to the preponderant economic agents, including in the broadcasting sector: broadcasting its signal free of charges, in a non-discriminative manner, simultaneously, without modifications, and with the same quality to concessionaires of restricted television services, to allow the use of its infrastructure, not to restrict the use of advertising, not to hire exclusive rights for broadcast sport events, to issue their signals to restricted television concessionaires in order to be broadcasted by other means. In the case of the preponderant agent in the telecommunications sector some measures include: to annually submit to the FTI for its approval the public offers for interconnection and visitor user services, as well as for sharing of infrastructure, effective disaggregation of its network, access, and wholesale resale services, and request the approval of the FTI for rates of certain services, bearing in mind that other concessionaries shall be able to replicate the rates and that such rates shall be equal to those applied by the preponderant in its operations.

The preponderant agent in the telecommunications sector and an agent with market power shall sell wholesale mobile services to concessionaires and authorized companies under competitive terms and shall share their infrastructure and platform as required by such companies in order to support their business model.

The FTI shall establish traffic measurement and network capacity criteria.

Substantial Market Power

In terms of the FBTL, the FTI may determine the existence of agents with market power in any relevant market of the broadcasting and telecommunications sectors and impose specific obligations to such agents, including limitations with respect to information, quality, rates, commercial offers, and invoicing.

Crossed Property

If a broadcasting and a telecommunication company providing services to the same market prevents or limits the access to plural information, the FTI shall indicate the restricted television concessionaire the channels of public interest that it shall integrate to its service. Such concessionaire shall also include at least three channels owned by independent national programmers.

Harmonization

Telecommunication and broadcasting devices that can be connected to a telecommunication network or that can use the spectrum shall be harmonized according to the standards and procedures to be issued for such purpose.

8. Inspections, Sanctions and Legal Remedies.

Inspections and Surveillance

The FTI has faculties to verify and monitor the compliance of the FBTL, the provisions derived therefrom, and, the compliance of the conditions and obligations under the concessions, authorizations, and other applicable provisions. For the abovementioned, the concessionaires and authorized entities, or anyone related, are required to allow the access to the domicile and facilities, as well as provide the needed information and documentation, including the agreements and covenants entered with third parties. The concessionaires with public telecommunications networks are obligated to provide as well, all of the information of the topology of their networks, including its capacity, characteristics, and location of its elements, as well as all of the information that permits the FTI acknowledge the operation and use of the telecommunications and broadcasting services.

The faculty to define and modify the content of the information that is given to the public regarding the telecommunication services they provide is added, and if necessary, order the suspension of advertising, without prejudice of the faculties conferred to the Federal Consumer's Protection Office ("FCPO").

If, initiated an inspection, the Institute considers the concessionaire is incurring in a monopolic practice, the FTI will give sight to the investigation authority, without detriment on continuing with the inspection.

Sanctions

Sanctions will be processed under the Federal Administrative Procedure Law.

Infringements to the users' rights will be penalized by the FCPO.

The Government Secretariat will penalize the breach in matters of contents, State times, as well as those breaches provided in other applicable provisions; national channels, newsletters, the National Anthem, contests, as well as reserve restricted television and audio channels.

The FTI will penalize the breach of the time limits established for the broadcasting of commercial messages and the obligations of audiences' defenses.

The fines will be determined based on the concessionaires' or authorized entities incomes, excluding those obtained from a wealth source located abroad, as well as taxable incomes if these are subject to a preferential tax regime for purposes of the Income Tax of the last fiscal year in which there has been a respective infringement.

Originally published on 13 August 2014.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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