United States: Mexico’s Telecommunications’ Reform Ready To Be Signed By President Peña Nieto

On May 23, after the approval of 24 Mexican states (Aguascalientes, Baja California Sur, Campeche, Chiapas, Chihuahua, Coahuila, Colima, Durango, Guanajuato, Hidalgo, Jalisco, México, Morelos, Nayarit, Puebla, Querétaro, Quintana Roo, San Luis, Potosí, Sonora, Tamaulipas, Veracruz, Yucatán and Zacatecas) the president of the Permanent Commission (Comisión Permanente) has declared constitutional the Telecommunications' Reform and sent the bill to President Peña Nieto for his signature and publication in the Official Gazette.

Here is a summary of this major reform. It took Mexican Congress two months to discuss and pass the bill:

  • Restrictions to media ownership

The Federal Telecommunications Institute (Instituto Federal de Telecomunicaciones) ("FTI"), sister to the Federal Communications Commission ("FCC") of the United States, will impose limitations on both national and local media ownership consolidation.

The FTI will have powers which in the United States are under the umbrella of the Antitrust Division of the Department of Justice, since it will supervise the economic competition within the main players of the industry by investigating and scrutinizing monopolies, media ownership consolidation and other economical restrictions that cause market inefficiencies in accordance with the Herfindahl index.

Although it has not been decided which threshold the FTI will use for horizontal and vertical ownership restrictions yet, the bill grants the FTI with the power to order mandatory divestments on certain entities that cause restrictions on competition. The question is how will they approach such divestments. This will be discussed in the secondary law (i.e. the regulation that will explain and expand this bill, which they estimate to pass in the next months).

One alternative would be the one carried forward in the United States in FCC v. National Citizens Committee, 436 U.S. 775 (1978), where the ban on cross-ownership between newspapers and broadcast was deemed constitutional, but mandatory divestments were only ordered on egregious cases (i.e. those where one entity or person was holding the only newspaper and the only broadcast station in a particular local market). Such entities were given a five (5)-year period to divest, together with some tax exemptions for the transaction.

Another alternative could be the Argentine route. Unlike the United States, Argentina's telecommunications law, enacted in 2009, mandates a divestment at a national and local level, but only giving a one (1)-year period to do so, regardless of how many entities are in the relevant market prior to divesting. These measures are currently being challenged in Argentina's highest court.

Further, the FTI will also be entitled to supervise all activities that are against the public interest. Therefore, like the FCC, it will seek diversity, localism and competitiveness to achieve benefits for the public interest. For example, it will regulate the advertising of kids' programming and promote a wide variety of viewpoints in the airwaves.

The FTI will not be entitled to restrict freedom of expression by any arbitrary and capricious decision or prior restraint.

On the other hand, Congress will create new criminal sanctions that severely punish monopolies and media consolidation.

  • Opening the doors to foreign investment

Currently, there is a 49% threshold for direct foreign investments in entities within the scope of the telecommunications industry. Moreover, there is no access for foreign investments in broadcast.

Since the aim of these changes is to foster competition, the bill intends to allow unlimited direct foreign investments in telecommunications entities, including satellite, and up to a 49% stake in broadcast stations.

Additionally, the development of the backbone to provide better network coverage for the general population could arise from private, public or PPP investment. Further, the 700 MHz and 2.5 GHz bandwidths will be used under the principles of non-discrimination, universal access, interconnection and common carriage.

  • Television: Digital transition

It is expected that by December 31, 2015, all full-power television stations nationwide will be broadcasting exclusively in a digital format. Once these steps are completed, licensees are requested to return the frequencies that were originally granted by the State. The goal is to guarantee an efficient use of the electromagnetic waves and have a better use of the 700 MHz bandwidth.

Further, at least 90 Mhz of the freed bandwidth will be used for expanding broadband services to the general population.

  • Must Carry Rules

Following the steps of the United States (see Turner Broadcasting System, Inc. v. FCC, 512 U.S. 622 (1994)), the FTI will implement must-carry rules for free and simultaneous retransmission of over-the-air television stations, without any preemption powers whatsoever. However, the FTI will be entitled to deny free retransmission when it concludes that (i) there is competition in the market, or (ii) such networks have been labeled as having a "substantial power" in the market.

The FTI will closely scrutinize those entities that either directly or indirectly have a national participation of more than 50% of the broadcast or telecommunication services. Such percentage will be measured by the number of customers, the network's traffic and its capacity, in accordance with the data collected by the FTI.

  • Two (2) new television stations

No later than 120 days after its new composition, the FTI will release the bidding terms and conditions to create two (2) new national broadcast television stations. Licensees that are in any way controlled by entities that have accumulated at least 12 MHz of broadcast services in any geographical area are not allowed to participate in the public bid.

  • Structure of the FTI

The FTI will be a fully independent agency of the government, integrated by seven (7) commissioners for a nine (9)-year term, without the possibility of reelection. These commissioners will be appointed by the President with the advice and consent of the Senate (they need at least the approval of two-thirds of the senators present at the time of voting). There are certain restrictions for the appointments. For example, those who have served as governors or members of congress five (5) years prior to an appointment cannot be considered for the position.

The decisions of the FTI (which will be issued by a majority vote) can be appealed to specialized courts that will be created no later than the second quarter of 2014. These courts will only hear cases related to (i) the implementation of the new telecommunications act, and (ii) antitrust.

It should be noted that the FTI decisions will not be stayed through the entire proceeding of a relevant challenge. This has caused a lot of concern, in particular when it comes to divestment orders by the appropriate government body. América Móvil, Slim's media conglomerate, has told the press their disagreement about this amendment.

  • Net Neutrality

In one of the hottest topics of these years, Mexico seems to have missed the opportunity to raise its voice on the matter. Although there are several declarations of principles throughout the bill on freedom of expression, the authorities have stated that the secondary law will regulate content. It is unclear whether they will say their standing in this important issue. As we know, the FCC, through its ancillary jurisdiction, has been trying to defend the concept of net neutrality (see Comcast v. FCC, 600 F. 3d 642, U.S. Court of Appeals, District of Columbia; see In the Matter of Preserving the Open Internet Broadband Industry Practices. This order is currently being appealed by Verizon).

  • Section 230 of the Communications Decency Act ("CDA")

There is nothing in the bill that seems to create a mirror to section 230 of the CDA, which provides a safe harbor against laws that might otherwise hold providers that host third-party speech liable for what users publish therein (see Fair Housing Council of San Fernando Valley v. Rommate.com,LLC 521 F.3d 1157 (9th Cir. 2008); Zeran v. America Online, Inc., 129 F.3d 327 (4th Cir.1997);  Ben Ezra, Weinstein & Co. v. America Online, Inc., 206 F.3d 980 (10th Cir.2000);  Green v. America Online, 318 F.3d 465 (3d Cir.2003);  Batzel v. Smith, 333 F.3d 1018 (9th Cir.2003);  Universal Communication Systems, Inc. v. Lycos, Inc., 478 F.3d 413 (1st Cir.2007); Chicago Lawyers' Committee For Civil Rights Under Law, Inc. v. Craigslist, Inc. 519 F.3d 666 (7th Cir., 2008)).

Therefore, websites and search engines need to be aware that the general rules of defamation and invasion of right to privacy, amongst others, will still apply under Mexican jurisdiction, regardless of whether the content has been created by the provider itself or by an unrelated third party. However, as mentioned above, the secondary law may deal with this matter.

Now it is time to see how the events develop after this historic reform. The Organization for Economic Co-operation and Development (OECD) has reported that it will provide benefits to all sectors of the Mexican economy. Other studies from the Consejo Coordinador Empresarial (CCE) have reported that the reform will generate a 300% increase in telecommunications' investments, reaching an estimate of 10 billion US Dollars per year.

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.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Events from this Firm
3 Dec 2018, Other, Los Angeles, United States

National Contract Management Association’s Government Contract Management Symposium

20 Feb 2019, Seminar, Orange, United States

The annual seminar addressing changes and developments in state and federal wage and hour laws is a unique one-day program and hundreds of California employers, personnel managers, controllers, attorneys, payroll managers, and supervisors attend each year.

21 Feb 2019, Seminar, Orange, United States

The seminar is designed to provide a guide to Human Resource Officials, Personnel Specialists, Consultants, Supervisors and other management officials through the ever-increasing maze of state and federal employment discrimination laws.

 
In association with
Related Topics
 
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions