Sunday, 24 September 2017

Court backs America Movil in asymmetric interconnect row

By Mary Lennighan, Total Telecom
Thursday 17 August 17

Mexican telecom regulator given power to set termination rates for market leader's network, as opposed to current zero rating arrangement.

America Movil on Wednesday revealed that Mexico's Supreme Court has ruled in its favour as it seeks to overturn a series of asymmetric regulations set up three years ago in a bid to curb its market dominance. Essentially, the court ruled that the law prohibiting America Movil's Telcel operating unit from charging rival players to terminate calls on its network is unconstitutional and gives telecom regulator the IFT the right to set the interconnection rates that those rivals should pay…

America Movil on Wednesday revealed that Mexico's Supreme Court has ruled in its favour as it seeks to overturn a series of asymmetric regulations set up three years ago in a bid to curb its market dominance.

Essentially, the court ruled that the law prohibiting America Movil's Telcel operating unit from charging rival players to terminate calls on its network is unconstitutional and gives telecom regulator the IFT the right to set the interconnection rates that those rivals should pay.

America Movil, which is itself required to pay other companies for interconnection, had protested this zero rating regime. In a statement lauding the result it noted that going forward it will be paid "based on international best
practices, cost oriented methodologies, transparency and rationality."

The IFT published a similar statement.

Other carriers will be required to pay for interconnection with Telcel's network from 1 January 2018. However, they will not be required to compensate America Movil for the lack of payment over the past three years.

In that time, the competitive landscape has changed significantly in Mexico, in no small part due to the government's determination to create a positive investment climate, which included tackling America Movil's dominance through regulation.

Most noteworthily, AT&T entered the market in early 2015 through the acquisition of Iusacell, and bulked up its presence by buying Nextel's local unit later that year, creating a more able competitor for the market leader.

America Movil's fixed-line unit lost eight percentage points of market share between mid-2013 and the end of 2016, when it claimed 63% of the market, according to a recently-published report from the IFT. The big gainers over that period were Grupo Televisa and Megacable-MCM.

In the mobile market its Claro business lost four percentage points, taking a market share of 65% at end-2016. Meanwhile second-placed Telefonica gained three points to reach 23% and AT&T took an 11% share. Mobile virtual network operators (MVNOs) had 1% of the market.

"The entry of AT&T, as well as the creation of eight MVNOs, has generated greater competition in this market, which has had a significant effect on price reduction," the IFT said.
 

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