By Juan Montes and Anthony Harrup
MEXICO CITY--Mexico's new telecommunications regulator suffered
its first legal setback, postponing a decision Wednesday on rules
under which broadcasters must offer their channels to
pay-television systems following a court ruling.
A Mexico City judge Monday notified the Federal
Telecommunications Institute, or IFT, that it doesn't have the
power to order the free transmission of certain broadcast channels,
the IFT said. The court's opinion stems from a 2011 legal dispute
between Grupo Televisa, the country's biggest broadcast company,
and satellite-TV provider Dish Mexico.
On Wednesday, the IFT's seven commissioners had been scheduled
to determine guidelines under which broadcasters must make their
channels available free to cable and satellite-TV operators and
those pay-TV providers must distribute the channels to their
customers.
The IFT said its commissioners agreed unanimously to reschedule
the discussion of the "must offer" and "must carry" rules to study
the judge's opinion.
Mexican telecommunications and media companies have used
drawn-out legal processes to avoid regulatory actions. This week's
court ruling was seen by some as a sign the new regulators will
continue to face dilatory legal challenges.
"This is a trial by fire for the telecom body. We'll know soon
of what the commissioners are made of," said Javier Corral, a
senator with the opposition National Action Party.
The IFT was created last year under a telecommunications
overhaul and given the power to determine dominant
companies--specified as those with market shares above 50%--and to
impose measures to establish competitive conditions. Measures can
include special rules to curtail the advantages of dominant players
and even forced asset sales, if deemed necessary.
At issue is whether the IFT can make resolutions before laws are
in place to implement the changes made to the Constitution last
year. The enabling legislation, initially expected in December, has
yet to be presented to Congress, which is now expected to pass it
by the end of April.
IFT President Gabriel Contreras said Tuesday he is convinced the
regulator has sufficient powers to act before the laws are passed,
given the explicit backing of the Constitution.
The institute has a March 9 deadline for determining which
companies are dominant players in their markets and ordering
measures to address competition issues. That deadline might arrive
before the laws are in place.
Mexico's $40 billion-a-year telecommunications and broadcast
markets have been led by billionaire Carlos Slim's America Movil,
which has around 70% of the mobile market by subscribers and 80% of
the fixed lines, and by Televisa, which has around 70% of the
television broadcast market and is the biggest pay-TV provider.
Both are being investigated by IFT for dominance.
Televisa isn't the only broadcaster in dispute with Dish Mexico,
which is a joint venture between Mexico's MVS Comunicaciones and
EchoStar of the U.S.,
TV Azteca, Mexico's No. 2 broadcaster with two network channels,
has called on regulators to consider Dish a dominant company
because of its relationship with America Movil unit Telmex, which
would exclude Dish from free access to Azteca channels.
Telmex, a former government monopoly that was privatized in
1990, is barred from offering TV service under its concession, but
the company has a marketing and billing agreement with Dish. Azteca
and Televisa believe r that via Dish they're competing directly
with Telmex and its vast resources, including millions of customers
who can have the TV service included on their monthly telephone
bills.
Dish and Telmex deny allegations that Telmex has any equity
interest or management involvement in Dish.
Azteca said Dish's use of its channels, which the satellite-TV
operator started distributing, along with Grupo Televisa's
broadcast channels, in September, is a violation of
intellectual-property rights.
Dish said that the amended Constitution not only allows it to
use the signals free of charge, but requires it to carry them
without charging its customers.
"We understand that there can be readings or interpretations,
but we think that the constitutional norm is very clear," said
Peter Bauer, a lawyer for MVS and Dish Mexico in an interview last
week. "Every Mexican, if they can receive those channels with a
rabbit ear antenna should be able to receive them on their
systems," he added.
Eduardo Ruiz Vega, head of regulatory compliance at Grupo
Salinas, which includes Azteca, said last week that Dish is taking
the Azteca signals from Mexico City and distributing them across
the country, whereas the Constitution refers to local broadcast
signals. Dish argued that since the signal covered more than half
the national territory, it had the right to use it.
Write to Juan Montes at juan.montes@wsj.com and Anthony Harrup
at anthony.harrup@wsj.com
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