Movil celebrates telecoms win

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Mexico’s highest court has decided that America Movil can charge rivals for calls made to customers on its network.

This is worrying.

Movil is the super dominant operator in the Mexican telecoms market.

President Nieto had enacted the Movilzero rate” in order to reduce barriers to entry (features which a new operator must conquer in order to enter and survive in the market). This encouraged challengers and made the sector more competitive. Consumers benefited through significantly lower prices, and operators were encouraged to make efficiencies and innovate.

It’s worrying the market.

Competitors like Telefonica and AT&T expressed anxiety over how sustainable their Mexican business model is, should Movil be allowed to charge interconnection fees. It threatens their continued investment in the country. At least the court decided against making them pay retrospectively.

However, Movil shouldn’t celebrate too much.

The court ruled that a regulator, the Federal Telecommunications Institute (IFT) will set fees.

The IFT was born from the reforms. It’s more powerful than its predecessor and independent of government. It’s predicted that by increasing its remit, it will ensure competition remains.

And interconnection fees are declining in importance: they’re a feature of voice calls only. Consumers are moving increasingly towards data driven connections.

The decision may strengthen other reforms.

The government, facing elections soon, is now under pressure. Growth has weakened and corruption scandals are abundant. Consequently, there may be renewed determination to ensure that energy market competition, which has worked so well in Mexico’s oil sector, is enhanced.

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