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Mexico’s Senate Approves Telecommunications Competition Bill

July 5 (Bloomberg) -- Mexico’s Senate, after more than six months of delays and legal challenges, has passed a bill that forces America Movil SAB and Grupo Televisa SAB to face penalties as long as they keep serving more than half of Mexico’s telephone and TV users.

The Senate voted 80 to 37, with no abstentions, earlier today to approve the bill in general terms. The vote was followed by amendments to more than 300 articles, most of which were turned down, and concluded 17 hours of debate.

The bill, which still requires approval from the lower house and President Enrique Pena Nieto, follows up on last year’s constitutional amendment on telecommunications, seeking to generate more competition in a highly concentrated industry controlled by a handful of Mexico’s richest people. America Movil’s Telcel has seven out of 10 mobile-phone users in Mexico, while Televisa draws almost 70 percent of the nation’s broadcast viewers.

The law will force America Movil, controlled by billionaire Carlos Slim, to eliminate the fees it charges competitors to make calls on its network and to share its extensive network infrastructure with other operators, according to the original draft presented to the Senate. Operators won’t be able to charge domestic long-distance fees starting next year, an amendment to a three-year phase-out period initially proposed last year.

Last month, Slim increased his investment in America Movil to 57 percent of the company after acquiring AT&T’s 8.3 percent stake for $5.57 billion.

New Channels

Televisa must publish its advertising rates and stand by them regardless of who the customer is. In a challenge approved last night, it also must provide network access to the winners of the national broadcast-TV auction of two new channels, according to a Senate statement.

Cable operators must retransmit the content with the highest audience for free, while satellite operators, such as Dish Mexico, are only obligated to retransmit content that is broadcast in more than 50 percent or more of country, the statement says.

Televisa and TV Azteca have already been required to offer their most popular broadcast channels to other pay-TV operators for free since September.

In another challenge, operators are now banned from calling users with service promotions unless they have authorized them to do so. Violating the laws would be punishable by fines of as much as 10 percent of Mexican sales -- or double for repeat offenses.

Also, the bill specifies Slim’s America Movil must comply with its regulatory requirements for 18 months before it can apply for a TV license.

As an alternative though, the law also lets dominant companies propose their own breakups to the telecommunications regulator, IFT, with the goal of reducing their market share below 50 percent. America Movil said last month it has created a committee to evaluate structural options after IFT ruled it’s dominant in the market.

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