
If the IFT is not there, who will grant telecommunications concessions in Mexico? For the proposal that is already in Congress, there is no doubt: the president of the country.
In what would be a reconcentration of powers, the proposed text states that the president would have to create a department and through it grant the concessions that apply to everything related to broadcasting and telecommunications. This works for public concessions as well as for commercial ones, that is, those held by Televisa, TV Azteca and América Móvil.
The first draft of the proposal was presented a few weeks ago. The president and his new department would have much more work. It is not only about granting the concessions, but also creating all the telecommunications policies for Mexico and even setting the costs that companies must pay for telecommunications concessions.
A concession is a permit to use the radio spectrum. It is a special permit because it makes companies use certain channels and frequencies, exactly what they need to provide their telecommunications services. It can be for television, telephone or internet; The point is the same: since the spectrum belongs to Mexico and cannot be sold, companies have to rent it with the help of a concession.
It is too early to know the full impact of what appears to be the imminent demise of the Federal Telecommunications Institute, but the road to its disappearance has taken years. Quick recap: Mexican President Andrés Manuel López Obrador proposed eliminating the IFT since 2021, but the proposal failed to gain traction due to a lack of votes in Congress.
That will change very soon. Starting September 1, the new Congress will come into force (the one that was voted on in the elections last June 2), so it makes perfect sense that a new proposal to eliminate the IFT appears right now, one month before the new Congress begins to function with an overwhelming majority of the Morena party. That majority that can make adjustments to the Political Constitution is called a qualified majority and corresponds to two-thirds of the two chambers of Congress.
The proposal that is already circulating in Congress plans to eliminate the IFT, but it is not the only decentralized constitutional body that would be extinguished. The same document plans similar fates for the INAI, the CONEVAL, the Energy Regulatory Commission, the National Hydrocarbons Commission and even the COFECE. The first draft that was uploaded a few weeks ago can be consulted on the Chamber of Deputies’ website.
The future of telecommunications in Mexico
Returning to the IFT, the document has some interesting notes. The concessions that have already been granted will have to be respected as they exist, although it does say that the concessionaires must comply with the new rules dictated by the President of Mexico. Literally, the text reads:
“The enabling titles granted by the Federal Telecommunications Institute will continue to be valid in their terms, without prejudice to the concessionaires having to comply with the obligations and compensations that the Federal Executive imposes on them, in the exercise of its powers.”
That the Mexican government is in charge of telecommunications comes at a crucial time. Internet for Well-being and CFE Telecomunicaciones are two of its proposals to bring mobile internet to the entire country, even though at times they seem to be unfair competition with services with concessionaires. Altán Redes, administrator of the Red Compartida and rescued by the Mexican government in 2022, will be directed by none other than the CFE, as President López Obrador has announced.
Now everything seems like a web of chess moves that are painted to have a result: the control of telecommunications to fulfill the pending mission that remains to close the digital gap in Mexico.
Seen like this, it does not sound like a terrible idea. But to understand the problem, you have to move away from the magnifying glass. CFE TEIT has a concession that allows it to operate only in rural areas. CFE TEIT provides services without profit, it should not be used for social programs and its services should be offered to “economically disadvantaged populations,” the IFT has said. In its latest review, the IFT set itself the task of continuing to monitor CFE TEIT to prevent it from causing market distortions.
The purpose is twofold: to cover disconnected areas that do not have internet connection and, at the same time, to ensure that its low prices do not compete directly with other services that pay for commercial concessions. A CFE without limits on telecommunications could cause market distortions. The only arbitrator that should prevent this is the IFT, the same one that is about to disappear.
In the worst case scenario, Victor Pavón of Oxford Competition Economics told El Economista, a nationally validated CFE without oversight will cause distortion because private investment would be replaced by public investment. “It will mean that you, as a government, will be funding it on a recurring basis with public money.”
Context matters when it comes to talking about eliminating the IFT. If the proposal goes ahead, its extinction is likely to occur before the end of 2024. If the text is approved in the Chamber of Deputies, it would then have to be voted on in the Senate of the Republic.
Source: xataka