The telecommunications reform has been filling headlines and coffee conversations during the past week and it seems to have diverted the attention from controversial topics such as Granier´s (former Tabasco Governor) embezzlement. Is it any wonder? It entails a true “Copernican turn” in the relation between Mexican State, private companies and interest groups.
The initiative of constitutional reforms on telecommunications and competition is a historical opportunity to improve markets with structural problems. The new Federal Competition Commission (CFC), as a Constitutional autonomous body, will be able to modify oligopolies or situations in which dominant operators exist, remove barriers to competition, regulate access to essential inputs as well as to order the asset stripping to eliminate anti-competition effects (internationally, this power has been used in the United Kingdom on the London airport system’s disincorporation).
With the aforementioned initiative, the Federal Institute of Telecommunications (IFETEL) is created, replacing the Federal Telecommunications Commission (COFETEL), an autonomous body with broad powers. The initiative removed entry barriers to telecommunications, such as limits to foreign investments, and it also imposed key measures to achieve greater competition in pay television, such as the obligation of free must carry and must offer for a large amount of concessionaries, though not for the main potential competitor and with several other limitations (it’s at this point where the lobbying of major TV companies was observed). Tender for two public broadcasting networks; criteria is established to determine important agents within the radio broadcasting and telecommunications market (that have a 50% or more share of the market), who will now have asymmetric regulation and requirements to unbundle local networks. The creation of a “network of networks” (new among carrier of carriers, using technical terms) that would operate the telecommunications network of the Federal Commission of Electricity (CFE) is the next step.
The constitutional autonomy was not essential but it’s obvious that the institutions and procedures needed to be improved in order to, at last, strengthen competition in Mexico. We must look closely to the designation of the new members of CFC and IFETEL to avoid political sharing. The filtering system through examinations and a committee integrated by the Bank of Mexico, the National Institute of Statistics and Geography (INEGI), and the National Institute of Educational Evaluation (INEE) will undoubtedly help; however, society must keep an eye on the process.
It will be important for new members to keep the experience and knowledge of specialized staff in both organizations. These new super regulators must have enough economic and human resources to comply with their new responsibilities; without that, there will be no results. The penal procedures shouldn’t be abused in order to punish monopolies, the 2011 reform can be improved, but only cartels should be legally sanctioned: that is the international custom.
As mentioned by Miguel Flores Bernés, several changes, new institutions with new capabilities, lots of triumphs. Even though the details will be the key to success, one can be optimist, but it’s also worth to remain vigilant.
One of the most important changes is the elimination of provisional suspension during the procedure of an amparo trial.
It’s about guaranteeing the delicate balance between public interest and fundamental rights. If the reform is approved the government would have a powerful instrument to establish the kind of control that existed on media in the past, but nowadays not because of the pressure but using legal instruments specifically designed for that purpose. It’s clear that the last chapter on this struggle-filled book hasn’t yet been written.
For some, the reform would violate the judicial certainty and trust of businessmen, with the subsequent loss of investments and jobs in sectors that contribute with a significant part of economic activities. This claim – according to Alejandro Faya – would be an exaggeration for several reasons.
Firstly, because an isolated action such as this one would hardly affect investments, since they are built within multiple factors and conditions. Secondly, because the exception doesn’t offer a blank check or applies to every authority act directed towards a certain group of companies but only to situations that impede or hinder the use and exploitation of public domain goods (the legal drafting is absolutely qualified and it seems to cover extraordinary events; however, that is not the case with the rest of the regulatory legislation).
The amparo – as Faya argues, an opinion which we agree upon – has turned into a national sport and this situation ought to change, specially when it affects the ruling capacity of the State to ensure market competition and an adequate provision of essential public services. This translates into major losses for big companies and certain interest groups. Let us not forget that this regulatory kafkianism that we´ve been dragging on for a long time has many variables that not always are related to the amparo: bad regulation, non-existent regulatory tools, weak regulatory institutions, long and inappropriate legal procedures, judicial criteria that are lowly deferential to the regulator and a lack of specialization from judges.
Would this reform help to reduce the existing litigation in, for example, the telecommunications sector? The strategy of Grupo Salinas is widely known: they sought to suspend biddings for frequencies in 2004-2005 and 2010 using subsidiaries. But to think that telecommunication problems are only due to the excess of litigation is to be deceived. It seems as if we were in the 1970’s Mexico, begging the government to do the job that it should be doing. But no, this is a common story, which has infinite economic and social losses. What’s been done? Or are Televisa, factual powers and its lawyers to blame as well?
Should there be specialized courts, just as the reform asks for? The Federal Judiciary Power, in order to comply in time with these quick trials, needs specialized courts. Justice delayed is justice denied, like Goethe said, and the ignorance of many judges of economic regulation took its toll in many companies.
The best example of the current government’s intention to “subdue” factual powers was the apprehension of Elba Esther Gordillo. The advances on telecommunications and competition reforms are the second test – specially subduing major TV networks and phone companies-. The third round will be the energy reform as well as PEMEX union. There is certainly more political will from President Enrique Peña Nieto than his two PAN predecessors. Let us not forget the apprehension of Quina and Jongitud Barrios created the “monsters” of Elba Esther Gordillo and Carlos Romero Deschamps.
It’s not a perfect reform but it’s certainly a positive advance. It sends a sign: that factual powers should not abuse as much as they have done in the past two decades. It shows political will, the ability and power of President Peña Nieto of forging ahead the reforms proposed by the Pact for Mexico. However, the devil is in the details, so the secondary laws are yet to be seen in order to measure its full impact.
Xavier Ginebra Serrabou
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