Mexico's Phone, TV Companies Raise Tone Of Dispute
March 02 2011 - 11:26PM
Dow Jones News
A battle between Mexico's biggest phone companies and top
broadcasters heated up Wednesday in a series of accusations and
counter-accusations over interconnection rates and investment.
The flurry of charges flew in a series of press releases from
America Movil SAB (AMX, AMX.MX) unit Telcel and Telefonos de Mexico
SAB (TMX, TELMEX.MX), controlled by Carlos Slim, Grupo Televisa SAB
(TV, TLEVISA.MX), controlled by Emilio Azcarraga, and other phone
operators.
Bestel and Cablevision, subsidiaries of Televisa, as well as
phone companies Axtel SAB (AXTEL.MX), NII Holdings Inc. (NIHD) unit
Nextel Mexico, and Grupo Iusacell, among others, put out a
statement calling on the federal government to apply
"pro-competitive" regulations, while offering reciprocal free
interconnection with Telcel.
Telcel responded by saying that smaller operators are seeking
free services because they haven't invested in infrastructure of
their own. Telcel said a number of them haven't passed on
reductions in interconnection rates since 2005 to their
customers.
In separate releases, fixed-line phone company Telmex and
Televisa aired details of a dispute over a network contract that
Bestel won a year ago from the state workers' social security
institute ISSSTE.
The slew of statements suggests the rift between Slim's
companies and the country's broadcasters is far from being
resolved.
In recent weeks, Telmex, Telcel and Grupo Carso (GPOVY,
GCARSO.MX) withdrew advertising from leading broadcaster Televisa
to the tune of about $70 million a year in a disagreement over
advertising rates. Slim was then refused space on No. 2 broadcaster
TV Azteca SAB (TVAZTCA.MX) unless Telcel offered lower
interconnection rates to mobile company Iusacell.
TV Azteca, whose controlling shareholder Ricardo Salinas Pliego
also controls mobile phone company Iusacell, later said it's
willing to sell Slim advertising, but called for broad debate on
interconnection.
TV Azteca operates two of the country's six nationwide broadcast
channels, and Televisa runs the other four. Telcel has about 70% of
the country's mobile subscribers.
Last month Telcel offered to extend to other operators the same
interconnection rates agreed among Telcel, Telmex and the local
unit of Spain's Telefonica SA (TEF), which is Mexico's No. 2 mobile
operator.
The interconnection rates agreed were 95 peso cents (8 U.S.
cents) per minute in 2011, falling gradually to 69 peso cents in
2014, as well as introducing billing by the second after the first
minute. Others have argued that the mobile interconnection rates
should be around 40 peso cents per minute.
The antitrust regulator said Tuesday that the spat among the
country's richest entrepreneurs could have a positive side by
leading to a solution to two problems in the country: high
interconnection rates and lack of competition in television.
Telmex, while awaiting government authorization to enter the TV
market, has a billing and marketing agreement with satellite TV
provider Dish Mexico. Televisa, whose cable businesses are already
offering phone services, says Telmex's relationship with Dish
Mexico goes beyond what Telmex is authorized to do. Dish competes
directly with Televisa's Sky Mexico satellite services.
-By Anthony Harrup, Dow Jones Newswires; (5255) 5980 5176,
anthony.harrup@dowjones.com
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