Mexico amends plan to eliminate telecom regulator IFT

[exbloguero]

Mexico's lower house of Congress proposed adjustments on Thursday to the details of a contentious reform that abolishes several regulatory bodies, aiming to ensure compliance with the USMCA trade agreement.

The ruling majority, led by the MORENA party, on Wednesday approved the general text of the constitutional amendment to abolish seven autonomous watchdogs including the transparency institute, antitrust body and the telecoms regulator.

The scrapping of the telecoms regulator IFT in particular has stirred concerns among investors and analysts, who had warned it appeared to breach the USMCA agreement and could result in disputes with the United States and Canada.

Legislators from the ruling MORENA party proposed, during Thursday's detailed discussion of individual articles of the bill, merging the IFT with the antitrust watchdog Cofece, creating an autonomous body under the Economy Ministry, while preserving its technical and operational independence.

"The idea is that there should be a competition body that corresponds to the agreement (USMCA), that is similar to that of the United States and that, above all, guarantees good competition," Vidal Llerenas, deputy economy minister for industry and trade, told reporters on Thursday.

The change to the reform, Llerenas added, makes a potential complaint from one of Mexico's commercial partners unlikely. "We do not think it will be a controversial issue," he said.

Analysts reacted positively to the adjustment, but remained cautious about the implementation of the reform.

"The fact that MORENA is taking a more cautious approach with two of the most important regulators, antitrust and telecoms, is a positive sign," said Rodolfo Ramos, of the Brazilian bank Bradesco BBI.

However, the constitutional reforms have sparked concern of potential credit ratings downgrades for Mexico, which currently enjoys investment-grade ratings from Fitch, Moody's and S&P.

Reactions and Concerns

The IFT has publicly opposed the reform, warning that the changes could revert Mexico to an institutional model that previously failed to ensure widespread access to quality services and enhance competition in telecommunications and broadcasting markets. The IFT highlights that before the 2013 constitutional reform, regulatory decisions were often subject to review by the head of the Ministry of Communications and Transport, potentially leading to decisions influenced by political interests rather than technical and legal criteria.

The IFT also highlights the significant progress made since the 2013 reform, which highlighted telecommunications and broadcasting services as fundamental rights and public services of general interest. This autonomy allowed the IFT to create a robust regulatory framework that ensured decisions were made based on transparent, technical, and legal criteria, independent of political or economic pressures.

Over the past 11 years, the cost of communications services in Mexico has decreased by 32.1%, despite rising inflation, argues the IFT. Internet penetration has surged, with 81.2% of the population now using the service, up from less than 45% in 2013. The number of households with internet access has also increased from 9.6 million in 2013 to 27.7 million in 2023.

The institute also underscored its achievements in improving service quality, with most fixed broadband connections now exceeding 50Mbps, compared to just 8.1% in 2020. Additionally, the IFT has overseen the transparent and open bidding processes that led to the creation of a new television network and the establishment of 244 new radio stations.

The IFT’s budget has decreased by over 40% in real terms since 2014. Despite this, the institute has generated significant savings for users, equivalent to MX$805 billion (US$41.06 billion), and has contributed over MX$180 billion (US$9.18 billion) to the federal treasury in fees and concessions.

“Although Mexico has experienced a historic election, it is fundamental for the IFT to maintain its institutional independence, both from political and economic interests, as well as from the political situations of the moment. In that sense, our focus will continue to be on fulfilling our constitutional mandate and moving forward with our annual plans for 2024. This includes the implementation of our strategic roadmap covering 2020 to 2025, ensuring that we meet our development objectives related to the regulatory and telecommunications sector,” said Javier Juárez, Commissioner, IFT, previously to MBN.

 

[exbloguero]

Dissolving the IFT: Self-inflicted Wounds to Digital Sector Growth​

In 2013, the Peña Nieto administration successfully pushed for a constitutional reform to reconfigure the telecommunications industry, opening to greater private sector investment and competition. The landmark reform also established the Federal Telecommunications Institute (IFT in Spanish), an independent regulatory authority overseeing Mexico’s telecommunications industry. The IFT is tasked with regulatory decisions aimed at increasing telecommunications coverage, building efficiencies, and ensuring greater competition in the sector.

Under Morena, however, independent and autonomous regulatory institutions have come under attack. The IFT is no exception. Starting with Andrés Manuel López Obrador (AMLO), Morena has pushed to reduce the scope of regulatory bodies such as the IFT, arguing that they are superfluous, cost too much money, and should be folded into existing executive agencies. (Against the IFT, AMLO said its costs outweighed its accomplishments, especially in breaking up monopolies, ignoring his own close personal ties to Carlos Slim, CEO of América Móvil.) Claudia Sheinbaum has advanced this argument and is pushing for a vote in Congress on autonomous agencies.

The IFT has had some significant successes. To name a few, it has managed to reduce the price of consumer telecoms by almost 30% while cutting into the share of América Móvil’s monopoly on Mexico’s telecoms market. Thus, eliminating the IFT's independence would harm Mexico’s ability to expand the fruits of broadband throughout the country and continue attracting investment from the private sector. The private sector, especially Western investors, favors regulatory institutions where decisions are taken independently, and evidence-based policy is the norm—not the whims of political parties. By folding independent and autonomous agencies into the executive branch, Morena risks politicizing regulatory decisions that would likely be off-putting for investors and prejudicial to garnering greater private investment in the sector.

The impact on Mexico’s economy could be significant. Without greater competition in the information, communications, and technology (ICT) sector, Mexico's ability to reach its full potential could be hindered. This is because much of the country’s future economic growth could be in the digital sector, as acknowledged by including a digital chapter in the renegotiated U.S.-Mexico-Canada Agreement.

Too many Mexicans still lack access to high-quality internet, especially in rural areas. In 2022, 76.2 percent of urban households had access to the Internet, compared to only 46.2 percent of rural households. Balanced economic growth will depend upon rectifying this disparity, something the IFT aimed to do with regulatory decisions meant to attract greater investment in Mexico’s ICT sector. The AMLO and now Sheinbaum governments have strongly advocated the “Internet Para Todos” initiative. Still, they prefer the Federal Electricity Commission (CFE) to lead this program in installing greater broadband coverage. Morena has demonstrated little trust in sound policy and private sector investment to lead the way on its strategic initiatives, such as Internet Para Todos, instead favoring a strong role for the public sector.

Yet, Mexico must take steps to promote a competitive ICT landscape that courts private investment, bridges the connectivity gaps between urban and rural zones, and sets the country on the path to achieving its digital transformation goals. To foster this competitive environment, Mexico must strengthen and reaffirm the independence of its telecoms regulatory body—quite the opposite of what Morena has been pursuing under both AMLO and Sheinbaum. Regulatory decisions on issues like spectrum policy could lead to improvements in the competitiveness of the ICT sector; such decisions would be a prerequisite to open the floodgates for investment from private firms and lessen the burden on state resources—especially important during a time when Sheinbaum’s government will struggle to close fiscal gaps bequeathed by AMLO.

Major US firms, such as AT&T, would be impacted by the vote to eliminate the IFT. The IFT's inability to set sound regulatory policy, such as on matters of fair competition and spectrum fees, has undercut the impact of investments from private sector firms, contributing to a self-fulfilling prophecy for Morena that the private sector is of no use in fulfilling its digital transformation goals.

Further adding to this self-fulfilling prophecy, AMLO’s policy toward the IFT vitiated its effectiveness through a strategy of death by a thousand cuts. Beyond slashing the IFT’s budget, he refused to appoint commissioners. Since 2019, the IFT has operated with only four commissioners. Because the Federal Telecommunications and Broadcasting Law requires a qualified majority of five votes to make significant organizational decisions, the lack of appointments to the commission has effectively gutted the IFT’s ability to carry out its responsibilities and make decisions. Mexico’s ICT sector needs to become more competitive, with the Institute for Management Development ranking Mexico 54th out of 65 countries considered in its 2023 rankings; instead, Morena is fiddling with the internal governance of the IFT and gutting its ability to issue regulatory decisions.

Beyond the ICT sector, there would be ramifications for US-Mexico relations. As the Wilson Center’s Diego Marroquín Bitar has pointed out, the elimination of autonomous agencies runs afoul of several provisions in the USMCA, highlighting the necessity of these institutions to key economic sectors. This would likely add further kindling to what could be a contentious mandatory review of the agreement in 2026. The IFT, although probably less well-known than other bodies slated for elimination, would be no exception. Dissolving the IFT would be an unnecessary, self-inflicted error.

Dissolving the IFT: Self-inflicted Wounds to Digital Sector Growth

www.wilsoncenter.org

 

[RF101]

The Senate approved IFT's dissolution on Friday...
" La presidenta Claudia Sheinbaum defendió este viernes la reforma constitucional aprobada en el Senado de la República, que suprime siete organismos autónomos y traslada sus funciones a diversas secretarías de Estado. Entre los entes afectados se encuentran instituciones clave como el Instituto Nacional de Acceso a la Información Pública y Protección de Datos Personales (INAI), así como el Instituto Federal de Telecomunicaciones (IFT)."

(more in the article but not IFT specific.)

Sheinbaum defiende reforma que elimina organismos autónomos | 8 Columnas

8columnas.com.mx

Regarding the cellular sector, getting rid of IFT proves okay because the Carlos Slim Family owns everything!

How does this impact Radio/TV and spectrum management?

 

[exbloguero]

POSITION OF THE INSTITUTO FEDERAL DE TELECOMUNICACIONES ON THE REFORM APPROVED BY CONGRESS Mexican States TO EXTINGUISH THIS REGULATORY BODY.

On November 28, the Senate of the Republic approved the Decree that reforms, adds to and repeals various provisions of the Political Constitution of the United Mexican States in terms of organic simplification, which determines the extinction of the Federal Telecommunications Institute (IFT) in terms of its transitory articles.

The approved Decree establishes an institutional model different from the current one, to regulate the telecommunications and broadcasting sectors, with a regulatory body in matters of economic competition without constitutional autonomy, and a design in which the powers currently held by the IFT would be divided among different government agencies.

This regulatory body has been emphatic, and we have made this public through various positions since the reform initiative was presented in February of this year, in which the evidence shows that the best institutional design for the regulation of these important sectors in our country has been the constitutional autonomy that is the fruit of historical social conquests, since it has been this model that today yields tangible results, which account for a significant evolution in the telecommunications and broadcasting industry, with direct benefits for Mexicans, for those of us who work and who have always been at the center of our decisions.

At the IFT we consider it essential to draw attention to some aspects of this reform that could generate uncertainty and limit the proper application of sectoral regulation and economic competition in telecommunications and broadcasting, and should therefore be carefully analyzed in the secondary legislation to be issued, including:

Technical impartiality, budgetary independence and collegial decision-making are essential elements for the implementation of regulation and the application of competition policy in the telecommunications and broadcasting sectors, which is why a sectoral regulatory body is required to guarantee technical and impartial decisions, which is particularly relevant in the current context, in which there are concessionaires with public participation that operate telecommunications networks and provide these services in the country, without compromising compliance with international agreements to which the Mexican State is subscribed.

It is essential to maintain specialized human capital, the result of years of training and investment of resources for the training of public servants by the Mexican State, and it is a fundamental pillar of any regulatory body.
Highly specialized knowledge is required in technological, economic and legal disciplines.
The results of the institutional work would not have been possible without the commitment and high specialization of the human talent that built an efficient and effective institution day by day.

This technical and professional capacity of the IFT staff must be recognized and valued, so we call for their labor rights to be respected as established by the transitional regime of the Decree.

In terms of the transitional regime of the Decree, the IFT informs all interested parties that all ongoing procedures and processes will continue to be processed, as well as those that are presented until the extinction according to the Reform materializes.

This Institute expresses its full willingness to provide the elements that are required so that through secondary laws conditions can be generated that are beneficial to the development of the sector, of the users and audiences of the country, and that savings can be achieved for consumers of telecommunications services of over 805 billion pesos, and a decrease in the prices of communications services of over 33% that have been achieved throughout the eleven years of existence of the IFT.

https://www.ift.org.mx/sites/default/files/filefield_paths/posicionamiento_ift_0.pdf

 

[exbloguero]

Mexican telecom regulator warns of reform risks as it faces extinction​

The constitutional reform approved by the Mexican congress that does away with telecom regulator IFT and other agencies “could generate uncertainty and limit the proper application of sectoral and competition regulation,” the IFT said in a statement.
The bill, which had already passed through the lower house, was approved on Thursday in the senate by 86 votes in favor and 42 against. It must now be approved by the state legislatures.

The reform, which was initially presented by former president Andrés Manuel López Obrador, eliminates the IFT and six other authorities, including the electric energy (CRE) and hydrocarbons (CNH) regulators.

“This regulatory body has been emphatic, and we have made this public through various positions since the reform initiative was presented in February, that the evidence shows that the best institutional design for the regulation of these important sectors in our country has been constitutional autonomy,” said the IFT.

“Combining the powers of sectoral regulation and economic competition in a convergent regulator with a comprehensive and coherent vision of the functioning of markets has made it possible to implement effective regulation and a deep transformation of the telecommunications and broadcasting sectors,” it added.
The Mexican association for the right to information (Amedi) also voiced its opposition to the reform earlier this month: “The extinction of this body [IFT] implies that its powers will be assumed by the federal executive through the agency in charge of telecommunications and broadcasting policies, even though it has been shown in several six-year terms to be a mechanism with little effectiveness.”

Reform risks

The IFT has called for the secondary legislation to address certain issues in the reform to avoid a number of risks.
Among them, it said that technical and impartial decision-making must be guaranteed.

“Technical impartiality, budgetary independence and colegial decision-making are essential elements for the implementation of regulation and the application of competition policy in the telecommunications and broadcasting sectors.”

According to local press, the functions of the IFT could be divided into different departments of the federal administration.

The bill transfers IFT's functions to the infrastructure, communications and transport ministry. However, the government has also discussed the possibility of creating a decentralized agency dependent on the economy ministry. It will ultimately depend on the outcome of the secondary legislation.

“Segmenting regulatory powers can lead to inconsistencies, inefficiencies and inadequate implementation of economic competition and regulatory policies in the telecommunications and broadcasting sector,” the IFT said, adding that it is key to maintain the agency's specialized human capital.

An independent ICT regulator is required under the USMCA free trade agreement that Mexico has with the US and Canada, representing a potential clash with its trading partners.

BNamericas - Mexican telecom regulator warns of reform ri...

Approved by both chambers of congress, the reform that eliminates several regulatory agencies must now be approved by state legislatures.

www.bnamericas.com

 

[exbloguero]

Mexico’s telecoms regulator is abolished

As expected, Mexico has gone ahead with plans to abolish a number of regulatory bodies, including telecoms watchdog the Instituto Federal de Telecomunicaciones (IFT). However, it hasn’t been the wholesale clear-out some commentators feared.

The country's ruling majority last week approved the general text of the constitutional amendment to abolish seven autonomous watchdogs. They include antitrust watchdog Cofece, telecoms regulator IFT, energy regulator CRE, hydrocarbon regulator CNH and public information and data protection office INAI.

These reforms to bodies that help to ensure government transparency could, Reuters has suggested, worsen tension with the US and hit credit ratings. In the event, some of the plans have been diluted. Mexico's lower house of Congress proposed adjustments to these reforms late last week to ensure compliance with the 2020 United States-Mexico-Canada Agreement (USMCA).

The telecoms regulator IFT was a strong focus of these adjustments as its scrapping in particular is seen as very likely to breach the USMCA agreement.

The answer, it seems, will be to merge the IFT with the antitrust watchdog Cofece, creating an autonomous body under the Economy Ministry, while preserving its technical and operational independence.

The argument for change has been that streamlined governance could save some US$5 billion annually and reduce corruption. The opposing argument has been that it would strip funding from important projects, reduce transparency and oversight and concentrate power with the executive.

In the event, the adjusted proposals will now move to the Senate, where ruling party Morena holds a large majority.

Mexico’s telecoms regulator is (almost) abolished

As expected, Mexico has gone ahead with plans to abolish a number of regulatory bodies, including telecoms watchdog the Instituto Federal de Telecomunicaciones (IFT). However, it hasn’t been the wholesale clear-out some commentators feared.

developingtelecoms.com

 

[exbloguero]

AT&T Clause and the Government's “Tangled Wires”

They created a mess of interference in the functions of Claudia Sheinbaum's government in the Mexican market.

AT&T clause and the government's "tangled cables." The rush of the official majority of Ricardo Monreal in the Chamber of Deputies and of Adán Augusto López in the Senate to eliminate autonomous organizations, including the Federal Institute of Telecommunications, has already generated a mess of interference of functions for Claudia Sheinbaum's government in the Mexican market and another of electroshocks in the review of the TMEC with a Donald Trump "on steroids" who has already shown how he will negotiate trade issues and regional investment.

As warned by the leader of the PRI, Alejandro Moreno, cheap is expensive: the argument of "austerity" to destroy the IFT that is still headed by Javier Juárez Mojica generates uncertainty that will come back to us like a fire in one of the most dynamic sectors of the economy and culture.

Separating the two functions of the IFT and centralizing them in entities of the executive branch contravenes Chapter 18.17 of the USMCA, while returning to the “double window” and duplication of powers both in the agency that will replace the also dying Federal Economic Competition Commission -sectorized in the Ministry of Economy of Marcelo Ebrard- and that will be the one that will define the asymmetric regulation of the preponderant economic agents... while the administration of the radioelectric spectrum remains in the Digital Transformation Agency (ATDT) in charge of José Merino... and that will also be under the control of the executive branch.

Article 18.17 of the USMCA is known as the “AT&T Clause”, it establishes that the telecommunications regulator must be autonomous and independent of the executive branch.

There is no way around it. Whether the entity that will replace the commission headed by Andrea Marván will be “decentralized and technical” does not really matter for the purposes of the trade agreement: that article was established due to the distrust of the US government and the most important telecommunications and multimedia company in that country - now headed by John Stankey - regarding Mexico's ability to regulate the "important provider" of services - which in practice is América Móvil - and which with skill and technology has put AT&T, led here by Mónica Aspe, against the wall - in terms of number of clients and coverage.

Bottom line: While the USTR under Commerce Secretary Howard Lutnick will have another lever to invoke a controversy panel over Mexico's "Plan C" reforms, the return to "double-window" domestic trading only aims to repeat the regulatory failure that persisted until 2013 and cost Mexicans $26 billion annually in overcharges for poor telecommunications.

Such will be the cost of centralizing with the liver.

Cláusula AT&T y los “cables enredados” del gobierno | pacozea.com

Cláusula AT&T y los “cables enredados” del gobierno. Le generaron un lío de interferencia de funciones al gobierno de Claudia Sheinbaum en el mercado mexicano.

www.pacozea.com

 

[exbloguero]

Concerns Mount as Mexico Moves Forward with Telecom Regulator Overhaul

Mexico’s recent constitutional reform, which has eliminated the Federal Telecommunications Institute (IFT) and other key regulatory agencies, has sparked concerns about its potential to disrupt the country’s regulatory framework. According to the IFT, the reform could create uncertainty and hinder the effective application of regulations in critical sectors such as telecommunications and competition law.

The bill, which was passed by the Senate on Thursday with 86 votes in favor and 42 against, had already cleared the lower house of Congress. It now awaits approval from Mexico’s state legislatures. The reform, originally proposed by former President Andrés Manuel López Obrador, removes the IFT, along with six other regulatory bodies, including the energy (CRE) and hydrocarbons (CNH) regulators.

In a statement, the IFT expressed its concerns, stating that the reform contradicts the proven benefits of institutional autonomy in regulating these vital sectors. “The evidence shows that the best institutional design for regulating these important sectors is constitutional autonomy,” the IFT remarked. It further argued that a single, convergent regulatory body overseeing both sectoral regulation and economic competition has enabled effective oversight and spurred significant transformation in Mexico’s telecommunications and broadcasting industries.

The reform has also faced opposition from other groups, such as the Mexican Association for the Right to Information (Amedi). Amedi criticized the dissolution of the IFT, warning that the transfer of its responsibilities to the federal executive could undermine regulatory effectiveness. “The extinction of this body implies that its powers will be assumed by the federal executive through the agency in charge of telecommunications and broadcasting policies,” the association said earlier this month, pointing to the limited effectiveness of such agencies in past administrations.

The IFT has raised alarms about the secondary legislation that will follow the constitutional reform. It stresses the importance of maintaining technical impartiality and budgetary independence, which it says are critical for effective decision-making and competition policy enforcement. The Institute also cautioned against fragmenting regulatory responsibilities, noting that this could lead to inefficiencies and inconsistent application of policies across the sector.

The government has suggested that the IFT’s functions might be transferred to the Ministry of Infrastructure, Communications, and Transport, although there is also a possibility of creating a new decentralized agency under the Ministry of the Economy. The final structure will depend on the details outlined in secondary legislation.

Critics also highlight a potential conflict with international trade obligations, specifically Mexico’s commitments under the US-Mexico-Canada Agreement (USMCA). The agreement requires an independent regulator for the telecommunications and broadcasting sectors, which may clash with the proposed changes.

Concerns Mount as Mexico Moves Forward with Telecom Regulator Overhaul | PYMNTS.com

Mexico's recent constitutional reform, which has eliminated the Federal Telecommunications Institute (IFT) and other key regulatory agencies, has sparked

www.pymnts.com