|Issue:||Latin America II 1997|
|Topic:||Telecommunications in Mexico|
|Author:||Minister Javier Lozano Alarcon|
|Title:||Under-secretary of Communications|
|Organisation:||Ministry Communications and Transport of Mexico|
Mexico is at the forefront of the liberalisation process. Yet it is first to admit that its telecommunications services are not fully developed. To this end, it has put in place a new legal framework to enable the maintenance, modernisation and expansion of its current infrastructure, and promoted an open dialogue with the private sector to ensure co-operation between the two parties.
Mexico must have an adequate, modern and sufficient basic telecommunications infrastructure and communication service to achieve sound and sustained economic growth. Today, many industry analysts are optimistic due to the transition from the old days of government monopolies to the new system of competition. In order to drive the telecommunications evolution, Mexico has to place the emphasis on maintaining, modernising and expanding its current infrastructure; improving regional integration; developing social coverage, including quality, access, and improved efficiency, while ensuring the capacity for national security services. New Federal Telecoms Law Planning in the telecommunications sector has been fortified; due to the introduction of a new Federal Telecommunications Law, consistent with the North American Free Trade principles, which came into being on June 8 1995. This new legal framework grants the Ministry of Communications and Transport better mechanisms to promote investment by making the licensing process transparent, thus promoting investment in services and infrastructure with unparalleled legal security. Furthermore, the new Law contemplates modern financial mechanisms and ensures that telecommunications networks will be able to offer new and creative services. In order to allow private investment in the satellite sector, article 28 – paragraph 4 of the Mexican constitution was modified. This historic step allowed private investors to establish, operate and sell satellite communications services in Mexico for the first time. The State, however, still administers the radio spectrum and the orbital positions assigned to the country, and ensures the capacity for national security services. National Development Plan Mexico’s future economic and social development, as well as the quality of life of its citizens, will have an increasing dependence on the telecommunications infrastructure. The challenge is to ensure co-operation between the government and private sectors. The National Development Plan for 1995-2000 and the Communication and Transport Development Programme for the same period, while describing Mexico’s telecommunications sector, establishes concrete strategies and actions for improving basic and rural telephone services, satellite communications, radio communications, broadcast radio and television, wireless cable television, information networks, postal and telegraph services. The public telephone network is the most important telecommunications infrastructure in Mexico and it has great social and economic value due to its coverage. Telephone services in Mexico were a State-run monopoly until the damage caused to the telephone infrastructure by the 1985 earthquake required the infusion of important sums of unavailable and scarce government resources. In order to obtain these scarce resources the State-run telephone company, Telefonos de Mexico (TELMEX), was privatised. TELMEX was issued a new concession (license), requiring commitments in coverage, modification of its tariffs with adjustments according to inflation, and an exclusivity in the long distance market until August 11 1996. Mexico needs to improve the coverage and penetration of telephone services, while increasing quality and diversity at accessible prices. In order to achieve this, telephone services must be provided in a competitive environment that will undoubtedly lead to the introduction of new technologies. The local telephone service has been open to competition, however, the lack of new technologies and the low profitability inhibited new competitors. With the current technical options available today it is possible to provide local telephone services at low costs. This has caused a considerable increase in the companies requesting licenses to enter into this market. The Ministry of Communications and Transport has already granted licenses to two companies and expects to grant more licences before the year is over. Rural Telephony The development of the rural telephony will ensure that communities with low population densities have access to telecommunications services. Nevertheless, the demand for these services in rural communities is limited, thus reducing incentives to create infrastructure by the private sector. Rural telephony programmes must take into consideration the special social aspects of these communities. Under the auspices of the Federal Telecommunications Law, the Ministry of Communications and Transport has the responsibility of developing social and rural coverage programmes, which may be implemented through private licensees. The current rural telephony programme is focused on providing access to telephone services to communities with populations between 100 and 500 people. Most of these communities are located in remote regions, with high poverty rates. To overcome this problem Mexico is using technically available solutions such as satellite, cellular, trunked radio, and of course cable telephone services. In order to fulfil the prime objective of the rural telephony programme to increase access and coverage, the Mexican government is developing subsidy programmes and investment mechanisms with participation from state and municipal governments and the private sector. Wireless Infrastructure Mexico was one of the first countries to use satellites for domestic communications by renting satellite capacity from international satellite service providers. In 1985, Mexico put into orbit its first satellite generation called Morelas I and II. In 1993 and 1994, Mexico launched the second satellite generation: Solidaridad I and II. Until now, the government entity Telecomunicaciones de Mexico, has been the only operator of Mexican satellites, though private companies have been allowed to operate earth stations for the provision of voice and data networks, and for the distribution of radio and television signals. Mexico’s satellite systems have been instrumental in providing services to the country’s remote areas. Mexico has one of the world’s largest remote television education systems with more than 12,000 sites installed. The Mexican satellite system faces strong competition and requires growing financial and technological resources. Private investment is required to expand and modernise this system, thus enabling the introduction of global communication systems with state of the art technology. Under the current Law, concessions to occupy and exploit geo-stationary orbital positions assigned to Mexico, are granted through a public tender procedure. Mexico’s wireless infrastructure is primarily comprised of cellular telephone, one-way paging systems, and trunked radio networks. To a smaller degree, the country has mobile maritime communications, private radio communications, and land-air-land communications (in aeroplanes). The cellular industry has been affected by fraud caused by the “cloning” of cellular telephones. There are proposals to modify the current law to eradicate this problem, which costs the industry millions of dollars per year, and to analyse other actions that could be considered illegal. The Federal Telecommunications Law also provides for a much more transparent and non-discretionary process to award frequencies to interested -parties, through a public tender. Spectrum Usage Mexico must improve its radio communications infrastructure by expanding coverage and increasing the quality of service offered. In order to achieve this, Mexico has embarked on a programme to improve the spectrum usage and promote the introduction of new technologies at competitive prices. AM and FM radio broadcasting covers over 95% of the Mexican population, while television has a penetration of 85%. Mexico is also in the process of expanding its programming and production industry. This will ensure that there will be a future for Mexican artists and producers, which will in turn promote our regional and national cultures. To this end, the government is making moves to promote the modernisation of broadcasting services, encouraging domestic production and programming and integrating new digital technologies. The growth of wireless cable television, though concentrated in the largest cities has been important. The challenge is to increase its penetration, which will be made easier under the current Federal Telecommunications Law. This new regulatory framework facilitates the provision of other services such as Internet and telephone services with minimal paperwork, and ensures that all telecommunications networks will interconnect with each other. This Law also recognises the fact that the government should deregulate technology and promote the introduction of new services within all of its telecommunications networks. Therefore, the Law will ensure that our information highway will not only be made up of our telephone network but also by cable television networks and other networks which have yet to be conceived. Restructuring Regulatory Regime The postal service is considered strategic and thus reserved for the State. All of Mexico’s communities, including those that are not profitable due to low volume of usage and their remoteness, must have access to this important service. Therefore, Mexico’s postal service has undergone a major restructuring in order to compete with private express mail services and still provide postal services in rural communities. To reinforce the role of the postal service as a reliable, efficient and accessible means of communication for the entire population, Mexico is restructuring its regulatory regime. The telegraph system is one of the most popular and accessible means of providing funds transfer services. The traditional telegraph service has always remained a State-run monopoly. However, the funds transfer function which it now provides and which represents the lion share of its core business, faces competition from the private sector and is undergoing a major overhaul to ensure its competitiveness. Change in the Government’s Role The coverage and diversity of telecommunication services in Mexico has not yet been fully developed. To this end the efforts of the government and the private sector have to be combined. Therefore, to ensure that co-operation exists between government and industry, the government’s regulatory role has changed from an exclusively supervisory role to the creation of an open dialogue between the two parties. This is to ensure better representation of the industry’s needs, while maintaining the ability to guarantee services concerning aspects of social and national security.