By Julia Love
MEXICO CITY (Reuters) – For every peso cent Mexican mogul Carlos Slim’s America Movil can charge for interconnection fees, the company’s competitors in Mexico would collectively pay about $20 million per year, according to estimates from rival AT&T Inc provided to Reuters.
The Federal Institute of Telecommunications (IFT), Mexico’s industry regulator, is discussing a proposal to allow America Movil to resume charging competitors for calls to its network, Reuters reported this week.
The decision would weaken a central pillar of a 2014 telecoms reform which sought to bolster competition by giving other companies free use of Slim’s network, which grew from the former state monopoly he acquired in the 1990s. Other companies can still charge competitors to use their networks.
AT&T’s calculation of $20 million per peso cent was compiled from IFT statistics and the company’s own data. The estimate does not include any potential reduction in the fees that non-dominant companies can charge.
AT&T did not provide any documents detailing its calculations. As the fees ultimately go to America Movil’s coffers, the impact in the marketplace would be even greater, said Cristina Ruiz de Velasco, assistant vice president of external affairs for AT&T in Mexico.
“Keep in mind the overall competitive effect in the industry could be of up to $40 million per peso cent, taking into account what the preponderant (America Movil) will gain, coupled with the transfer of competitive resources from the non-preponderants,” she said.
The IFT and America Movil declined to comment.
In August, the Supreme Court ruled that the IFT, rather than legislators, should determine interconnection fees, touching off a fierce debate within the sector about the proper rate.
The IFT is considering a proposal that would allow America Movil to charge competitors 0.03686 pesos per minute for mobile calls to customers on its network. Other companies could charge America Movil and other competitors 0.1176 pesos per minute for calls, according to the Reuters report.
Currently, the gap between America Movil and its competitors is much wider: minority players such as AT&T and Telefonica SA can charge 0.19 pesos, and Slim’s firm bills nothing.
Within the reform, the so-called zero-rate has been particularly effective at lessening America Movil’s grip on the market, experts say. Cellphone service prices have dropped more than 40 percent, according to IFT statistics.
Yet with America Movil still holding about two-thirds of mobile subscriptions, it is too soon to ease restrictions, said analyst Ernesto Piedras of research firm CIU.
“We have a market which is supposed to get rebalanced in terms of competition, and that is something we still have not witnessed,” he said.
Yet the IFT must balance promoting competition with encouraging investment in Mexico. Slim has criticized rivals for not investing enough in infrastructure.
Foreign firms such as Telefonica and AT&T said that ending the zero rate could have grave consequences. In an open letter to the IFT on Tuesday, the companies argued that the policy had enabled them to increase investment and offer better plans.
(Reporting by Julia Love; Editing by Lisa Shumaker)