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The new Mexican Federal Telecommunications and Broadcasting Law

Mark W. Brennan

Mark W. Brennan,

Washington, D.C.

Michele C. Farquhar

Michele C. Farquhar,

Washington, D.C.

Ari Q. Fitzgerald

Ari Q. Fitzgerald,

Washington, D.C.

Trey Hanbury

Trey Hanbury,

Washington, D.C.

11 September 2014
As part of the constitutional reform in telecommunications matters published on 11 June 2013 (the Constitutional Reform), the new Federal Telecommunications and Broadcasting Law (the Law) was finally published on 14 July, and went into effect this past 13 August.

The new Law establishes a new regulatory framework in the telecommunications and broadcasting sector in Mexico, which contains the principles based on the Constitutional Reform, whose principal objectives are: the creation of more rights, the promotion of competition, and the provision of better services at lower prices. Additionally, along with the expedition of the Law, many articles of other related laws were reformed for their proper implementation.

A general summary of the most important aspects of the new Law is presented, and it follows the same structure as contained in the Law.

1. Area of application of the Law and the power of the authorities

The object of the Law is to regulate: (i) the radio-electric spectrum, (ii) the public telecommunication networks, (iii) the access to active and passive infrastructure, (iv) orbital resources, (v) satellite communication, (vi) the provision of public services of general interest of telecommunications and broadcasting and the convergence between both services, (vii) the rights of the users and audiences, and (viii) the process of competition and free market participation in these sectors.

In general terms, the Federal Institute of Telecommunications (the IFT), created by the Constitutional Reform as an autonomous constitutional body, has under its charge the regulation, promotion, and supervision of the use, approval, and exploitation of: (i) the radio-electric spectrum, (ii) orbital resources, (iii) satellite services, (iv) the public telecommunications networks, (v) broadcasting and telecommunications services, (vi) the access to active and passive infrastructure, and (vii) other essential facilities.

The Ministry of Communication and Transportation (SCT) is responsible for: (i) giving a technical and non-mandatory opinion to the IFT for the granting, extension, revocation, and authorization of transfers and changes of share control, (ii) guaranteeing the continuity of the provision of telecommunications and broadcasting services for reasons of termination by revocation or taking of concessions, dissolution, or bankruptcy of concessionaires, (iii) planning policies of universal and social coverage, (iv) elaborating the telecommunications and broadcasting policies of the federal government, and (v) establishing programs of access to broadband in public spaces.

 2. The function of the IFT

The IFT is responsible for: (i) awarding, extending, modifying, revoking, taking, or terminating for bankruptcy the concessions and authorizing assignments and changes of control, (ii) conducting the processes of bidding for frequency bands and orbital resources, (iii) fixing the fee for awarding of concessions (with the previous non-mandatory opinion of the Ministry of Finance and Public Credit (SHCP)), (iv) regulating interconnection and sharing of infrastructure, (v) declaring the existence or nonexistence of preponderant economic agents or agents with substantial power and imposing appropriate measures, and (vi) verifying, supervising, and if applicable, imposing sanctions.

In accordance with the Law, the various bodies within the IFT and its powers are the following: • The Plenary is the highest body of government and decision; its powers are not delegable in the regulatory and administrative areas, and it is subject to several transparency obligations. • The president of the IFT is also the president of the Plenary, and is responsible for the representation, as well as the direction and administration of the IFT. • All of the commissioners of the IFT are responsible for participating in the sessions and voting the matters submitted to the Plenary and they are impeded from voting when there is a risk of independence, professionalism, and impartiality, and in addition they are subject to the Federal Law of Administrative Responsibilities of Public Servants. • The technical secretary of the Plenary is responsible for attending the sessions and assisting the Plenary, as well as integrating the agenda and the minutes of the sessions. • The Investigation Authority will conduct the stage of investigation in economic competition procedures and holds technical and operative autonomy. • The Advisory Council is the counsel body of the IFT formed with 15 honorary members who will have a one-year term (renewable) and will issue non-mandatory opinions to the IFT. • The Internal Comptroller of the IFT holds technical and operative autonomy to supervise income and expenditures, and to impose sanctions on public servants of the IFT. • The commissioners are subject to rules of contact with the industry and the organic statute will provide the applicable rules for the Investigation Authority and other officials of the IFT.

3. Radio-electric spectrum and orbital resources

The radio-electric spectrum and the orbital resources are properties of the public dominion whose administration will be exercised by the IFT in the following manner: (i) elaborating plans and programs of use, (ii) establishing conditions for the attribution of frequency bands, (iii) granting concessions, (iv) supervising radio-electric emissions, and (v) imposing sanctions.

In the administration of the spectrum, the IFT will seek, among others, the following objectives for the benefit of the users: (i) life security, (ii) the promotion of social cohesion, regional or nationwide, (iii) effective competition in converging markets, (iv) effective use of the spectrum and its protection, (v) guaranteeing the spectrum for the purpose and functions of the executive branch, and (vi) promotion of technological neutrality. Additionally, the IFT will act on impartial objectives, transparent, nondiscriminatory, and proportional criteria to allocate a frequency band and grant concessions of the spectrum and orbital resources.

The frequency bands are classified as follows: (i) determined spectrum, (ii) free spectrum, (iii) protected spectrum, and (iv) reserved spectrum. For the planning and use of the radio-electric spectrum, the IFT shall update the National Chart of Allocation of Frequencies (CNAF) and will guarantee the availability of frequency bands of the spectrum or network capacity for: (i) national security, (ii) public security, (iii) connectivity of public spaces, and (iv) social coverage.

The CNAF will provide the allocation of bands to one or more services according to the following categories: (i) primary basis (including protection against harmful interference), and (ii) secondary basis (which cannot cause harmful interference and do not have protection in relation to the bands under a primary basis).

Each year on 31 December the IFT will issue a program of frequency bands with the frequencies or frequency bands that will be subject to auction or direct assignment.

In the operation of wireless infrastructure, the limits of maximum exposure to humans of electromagnetic radiation should be observed.

4. Regimen of concessions

According to its aims, the concessions are classified as follows: (i) for profit commercial use; (ii) for public use to achieve the purpose of the state and the three levels of government (including public service concessionaires or permissionaires), (iii) for non-profit private use, and (iv) social use with cultural, scientific, educational, or community purposes.

The concessions will be awarded to individual or legal entities of Mexican nationality. Under the Constitutional Reform, foreign investment is permitted to the extent of 100% in telecommunications and 49% in broadcasting (subject to reciprocity in the country of the ultimate beneficiary).

A unique concession will be required (without involving radio-electric spectrum or orbital resources) in order to provide all types of public telecommunications and broadcasting services, which will be awarded for 30-year terms (renewable). To obtain a unique concession, a request that complies with the minimum requirements must be submitted. The request will be reviewed by the IFT within 60 calendar days with the understanding that the IFT will grant the concession after this period assuming all requirements are met.

The concessions of the radio-electric spectrum and orbital resources for determined use will be awarded according to a public bid, previous payment of a consideration (which will not be the sole factor in determining the award of the concession), for a term of 20 years (renewable).

The Law provides the possibility to obtain concessions of orbital resources through the request of an interested party.

All of the considerations require the non-mandatory opinion of the SHCP, which has no more than 30 calendar days to render its opinion. In order to set the amount of the consideration, the IFT will consider: (i) the frequency bands, (ii) the amount of spectrum, (iii) the coverage of the frequency band, (iv) the term of the concession, (v) the national and international references of the market value of the bands, and (vi) the achievement of the Constitutional objectives.

The concessionaires can lease frequency bands for commercial or private use with the prior authorization of the IFT.

Likewise, the Law regulates the following figures: (i) the change or recovery of the spectrum or orbital resources, (ii) the assignment of rights, (iii) change of control, and (iv) the extension, termination, and confiscation of the concessions.

5. Networks and telecommunication services

The concessionaires of public telecommunications networks shall: (i) interconnect themselves directly or indirectly, (ii) permit the portability of numbers, (iii) abstain from charging fees for national long distance, (iv) provide services in a non-discriminatory manner, (v) abstain from establishing contractual barriers, and (vi) adopt designs of open network architecture.

Additionally, the concessionaires will execute an interconnection agreement within 60 calendar days, but if they fail to reach an agreement and prior request, the IFT will resolve the disagreement terms through a specific procedure.

When the IFT considers the existence of effective conditions of competition, the concessionaires will be able to enter into bill and keep agreements, without a termination charge, including calls and SMS.

The IFT will promote the agreements among concessionaires for the co-location and shared use of the infrastructure.

The concessionaires and authorized entities who provide Internet access shall observe the following principles of network neutrality: (i) free election, (ii) non-discrimination, (iii) privacy, (iv) transparency and information, (v) management of traffic and quality, and (vi) sustained development of the infrastructure.

The public telecommunications networks with public participation will have the character of a shared wholesale network without offering services to final users, even if it is structured as a public-private association. The IFT will directly assign 90 MHz of the 700 MHz band for the operation and use of a shared wholesale network.

The Law establishes that any concessionaire may install infrastructure on state property to deploy its telecommunications networks.

In the area of broadcasting, the Law regulates the following figures: multiprogramming and retransmission, which were introduced by the Constitutional Reform. The first figure refers to the possibility of distributing more than one programming channel in the same channel of transmission, and it requires the authorization of the IFT. The second figure consists on one hand, that the concessionaires of broadcast television service shall allow the retransmission of their signal for free, without discrimination, and simultaneously, in the same geographic area, without modifications and with the same quality (must offer) and, on the other hand, that the concessionaires of pay television services shall transmit those signals of open television (must carry). The concessionaires of satellite pay television will retransmit the broadcasted signal only if they cover 50% or more of the national territory.

6. Authorizations

According to the Law, an authorization of the IFT is required to: (i) establish, operate, or use a reseller of telecommunications services without being a concessionaire, (ii) install, operate, or use terrestrial stations to transmit satellite signals, (iii) install telecommunications devices and transmission means that cross the national borders, (iv) exploit the rights of emission and reception of signals and frequency bands associated with foreign satellite systems that cover services in the national territory, and (v) temporarily use spectrum bands for diplomatic visits.

The resellers can: (i) access wholesale services offered by concessions, (ii) commercialize their own services or resell services and capacity, being responsible to the final user, and (iii) have their own numbering scheme or acquire one through the concessionaires, allowing the portability of numbers.

The procedure to obtain an authorization is the following: a request must be submitted in terms of the regulations established by the IFT, which will have 30 business days to resolve it, in the understanding that if the IFT fails to issue the authorization within such period the authorization will be granted and will be valid for a 10-year term (renewable).

7. Public Registry of Telecommunications

The IFT will be in charge of the Public Registry of Telecommunications, which will be integrated by • the Public Registry of Concessions, in which, among other things, will be filed: (a) the titles of the concessions, authorizations, modifications, or termination, (b) interconnection and fundamental plans, (c) interconnection agreements, sharing of infrastructure, and unbundling of the local network, (d) public offers issued by preponderant economic agents or with substantial power, (e) tariffs, discounts, and bonuses, (f) measures and obligations imposed by the IFT to the preponderant economic agents or with substantial power, and (g) sanctions (res judicata); and • the National System of Information of Infrastructure shall maintain an updated geo-referenced national database with information of: (a) active infrastructure and means of transmission, (b) passive infrastructure and rights of way, and (c) public sites.

8. Collaboration with the justice

Relevant provisions are those obligations applicable to telecommunications concessionaires, and authorized entities, regarding security and justice matters. The main obligations are: • to collaborate with the authorities in charge of public security and administration of justice in the geographic location in real time of mobile communication devices; • to store a registry and control of communications made from any line with its own or leased numbering, which shall identify the following data: (a) name, corporate name, and address of the subscriber, (b) type of communication or of services used, (c) data showing the origin and destination of the communications, (d) data to determine the date, hour, and length of the communications or service, (e) date and hour of the first activation and localization tag, (f) technical characteristics of the device, (g) geographic position of the lines, and (h) obligation to store data since the communication is produced; • to have an area to attend 24x7 requests for information, geographic location, and tapping of private communications; • to suspend services of mobile devices reported as stolen or missing by the owner; and • to cancel or nullify permanently the cellular telephone or radio-communications signals, or the transmission of data or images within social reformation centers, penitentiaries, or juvenile halls.

9. Rights of users

The users of telecommunications services will have the rights provided in the Law and the Federal Law of Consumer Protection. In concordance with the Law, the following rights (among others) are established: • to consult its balance free of charges; • protection of personal data; • portability; • to freely elect a service provider; • to know the commercial conditions of the pre-formulated standard contracts that were previously registered before the Consumer Protection Agency (PROFECO); • free election and non-discrimination in the access of Internet services; • notification of any change of the conditions originally agreed; • unblocking of the mobile device terminal when it is paid or after the expiration date; • bonuses or discounts for service failures or wrongful charges; • duration of credit for one year; and • not to receive telemarketing calls.

The IFT and PROFECO will exchange information about complaints of users and commercial behavior of concessionaires and authorized entities.

Handicapped users will have access to telecommunications services equal to other users and will have the following rights (among others): (i) to request and receive advice about the use of the telecommunications services, (ii) to have mobile devices for handicapped people, and (iii) that service centers, Internet pages, and customer lines will have accessibility functions.

On the other hand, the Law allows that the providers of telecommunications services be able to set prices freely, except in the case of preponderant agents or those with substantial power.

10. Universal coverage

Every year, the SCT will draft a program of social coverage and one of connectivity in public sites, with the purpose of increasing the coverage of networks and introduction of telecommunications services in priority zones, like Internet access and voice services. To measure the foregoing, indicators will be established to track the evolution of telecommunications and broadcasting services in the country.

11. Audiovisual content

The Law contemplates the following authorities in the area of audiovisual content: • The IFT will monitor and sanction the compliance of the maximum amount of time for the transmission of advertising and the rights of the audience, except with respect to programming targeting children. • The Ministry of Interior has the following powers: (a) to order the transmission of the broadcast time of the state (free daily broadcast transmissions up to 30 minutes), presentations, bulletins, and the National Anthem, at 6:00 a.m. and 12:00 a.m., (b) to authorize and supervise the transmission of game shows, (c) to verify the classification criteria, and (d) to regulate and sanction programming and advertising directed at children. • The Ministry of Public Education will promote the transmission of cultural, civic, educational, and recreational programs, as well as the protection of copyrights. • The Ministry of Health will authorize the advertising of medical and connected activities, and other products related to health, as well as imposing the corresponding sanctions. • The National Electoral Institute is responsible for the administration of the broadcast time of the state in electoral matters. The Law provides the rights of information, freedom of speech, and reception of content without any persecution. The programming should promote diverse aspects such as the integration of families; the harmonious development of children; the diffusion of artistic, historic, and cultural values; the equality between men and women; and the correct usage of language, among others. Additionally, children’s programming shall pursue specific objectives for their protection.

In terms of advertising, an equilibrium shall be maintained between advertising and programming, subject to diverse rules such as the following: advertising shall not exceed (i) 18% in open television of the total time per channel, (ii) 40% in radio, and (iii) six minutes per hour of pay television and audio.

With respect to the rights of the audience of broadcasting services, the Law provides, among others, the following: • to receive content that reflects the ideological, political, social, cultural, and linguistic pluralities of the country, as well as the democratic life of the society; • to differentiate with clarity the news information and the opinion of the person presenting it; • to distinguish between advertising and programming content; and • to respect human rights, the superior interest of children, the equality of genders and nondiscrimination. Specific rights are also established for handicapped audiences, such as: subtitle services, dubbing of Spanish and Mexican sign language for people with hearing problems (at least in the most rated news program), and programming through a telephone number or Internet portals with accessibility.

Finally, it will be the obligation of broadcasting concessionaires to have an audience advocate, which will be responsible for receiving, documenting, processing, and following up on the observations, complaints, suggestions, petitions, or indications of the audience.

12. Asymmetrical regulation

The Law provides three figures for the application of asymmetric regulation with the objective of avoiding affectation of competition and free market participation in order to benefit the final user. • The preponderance means the existence of an economic agent in the broadcasting or telecommunications sector with national participation of over 50%, to which measures will be imposed regarding information; the offer and quality of services; exclusive agreements; limitations on use of devices; tariffs and network infrastructure; unbundling of essential elements; and accounting, functional or structural separation, through a specific procedure under the Law. • Substantial power in any relevant market in the broadcasting or telecommunications sectors shall be determined under the Federal Economic Competition Law, applied by the IFT with the purpose of establishing specific obligations concerning information, quality, tariffs, commercial offers, and billing issues. • The telecommunications and broadcasting concessionaires that provide services in the same market or geographic coverage zone, which hinder or limit access to plural information will be subject to the following: (a) the IFT will notify the concessionaire to include in its services the access to plural information, and (b) the concessionaire will include three channels with content produced by national independent programmers, with main Mexican financing. In case of breaching the foregoing, the IFT will impose the following limits: (a) to the national or regional concentration of radio-electric spectrum frequencies for broadcasting services, (b) to the granting of new concessions of radio-electric spectrum frequency bands for broadcasting services, and (c) the cross-ownership of businesses that control various means of communication and provide services in the same market or geographic coverage zone.

13. Homologation

The telecommunications products, devices, or equipment connected to a telecommunications network or using radio-electric spectrum bands shall be homologated to comply with the Federal Metric and Normalization Law.

The IFT will give mutual recognition to telecommunications products, devices, or equipment of another country with which Mexico has an agreement or international treaty for such effects.

The IFT will certify experts in the area of telecommunications and broadcasting to assist in the homologation procedures.

14. Verification regime

The IFT will monitor and verify, according to its powers, the compliance of the Law; therefore, every person is obligated to allow the IFT’s inspectors access.

Likewise, the IFT will establish mechanisms to verify: (i) radio-electric transmissions, (ii) the identification of harmful interferences, and (iii) other disruptions to telecommunications and broadcasting systems and services.

To achieve its objectives, the IFT is able to use — with a prior written warning — enforcement measures such as fines and public force.

15. Sanctions

Infractions to the Law, administrative provisions, and concessions or authorizations will be sanctioned by the IFT — under the terms of the Federal Administrative Procedure Law. Infractions under the Federal Economic Competition Law will be sanctioned by the IFT under the established procedures contained in such law. Infractions to the rights of users will be sanctioned by the PROFECO under the Federal Consumer Protection Law.

The Law establishes a new regime of sanctions based on the percentage of revenue of the offender, except if that is not possible, in which case the fines will be based on minimum wages. Diverse factors shall be considered to determine the amount of the sanction, and in case of a repeat offense, the fine will be doubled.

Likewise, the Law provides to revoke the concessions and authorizations, such as: (i) failing to provide the services, (ii) performing acts contrary to the Law, (iii) not complying with the obligations or conditions of the concession or authorization, (iv) denying to interconnect with other concessionaires, (v) blocking traffic, and (vi) denying the "must carry or must offer."

16. Legal remedies

The general norms, acts, or omissions from the IFT can be appealed only through a constitutional trial (amparo indirecto) and there is no injunction. Constitutional appeals against intra-procedural acts will not be allowed in any case.

These trials will be held before the specialized judges and courts in the areas of competition, telecommunications, and broadcasting which were created as part of the Constitutional Reform.

17. Transitory articles

The decree that issued the Law contains 45 transitory articles. A summary: • The Federal Telecommunications Law of 1995 and the Federal Law of Radio and Television of 1960 were repealed. • The regulatory and administrative dispositions will continue to apply until the new provisions are issued, except for the ones that conflict with the Law. • The IFT will adjust its internal regulations. • The previous concessions and permits will remain on those terms. • A merger exception regimen is established as long as a preponderant economic agent exists, in which case the IFT’s authorization is not required for concentrations, subject to the compliance of specific requirements. • The possibility to eliminate the preponderance is allowed through the presentation of a plan that should satisfy determined requirements. • It is ratified that the digital terrestrial transition will be completed on 31 December, 2015, as long as it has reached a level of 90% of households with limited resources. • As of 1 January, 2015, long distance charges will not be allowed to be collected from users for calls made to any part of the country.

 

 

 

Mark W. Brennan

Mark W. Brennan,

Washington, D.C.

Michele C. Farquhar

Michele C. Farquhar,

Washington, D.C.

Ari Q. Fitzgerald

Ari Q. Fitzgerald,

Washington, D.C.

Trey Hanbury

Trey Hanbury,

Washington, D.C.

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