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Amendment to the Federal Telecommunications and Broadcasting Law.

On January 12, 2021, the Amendment Decree through which a section IV is added to subparagraph A) and the section (IV) of the subparagraph B) is abrogated from article 298 of the Federal Telecommunications and Broadcasting Law, was published in the Mexican Federal Official Gazette (the “Amendment Decree”).

Under the Amendment Decree, the penalty for carrying out violations to the law, regulations, administrative provisions, fundamental technical plans and other provisions issued by the Federal Institute of Telecommunication, as well as to the concessions or authorizations not expressly referred to in Chapter II of the Federal Telecommunications and Broadcasting Law (the “General Violations”), which was provided for in Section (IV) of the subparagraph B) of Article 298 of the Federal Telecommunications and Broadcasting Law (the “Law”) was abrogated and included, with exactly the same text, in section IV, subparagraph A of the aforementioned Article 298. In consequence, the penalty for breaching the General Violations decreased from 1% to 3% to 0.01% to 0.75% of the income of the concessionaire or authorized.

It is important to mention, that Section (IV) of the subparagraph B) of Article 298 of the Law that is abrogated under the Reform Decree, was declared unconstitutional by resolution of the Supreme Court of Justice of the Nation in the normative section of the 1%, for considering that such provision violates Article 22 of the Political Constitution of the Mexican United States, as it is an excessive penalty that neglects the due relationship between the conduct, the consequences produced and the applicable penalty, besides that the minimum fine is greater than the minimum fine applicable for other infringements. This led to the jurisprudence 2ª/J. 167/2017 (10ª).

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Disappearance proposal of the Federal Institute of Telecommunications

At the morning conference on January 7, 2021, the President of the Mexican Republic, Andrés Manuel López Obrador, expressed his intention to present a bill to disappear several autonomous bodies, including the Federal Institute of Telecommunications (“IFT“, as per its Spanish abbreviation) and the National Institute of Access to Public Information, with the aim of reducing public spending.

With regards to the possible disappearance of the IFT, the President mentioned that the functions currently performed by the IFT could be absorbed by the Ministry of Communications and Transportations (“SCT“) and openly questioned the acting and results of the IFT, accusing the commissioners of being “closely linked” to the dominant and foreign  companies. The President finally indicated his intention to present in February a bill to disappear the IFT.

From our perspective, the disappearance of  the IFT would, in principle, imply the following:

  • A major reform of the Political Constitution of the Mexican United States, since it provides for the existence of the IFT, as well as the way in which the IFT is integrated and its directors chosen, among other things;
  • An amendment to the New Treaty between Mexico, the United States and Canada, since Chapter 18, specifically Article 18.7, provides for the existence of an independent telecommunications regulatory body;
  • A total reorganization of the SCT to assume the functions and authorities of the IFT, considering that the Sub-Secretary for Communications and Technological Development recently disappeared.

Notwithstanding the previous statements, on December 16, 2020, the President sent to the Permanent Commission of the Congress a request for Sayuri Adriana Koike Quintanar and Laura Elizabeth González Sánchez to be ratified as new IFT commissioners instead of former commissioner Gabriel Contreras and the current commissioner Mario Fromow, who will leave office this year.

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Publication of the Provisions to allow Telecommunications Service Providers access to facilities and rights of way of the National Electric System

On October 29, 2018, the General Administrative Provisions were published in the Mexican Official Gazette to allow Telecommunications Industry Service Providers access to facilities and rights of way of the National Electric System (“Provisions”).

The objective of these Provisions is for Telecommunications Service Providers (“PST”) to have access to more than 11 million Federal Electricity Commission (“CFE”) poles and National Electric System (“SEN”) rights-of-way, which will stimulate competition, modernize and encourage the use of new technologies.

This will be possible because the CFE has a supporting infrastructure in urban and rural areas of the country, which are able to reach 98% of the population. As a result, the coverage of telecommunications services will be extended through the CFE’s electricity distribution network (“Network”).

The area of opportunity of these Provisions is to improve infrastructure sharing practices, since it reduces development costs and leads to a better price for end consumers.

In order to grant access to the facilities and rights of way of the SEN, the Access Providers (“Provider”) shall process the requests through the order of priority with which they were received through the Electronic Management System (“SEG”), an electronic platform developed by each Provider in which it will receive, process, register and respond to the requests for access to the facilities and rights of way of the SEN. In the event that there is insufficient access capacity for applicants, the Provider shall give alternatives such as building additional infrastructure or conducting an auction-type award mechanism. Therefore, these new provisions allow PSTs to enter into a contract directly with Providers and the current procedure based on the un-objective and functional guidelines developed by the CFE is eliminated. This means that the requirements, rights and obligations are clearer and provide greater legal certainty for PSTs.

The PST that have a contract in force at the entry into force of these Provisions and have infrastructure installed in the Network, shall cover an annual economic remuneration to the Provider of $100.84 MX per post, as long as the infrastructure used for the provision of the service exceeds the weight limit established corresponding to 250 kg/km. In addition, they may retain the additional weight for a period of up to 10 years.

As for the calculation of the fair remuneration for the deployment of infrastructure and equipment according to the Provisions for the PST, this will be $6.544 MX per kilogram. These calculations are based on mathematical formulas, also, it will be necessary to pay the cost of the access study, which will be $100.02 MX per post for each PST and is charged for one time. This encourages companies to adopt lighter technologies, because the lighter the infrastructure, the less they pay.

As established in the Fifth Agreement of the Provisions, they will enter into force on January 1, 2019.

Source consulted: Energy Regulatory Commission

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Approval of the General Administrative Provisions to allow telecommunications industry service providers access to facilities and rights of way of the National Electric System.

The plenary of the Energy Regulatory Commission (Comisión Reguladora de Energía – CRE) approved the General Administrative Provisions to allow telecommunications industry service providers access to facilities and rights of way of the National Electric System (the “Provisions”).

Through the approval of the Provisions, the CRE seeks to promote fair and transparent competition, allowing the Telecommunications Services Providers (“TSP”) access to  more than 11 million poles of the Federal Electricity Commission (“CFE”), which in principle will result in an increase in the coverage of telecommunications services.

Different to the access conditions that currently operate according to the guidelines issued by the CFE, in which the only considered criteria is the number of cables that can be deployed. With the new Provisions, the access to the CFE poles is based on objective criteria based on the weight and space that will take up the infrastructure installed by the TSPs on both sides of the pole, which will allow the installation of a greater number of cables.

Likewise, the contributions to be paid now by PSTs for the use of the poles will be based on the weight of the infrastructure installed in them.

According to the Provisions, the CFE’s distribution department shall create an electronic system to deal with requests for access to poles in an agile and expeditious manner, through clear procedures and defined timeframes, which shall facilitate the procedures for TSPs and provide them with certainty in their requests.

The Provisions seek to ensure better use of infrastructure, so provisions were included to prohibit practices that limit the ability to access poles. The Provisions shall enter into force on 1 January 2019.

Source Energy Regulatory Commission

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Draft of Mexican Standard on E-Commerce

The Ministry of Economy together with the Federal Consumer Protection Agency presented the draft of the Mexican Standard for self-regulation for those sellers who offer goods or services through electronic means.

This project attends the necessities of the ever-changing digital world and derives from the independence of the market, as well as from the commercial reality of electronic transactions, with the purpose of strengthening the country’s competitiveness.

The project focuses on the importance of protecting and providing security to economic agents (producers and consumers) and establishes mainly specifications, characteristics and conditions in relation to the following:

  • Security of payment mechanisms;
  • Confidentiality of personal data;
  • Transaction tracking; and
  • Efficient ways to file petitions, complaints and claims.

By virtue of this project, consumers will be able to identify online stores where they can make safe purchases.

The National Commission for Regulatory Improvement is currently evaluating the viability of the project, so that it can be submitted for public consultation and a ruling can be made in accordance with the Federal Law on Metrology and Standardization.

Finally, as this project is a voluntary standard, it will boost the competitiveness of companies and suppliers, as well as the safety, confidence and quality service in terms of the current legal framework.

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