Category Archives: Telecommunications policy

Calderón reshuffles cabinet with an eye to 2012 campaign

On Saturday, President Felipe Calderón announced a cabinet reshuffle, with an eye to the 2012 election. Juan Molinar Horcasitas, one of Calderón’s closest political advisers, resigned as Secretary of Communications and Transportation in order “to participate intensively in political-party work that is important for the life of the country” according to the President’s statement. He is being replaced by Dionisio Pérez-Jácome, who has been Undersecretary of Finance for Expenditures and who also briefly served as presidential chief of staff.

Molinar’s record as head of SCT was not stellar. The ministry continued to be bedeviled by technical problems in executing the government’s ambitious transportation infrastructure program. And little headway was made in the area of telecommunications policy, where the award of a large bloc of wireless spectrum to a Nextel-Televisa consortium was drowned in a sea of lawsuits and the withdrawal of Televisa.

The President also named congressman Roberto Gil Zuarth as his new private secretary, replacing Luis Felipe Bravo Mena.  Gil Zuarth had been widely seen as the President’s preferred candidate to take over the PAN in the party’s recent election of a new leader (an election won by Senator Gustavo Madero).  Bravo Mena is returning to the private sector.

As noted by El Universal’s Bajo Reserva column:  “Inside and outside his party, the PAN, the reading [of the changes] was the same: it is a signal that Calderón is not packing his bags and ready to give up power, perhaps to a political adversary. [The appointments] announced yesterday were a demonstration that he will give battle to everyone, including those within his own party.”

Georgina Kessel moves from Secretary of Energy to the President of Banobras, the development bank. She replaces Alonso García Tamés, who returns to the private sector.

José Antonio Meade, Undersecretary of Finance, becomes the new Secretary of Energy. Meade becomes the last of the senior level technocratic ‘old guard’ of the Ministry of Finance to leave, a process that started with the appointment of Ernesto Cordero as Finance Secretary in December 2009.

(Presidencia 1/8)

Digital TV initiative at risk

Supreme Court Minister Olga Sánchez Cordero ordered the suspension of the presidential decree issued on Sept. 2 that would have accelerated the transition to digital TV in Mexico to 2015 from 2021. Sánchez was acting on a petition by the Congress to rule on the constitutional issues. Speaking at a business forum, President Calderón said, “We are pushing forward, with determination, and despite the resistance, for the transition to digital television in Mexico, in order to … give higher quality and more options to consumers.”  The full court could take many months before ruling on the substance of the constitutional controversy. (Reforma 10/26)

Televisa-Nextel dissolve consortium

In a major setback to the Government’s tortured attempt to create a new strong player in the telecommunications sector, Televisa and Nextel announced that Televisa was backing out of the agreement to invest US$ 1.44 billion in Nextel in order to fund the buildout of a nationwide 3G mobile network. Their consortium was the winner of the controversial wireless spectrum auction 21,  which was specifically structured by the Government to make it practically impossible for the existing holders of large nationwide blocs of spectrum (Carlos Slim’s Telcel, Telefonica, and and Ricardo Salinas’ Iusacell-Unefon) to enter bids. The spectrum was awarded with the affirmative vote of only two of the five Cofetel commissioners, and the entire process has been challenged in the courts  by Grupo Salinas, which has filed more than 70 lawsuits seeking to block the award. On his Twitter account, Emilio Azcárraga Jean, the CEO of Televisa, said simply, “We have to take decisions every day, and I believe that we are taking the best decision for us.” Nextel, which was actually awarded the spectrum, has said it intends to go forward. (Reforma 10/18, Universal 10/18)

SCT delivers wireless concessions to Televisa-Nextel consortium, but controversy continues

The Ministry of Communications and Transportation (SCT) sought to end the seemingly endless controversy surrounding the award of 30MHz of nationwide wireless spectrum to a Televisa-Nextel consortium by delivering the concession deeds immediately after a federal judge overturned an injunction blocking the move. Iusacell, controlled by TV magnate Ricardo Salinas, had filed some 69 suits trying to block the delivery of the concessions. SCT Secretary Juan Molinar denied that the concessions were being delivered “furtively,” but the SCT clearly decided to act before any more injunctions could be issued. President Calderón spoke directly on the subject, saying, “I know that this is a controversial solution, but it is giving us a much clearer framework for the [telecommunications] sector and much greater competition.” The conclusion by many commentators that the issue is not yet resolved was strengthened by the cautious statement issued by Televisa, saying that “discussions are ongoing … as to whether certain closing conditions have been or can be satisfied.” (Universal 10/3, 10/8, Televisa 10/4)

Accelerated conversion to digital TV is biggest surprise

Simultaneously with the Informe, Calderón issued a decree accelerating the conversion from analog to digital TV. According to the President, this “transcendent measure” will free up the 700 MHz band (currently used for analog) for other uses that will speed the convergence of telephone, Internet, and television services. The recapture of spectrum, sure to be challenged in court by the broadcasters, is now set to begin in 2012 and be completed by 2015. José Antonio Crespo writes, “If carried out as proposed, [the decree] could become the greatest legacy of the Calderón government and would have media-political implications of the greatest importance. The competition between the electronic media and telecommunications providers constitutes a reform of great depth, which could contribute to democratization, opening up new information options … in order to reduce the enormous political influence that the media and communications conglomerates have in Mexico.” (Excelsior 9/3)

Mony de Swaan elected Cofetel chairman

As expected, the five Cofetel commissioners met today and elected their newest member, Mony de Swaan as Chairman for the next four years. De Swaan had been chief of staff to Juan Molinar, the SCT Secretary, and was only appointed last week by President Calderón to fill the chair vacated by Héctor Osuna’s surprise resignation.  (CNN Expansión 7/7)

SCT chief of staff Mony de Swaan to be new Cofetel commissioner

SCT Secretary Juan Molinar announced that his chief of staff, Mony de Swaan will be named by President Calderón to the Cofetel seat left empty by the sudden resignation of Hector Osuna last week.  De Swaan came to SCT when Molinar was named Secretary, and had also been Molinar’s deputy when the latter was an IFE counsellor. In her business column, Maricarmen Cortés wrote that President Calderón would likely push for the Commission to vote de Swann into the chairmanship. She also noted that the pros for naming de Swaan were the prospect of greater coordination between the Ministry and Cofetel and the likely abolition of the ‘double window’ whereby telecommunications regulations have to be approved by both the SCT and Cofetel.   The cons are his “brief but intense” background in telecommunications issues, and the likely de facto reduction of Cofetel’s autonomy.

A 2007 Supreme Court decision removed the Senate’s power to confirm Cofetel commissioners (on the grounds that the Cofetel is, as a body within the SCT, part of the executive branch and not a true autonomous agency). However, a number of parties have threatened to file suit to block de Swaan’s appointment on the grounds that he does not meet the legal qualifications as “having carried out in a distinguished manner professional, public service, or academic activities substantially related to the telecommunications sector.”

(Universal 6/30, 7/1)

Head of Federal Telecommunications Commission resigns

In a surprise move, the controversial Chairman of the Federal Telecommunications Commission, Héctor Osuna, said he would not seek to be re-elected to a new 4-year term as Chairman and also resigned from the Commission.  The five Cofetel commissioners are nominated by the President and confirmed by the Senate; the commissioners elect one of their own number as chairman. The Cofetel session scheduled for the 25th that was to have elected a chairman for the next term was cancelled. It is expected that the four remaining commissioners will operate without electing a chairman until President Calderón nominates a new commissioner and the Senate confirms him/her. While Osuna said he was resigning for personal reasons, most commentary implied that he resigned after determining that he would not be re-elected.  The Cofetel has frequently served as Exhibit A for the lack of effective regulatory oversight in Mexico. There is an uneasy division of labor between the SCT and Cofetel in terms of regulation of the communications sector, and the body is currently involved in the auction of new wireless spectrum.   (Universal 6/24)

Osuna was a PAN Senator and one of the promoters of during the Fox administration of the Ley Televisa (since declared unconstitutional) that locked in the dominant market position of the incumbent TV broadcasters. Last year, he was identified by then-SCT Undersecretary Purificación Carpinteyro as the source of leaked recordings of then-SCT Secretary Luis Téllez’ phone conversations that led to Tellez’ resignation.

Columnist Miguel Angel Granados Chapa wrote,

“Héctor Osuna is exceptional: He was elected to the Cofetel in a cynical payback of favors. As the motor in the Senate for passing the Ley Televisa that gave that conglomerate the legal backing that it wanted (even though the law was defanged [by the Supreme Court]), he finished the game as the regulator that [the broadcasters] needed. And now he departs without any rendering of accounts before the Commission or facing Purificación Carpinteyro, who has shown more gallantry and integrity than he who is leaving Cofetel, dogged by his unmet obligations.” (Reforma 6/25)

SCT awards ‘dark fiber’ network to Telmex competitors

As expected, the Ministry of Communications and Transportation (SCT) awarded a 20-year concession to operate and develop a high capacity fiber optic network that will provide an alternative backbone to the one provided by dominant telecom operator Telmex (and its sister company, cell phone operator America Movil).  The winning consortium—and sole bidder—is owned in equal shares by Televisa, Telefonica, and Megacable.  They will pay the government Ps. 884 million (just over the minimum price) for the ‘dark fiber’ network of state-owned utility company CFE, and plan to invest Ps. 1,400 million to build out and light up the network, which can carry voice, data, and video. Minister of Communications Juan Molinar said,

This will be a significant increase in the telecommunications infrastructure in our country, which will provide enormous benefits for telecommunications operators and, above all, for Mexican consumers…. This will increase competition, coverage, and convergence, the three ‘Cs’ that orient the public policies of the Government of President Calderón in the communications area.

Francisco Gil Diaz, the head of Telefonica in Mexico (and former Secretary of Finance) noted:

Among the many things that are lacking in this country, one is the lack of competition. The fact that [the existing] fiber optic network is under the control of one sole operator signifies that everyone else that participates in the telecommunications market has to accept the prices and conditions of service that this operator provides us.  Now we will have competition, and this fiber network will be … available to everyone in the industry.

Scorecard: Congress ends session without passing any major legislation

Congress recessed until September 1 without passing any of the pending reform proposals. (Universal 5/1, Reforma 5/1)

Political reform: President Calderón put forward his 10-point reform last December, followed by the PRI’s package in February, and a PRD version. All of these, plus others, languish in the legislative commissions without any consensus.

Labor reform: Labor Secretary Javier Lozano proposed a comprehensive reform in March to make labor contracting rules more flexible and making unions more transparent and democratic. It is strongly supported by the business community.  May Day marches by the major labor unions across the country attacked the proposed legislation, and neither house has yet voted. (Universal 5/2)

Fiscal reform: No specific proposals have been made public, despite widespread recognition that urgent change is needed on both the spending and revenue side of the budget.

New media law: The PAN and PRD congressional delegations proposed an integrated reform in mid-April, after the PRI tried to ram through a Televisa-drafted bill. Hearings will continue over the summer. (Universal 4/28)

National Security reform: The Senate approved a law 105-1-1 clarifying the procedures and standards for deploying the military in public safety (i.e., crime fighting) operations, while punting on the question of subjecting members of the military to civilian court jurisdiction for some crimes. The law as passed is believed to be strongly opposed by at least parts of the military. The Chamber did not bring it to a vote. (Universal 4/28, 5/3)

Competition law: A watered down version of the Government’s proposed law to strengthen the Federal Competition Commission and stiffen penalties for monopolistic practices was passed by the Chamber 386-15-2; the Senate has not acted. (Excelsior 4/30)

Human Rights law: A constitutional reform strengthening constitutional protection for human rights and giving the language in the Constitution and giving the National Human Rights Commission (CNDH) the power to investigate “grave violations of individual rights” passed the Senate in early April. The Chamber has not yet acted.  (Universal 4/9)