April 10, 2017

Mexico Courts Rule Telecom Agency's Interconnection Costs Model "Reasonable"

Holland & Knight Alert
Carlos Ochoa

Mexico's Telecom and Antitrust Federal Courts have issued three resolutions declaring that the model used by the Comisión Federal de Telecomunicaciones (COFETEL) for calculating interconnection costs for fixed and mobile services from 2012 to 2014 was "reasonable."

The Courts held that COFETEL's decision of using the hypothetical operator for such calculation was not arbitrary and that the public policy was fully justified. The ruling gives legal support to the "bottom-up" model of costs for constructing the most efficient network in order to determine interconnection costs with a market share of 33 percent, based on the fact that no operator could provide reliable information to reflect the market. The decision also confirms that international practices regarding economics and telecommunication can be used to justify the decisions of regulators.

In 2013, the Federal Telecommunications Institute, or Instituto Federal de Telecomunicaciones (IFT), was created as a constitutional autonomous organization at the same level of the executive branch. It was given the authority to independently rule the telecommunications and broadcasting sectors in technical and antitrust issues, replacing COFETEL (technical) and the Comisión Federal de Competencia (antitrust).

Based on the Courts' rulings of 2014, IFT is a substitute authority by constitutional mandate, in charge of enforcing previous acts of regulation and antitrust matters in the telecommunications and broadcasting sectors.

These resolutions provide guidance on IFT's authority for using the economic theory in support of 1) its decisions regarding interconnection disputes and imposing asymmetric measures on preponderant agents or agents with substantial market power, and 2) measures when granting or modifying concessions.

Holland & Knight attorneys have extensive sector-wide experience for a variety of projects, proceedings and regulation in the telecommunications and broadcasting industries. For more information, contact Holland & Knight's Mexico City office.


Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem. Moreover, the laws of each jurisdiction are different and are constantly changing. If you have specific questions regarding a particular fact situation, we urge you to consult competent legal counsel.

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