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Mexican Wireless Leader Makes Concessions to Avoid Big Fine

MEXICO CITY – Mexico’s anti-trust regulator announced it has dropped a 12-billion-peso ($929-million) fine against Telcel, the country’s dominant wireless operator, as part of a settlement in which the carrier agreed to charge lower interconnection fees and make other concessions.

“It’s clearly preferable to ensure immediate and direct savings for consumers of up to $6 billion annually than to undergo years of litigation,” the Federal Competition Commission, or CFC, said in a statement Thursday.

The decision was handed down after Telcel, the local unit of Mexico City-based regional wireless giant America Movil, appealed the fine imposed in April 2011 for alleged monopolistic practices in Mexico dating back to 2006.

As part of the appeal, Telcel agreed for the first time to charge lower fees for calls placed into its network by users of other cellular providers and also promised to “provide information to verify compliance with its commitments,” the CFC said.

They include a sharp drop in interconnection fees from 0.95 pesos ($0.07) per minute, the rate through 2011, to 0.36 pesos ($0.03) per minute in 2012.

Telcel also agreed to bring those fees down to 0.30 pesos ($0.02) per minute in 2014 and to “work with telecommunications authorities and the CFC to make additional reductions,” the regulator said.

The fees “will be charged per second, with no rounding up,” providing additional cost savings for consumers, it added.

In another move to level the playing field between the dominant operator and its competitors, Telcel also will “offer subscriber plans and/or promotions that include minutes usable indistinctly for calls within its own network or to the network of any other fixed or mobile telephone company.”

Under the terms of the settlement, Telcel pledged to drop all legal action against the decisions of the Cofetel telecoms regulator with respect to interconnection fees.

The CFC also said that in the event of non-compliance with its commitments Telcel would be slapped with a fine equivalent to up to 8 percent of its annual revenues.

The settlement is an effective and sustained way to resolve “one of the main competitiveness problems that has afflicted Mexico’s telecommunications market for many years: high mobile interconnection fees,” the regulator added.

It said that situation has inhibited smaller operators from competing and forced consumers to pay artificially high prices for telecommunications services in Mexico.

Telcel holds a roughly 70 percent market share in Mexico, while America Movil – controlled by Mexican multi-billionaire Carlos Slim – has more than 275 million subscribers in 18 countries across the Americas. EFE

Source: Latin American Herald Tribune – Mexican Wireless Leader Makes Concessions to Avoid Big Fine.

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