Pricing and consumer protection
What rules govern retail pricing for telecoms services?
In general, telecoms service providers can freely set the retail prices for the services that they provide. Exceptions apply to the preponderant agent, which must have its retail prices approved by the Federal Institute of Telecommunications (IFT).
What rules govern consumer service contracts?
All telecoms services must comply with basic consumer protection rights. Certain warranties and terms may not be waived, as these protect customers’ interests. Below is a non-exhaustive list of such rights:
- The service provider must render the service according to the terms and conditions either offered or implicit in the advertising or information released, unless there is a covenant or the consumer provides written consent to the contrary.
- The service provider cannot deny (without a valid reason) the sale, acquisition or supply of available services to consumers.
- The service provider must allow consumers to make claims through means similar to those used to make the sale.
- When a customer requests an invoice, the service provider must issue one in a timely manner.
- The service provider must use the information that the consumer provides on a confidential basis.
- The service provider must provide consumers with its physical address, telephone numbers and other means to submit claims or request clarifications.
- The service provider cannot stipulate unreasonable covenants or requirements, or unfair or inequitable obligations, on consumers.
Are telecoms service providers bound by any consumer disclosure requirements?
Yes – in accordance to the Federal Telecommunications and Broadcasting Law, all service providers must disclose a list of minimum consumers' rights. The IFT issued a specific list, which is typically posted on service providers' official websites. The list can be found at www.ift.org.mx/sites/default/files/cartaderechosminimos.pdf.
In addition, certain contracts must be registered with the IFT and the Consumer Protection Bureau. The list of contracts that must be registered can be found at http://rcal.profeco.gob.mx/. Registration can also be voluntary.
Issues and concerns
Are there any particular competition issues or concerns in the domestic telecoms market?
In addition to the figure of preponderance (see below), the Federal Telecommunications and Broadcasting Law and the Mexican Antitrust Law provide the framework for dominant carriers – that is, a carrier that falls foul of Mexican competition law either because:
- it engages in anti-competitive behaviours which are illegal by law, regardless of its size and market influence; or
- its actions are deemed to be anti-competitive because of its size and relevant market participation (see below).
The Federal Institute of Telecommunications (IFT) has been particularly concerned about competition issues in the telecoms market and is investigating the markets listed below (all investigations listed took place at the national level):
- On April 29 2016 the IFT initiated an investigation into alleged relative monopolistic practices (or abuse of dominance practices) in the interconnection, broadband internet access, corporate internet, shared use and active or passive infrastructure markets, as well as in the dark fibre services market.
- On August 22 2016 the IFT initiated an investigation into alleged illegal mergers and transactions concerning the commercial use and exploitation of radio electric spectrum frequencies to render public services in the sound broadcast market.
- On October 18 2016 the IFT initiated an investigation into alleged relative monopolistic practices (or abuse of dominance practices) in the production, distribution and commercialisation of public telephony services to be sold to end users by means of telephone devices in the public use market.
- On September 11 2017 the IFT initiated an investigation into alleged relative monopolistic practices (or abuse of dominance practices) in the fixed and mobile telephony services markets, as well as in the market of fixed and mobile internet services and the production, distribution and commercialisation of audio-visual contents broadcasted on the Internet.
Do any sector-specific competition regulatory/legal provisions apply (eg, special conditions for dominant telecoms market players)?
Preponderant carrier A carrier or group of persons will be deemed a preponderant carrier when, by virtue of their involvement in the telecoms sector, such person or group, directly or indirectly, maintains or attains a participation in excess of 50% in the sector. This percentage is measured nationwide by:
- the number of customers;
- the amount of traffic; or
- the used capacity of the network.
Preponderance (and termination of preponderance) requires an IFT resolution, which must be based on information collected by the IFT. The preponderant economic agent will be freed from preponderance regulations if:
- the market evolves in a manner so that its participation in the sector falls below 50%; or
- it adopts a divestiture plan or similar which causes it to fall below the referenced threshold, provided that:
- such divestiture generates favourable and effective pro-competitive effects in the markets which constitute the telecoms sector;
- he divestiture plan does not adversely affect the social coverage obligations of the preponderant economic agent; and
- no other carriers participating in the sector emerge as the new preponderant economic agent in its stead.
Preponderance imposes a series of obligations on the preponderant economic agent, which will remain in effect until the IFT determines that its preponderance in the sector has ceased. The preponderant economic agent must, among other things:
- maintain accounting separation;
- publish services reference offers;
- abide by a framework interconnection agreement;
- permit access on a non-discriminatory basis;
- enter into sharing agreements relating to its infrastructure and resale services;
- unbundle the local loop under its control;
- permit roaming;
- disclose in detail the topology of its network; and
- provide transport and last-mile services to competing carriers.
In addition, the preponderant economic agent requires prior IFT approval to:
- implement tariffs relating to intermediate services to carriers and licence holders and those charged to operate alone in order to avoid cross-subsidisation; and
- provide unbundled tariffs to end consumers.
Pursuant to the 2013 constitutional amendments and the Federal Telecommunications and Broadcasting Law, the IFT acts as the antitrust regulator of the telecoms sector and is empowered to impose dominant carrier status on telecoms concession or licence holders.
In general, the rules relating to dominance date back to the Mexican Antitrust Law. An economic agent with substantial power over one or more markets (of the telecoms sector) will be subject to dominance regulations. This regime is separate and independent from the declaration and effects of the regulatory regime of the preponderant economic agent. Dominant carrier regulations must be market specific rather than sector specific, as sector-specific regulations are limited to the regime of the preponderant carrier.
In determining the market specific constraints or restrictions, the IFT must identify the profile of the economic agent – that is:
- the breadth and scope of its participation in the market or markets in question;
- the ability of the economic agent to determine prices or restrict access to services;
- the regulatory barriers or restrictions; and
- the possibility of substituting services or other essential resources (elements of the network or services that cannot be replicated and have no direct substitutes) controlled by the economic agent and costs.
Are there any requirements for structural, functional or accounting separation of operators’ activities?
The IFT can impose a structural, functional or accounting separation measure only on the dominant carrier in order to prevent further damage to competition and end users.
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