Initiative of decree whereby the Federal Law on Telecommunications and Broadcasting and the Law of the Public System of Mexican Broadcasting are issued, and whereby various provisions on Telecommunications and Broadcasting are amended, supplemented and repealed.

On Monday March 24, 2014, the President of the United Mexican States, submitted to the Senate the initiative of decree whereby the Federal Law on Telecommunications and Broadcasting (the “Secondary Legislation on Telecommunications”) and the Law of the Public System of Mexican Broadcasting are issued, and whereby various provisions on Telecommunications and Broadcasting are amended, supplemented and repealed (the “Initiative of Decree and Amendments to Secondary Legislation”).

The Initiative of Decree and Amendments to Secondary Legislation will have to follow the ordinary process in Congress for the issuance and enactment of laws.

Ordinary process to issue and enact laws

The ordinary process began with the submission of the Initiative of Decree and Amendments to Secondary Legislation to the Senate. Subsequently it was submitted for its dictamination to the commissions of communications and transportation, of radio, television and cinematography, and of legislative studies. The commissions will elaborate an opinion which will be submitted to the Plenary of the Senate. Once approved by the Senate, it will be submitted to the Deputies, to follow the same procedure as in the Senate. After that process is followed, it will be submitted to the Executive Branch for its publication and promulgation.

It is worth to mention, that due to the complexity and importance of the initiative, it is expected for it to have modifications, so the aforementioned process may be modified in case there are observations or rejections by the Deputies.

Purpose of the Initiative of Decree and Amendments to Secondary Legislation

The Initiative of Decree and Amendments to Secondary Legislation is submitted to comply with the Decree amending and adding several provisions of the Mexican Constitution on telecommunications matters published on June 11, 2013 (the “Decree of Constitutional Amendments”)

The transitory articles to the Decree of Constitutional Amendments, establish, among others, that the Mexican Congress will issue one single law which shall convergently regulate the use, operation and exploitation of the radio spectrum, the telecommunication networks and the provision of broadcasting and telecommunication services, and will pass laws, reforms and amendments derived from such Decree within a 180 calendar day term following its enactment. This term expired on December 9, 2013.

The Initiative of Decree and Amendments to Secondary Legislation mentions in the statement of legislative intent, that the development process was based on a project and proposals submitted by the industry and society in general (a total of 33 proposals is mentioned). Additionally, it is mentioned that international organisms were consulted, such as the Organization for Economic Cooperation and Development (OECD). OECD has played an important role in the telecommunication sector in Mexico since the issuance of the “Review of Telecommunication Policy and Regulation in Mexico” on 2012.

In the Initiative of Decree and Amendments to Secondary Legislation, the amendment to the following laws is contemplated:

  1. Foreign Investment Law, to repeal the provisions regarding the limits of foreign investment in telecommunications and the modifications thereof regarding broadcasting.
  2. Copyright Law, to include must carry and must offer rights.
  3. Federal Law on Administrative Responsibilities of Public Servants, to contemplate the Telecom and Broadcasting Agency “Instituto Federal de Telecomunicaciones” (by its acronym in Spanish “IFT”) as obligor.
  4. Amparo Law, to establish that the acts of IFT are subject to the “amparo indirecto” process and to establish that the “suspension” (provisional measure) against general rules, acts or omissions of IFT is not available. It is expressly established that fines or divestiture of assets, will not be executed but until the “amparo” process has been resolved.
  5. Statistical and Geographic Information System Law, to integrate IFT to the National Advisory Council, to include the telecommunications and broadcasting criteria as topics understood as Information of National Interest, and to include as persons subject to certain sanctions the concessionaries and authorized persons of the telecommunications and broadcasting sectors.
  6. Federal Law on Metrology and Standardization, to include IFT as competent authority for the evaluation of conformity, and as a competent authority to carry out verification visits to verify due compliance of such law and to coordinate with the Ministry of Economy.
  7. Federal Criminal Law, to include new crimes related to the confidentiality of telecommunications and regarding people refusing to cooperate with the Justice when telecommunications must be intercepted.
  8. Federal Law of Transparency and Access to Public Governmental Information, to include IFT as obligor.
  9. Public Private Partnerships Law, to include the provision of wholesale services as projects for public private partnerships.
  10. Federal Public Entities Law, to exclude from the compliance of such law the Public System of Mexican Broadcasting.

Federal Law on Telecommunications and Broadcasting

The purpose of this Secondary Legislation on Telecommunications is to rule the use, operation and exploitation of the radio spectrum, the telecommunications networks, the orbital resources, the satellite communications, the provision of telecommunication and broadcasting services, consumer rights, and the convergence process of free competition in these sectors.

The Federal Law on Telecommunications and Broadcasting consists of 312 articles divided into 16 chapters: (I) The Application of the law and authorities; (II) The operation of the IFT; (III)The radio spectrum and orbital resources; (IV) The concessions; (V) The networks and telecommunications services; (VI) The authorizations; (VII) The Public Telecommunications Registry; (VIII) Collaboration with Justice; (IX) Users; (X) Universal coverage; (XI) Audiovisual content; (XII) Asymmetric regulation; (XIII) The homologation; (XIV) The verification regime; (XV) The sanction regime; and (XVI) The legal remedies.

Hot Topics

The Secondary Legislation on Telecommunications allocates different authorities to Ministries and Organisms. Among the most important are the Ministry of the Interior “Secretaria de Gobernación” that shall monitor the maximum time for the transmission of advertisements in radio and television, the Ministry of Communications and Transportation “Secretaria de Comunicaciones y Transportes” to issue non-binding opinions for the granting and extension of the concessions, the Federal Consumer Protection Agency “Procuraduría Federal del Consumidor” to protect the consumers rights in telecommunications and broadcasting services, and the Ministry of Finance “Secretaria de Hacienda y Crédito Público” to issue preliminary non-binding opinions for the payment of the legal fees for the concessions of radio spectrum, among other authorities.

The autonomy of the IFT is confirmed and it is expressly established the authorities and duties of IFT, as well as the authorities of its commissioners and its Plenary. The IFT shall adapt its current Organic Statute to the provisions of the new law.

The Sole Concession for the provision of all kinds of telecommunications and broadcasting services is regulated. The Sole Concession, depending of its purposes, may be (I) for commercial use; (II) for public use; (III) for private use; and (IV) for social use. A concession of radio spectrum and a Sole Concession may be granted in one single administrative act.

The concession of “future” orbital resources is established, which shall be understood as the concession that is directly assigned to the individual or Company that expressed interest in obtaining an orbital position and complies with all the requirements established by the law. In this case, the applicant participates jointly with the IFT and the Ministry of Telecommunications and Transportations for the allocation of an orbital position by the International Telecommunications Union (ITU).

While the secondary market of radio spectrum was already established in the previous telecommunications legislation, in the Secondary Legislation on Telecommunications, the legal concept of spectrum leasing is established, which together with the assignment, are aimed to encourage the secondary market of radio spectrum. It is established that the leasing of spectrum will not be authorized when cross-ownership or concentrations are generated.

The reseller permit or commercialization permit established by the previous Federal Law on Telecommunications is removed and a new legal figure of Authorization is included. By means of such legal figure, the following services may be rendered (I) commercialization of telecommunications services; (II) installation and operation of earth transmitting stations; (III) installation of equipment and transmission of cross border means; and (IV) exploitation of the emission rights and the reception of signals and frequency bands of foreign satellite systems.

Through the commercialization of telecommunications services, it will be possible to access the wholesale services offered by any concessionaire to carry out the commercialization of further services by a third party. Under this structure, Virtual Mobile Networks Operators (VMNOs) may enter into the Mexican market as resellers of mobile services of another concessionaire, which they commercialize under their own brand.

The legal figure of “visiting user” is established by the Secondary Legislation on Telecommunications. Through such figure, the users from a concessionaire of voice and data mobile services which does not have coverage in one specific location, may access to the voice and data mobile services of a concessionaire that does have coverage in such location. The agreements of visiting user are to be executed between the concessionaires and are to be obligatory for the concessionaire that has been declared preponderant, subject to the terms and conditions that will be established.

The public networks with public participation are regulated as wholesale shared networks, in which public-private partnerships may participate (it is foreseen that the release of the 700MHz band will operate under this structure).

Net Neutrality in Internet is expressly established and obligatory for concessionaires and individuals or companies with an Authorization, forbidding discrimination of data on networks.

For broadcasting services, it is allowed for the concessionaires to offer multiprogramming (broadcast various program channels in the same broadcasting channel), and the obligation to broadcast the programming of broadcasting television concessionaires by the concessionaires of pay television (must carry) is regulated.

Finally, without entering into detail, one entire chapter of the Secondary Legislation on Telecommunications is devoted to the asymmetric regulation of telecommunications and broadcasting sectors, which is phased out as more effective competence is developed in both sectors. It is established that the measures and obligations on IFT shall rule are the ones related to information, offer and quality of the services, exclusive agreements, limitations to the use of terminal equipment between networks, asymmetric regulation of infrastructure and rates, and unbundling essential elements, among other mechanisms and obligations for telecommunications and broadcasting sectors.

Transitory articles

The Decree and Amendments to Secondary Legislation has 29 transitory articles which establish some pending tasks, such as the issuance of the regulations and administrative rules, the issuance of the respective official Mexican standards on telecommunications and broadcasting, the adaptation of the Organic Statute of IFT to the content of the Secondary Legislation, the installation of the shared network of telecommunications (known as the public tender of the 700MHz band), the creation by the Consumer Protection Agency “Procuraduría Federal de Protección al Consumidor” (by its acronym in Spanish “PROFECO”) of a specialized unit to protect the rights of telecommunications and broadcasting users, and the implementation of programs and activities for the delivery or distribution of decoders or equipment to conclude the analog transmissions of television signals (known as the “digital switchover”) for the transition to the digital television, among other pending tasks.

Likewise, in the same transitory articles, there are other tasks that are subject to a specific term after the Decree and Amendments to Secondary Legislation enters into force: (I) 180 calendar days to issue the regulations and guidelines in regard to content; (II) 180 calendar days for the implementation of a professional career service in IFT; (III) 180 calendar days to create the Advisory Council by the IFT; (IV) 180 calendar days to create the committee to promote access to information technologies and communications; (V) 180 calendar days to issue the work program and to reorganize the radio spectrum by the IFT; (VI) 180 calendar days to issue the guidelines to carry out the consolidation of the local service areas (with this consolidation the national roaming will disappear); and (VII) 90 calendar days for the IFT and the law enforcement authorities to issue administrative rules regarding collaboration.

Conclusions

It is important to monitor the discussions and the modifications that the Congress may adopt for the Initiative of the Decree and Amendments to Secondary Legislation. We believe that there will not be substantial modifications to the particular topics discussed in this document. However, some subtle details may be modified in the provisions of Telecommunications and Broadcasting.

Likewise, it is important to consider the current situation of the political parties in Mexico, and the development and participation of such parties in the process of discussion, modification and voting of the Decree and Amendments to Secondary Legislation, as the Decree of Constitutional Amendments was approved under the well-known “Pacto por México”, which today has undergone several breakups. However, because of the majority of the ruling political party in the Congress, its approval should not be substantially delayed.