Allowing the Mexican telecoms market’s dominant operator into the pay TV space would bring benefits to consumers and to the wholesale space, according to new OECD report.
The competitive landscape in Mexico would benefit from allowing America Movil to launch pay TV services, the Organisation for Economic Cooperation and Development (OECD) concluded in its latest telecom and broadcasting market review, published this week.
The OECD’s recommendation will come as music to the ears of the country’s largest telecoms operator, which has been lobbying for a pay TV service permit for years.
"The IFT should assess the entry of Telmex into pay TV as soon as possible, following the successful implementation of its functional separation," the OECD said in its report. Telmex is the brand name of America Movil’s fixed-line subsidiary.
"This change would prevent the current preponderant agent, America Movil, from leveraging its existing power from bottleneck infrastructure while, at the same time, allowing America Movil to compete with rivals by offering a full bundle of services including pay TV," it explained.
The IFT, Mexico’s telecoms regulator, ordered the functional separation of Telmex (and sister company Telnor) from its wholesale operations in March. At the time America Movil said it would challenge the ruling.
But the ability to offer pay TV services would be a huge boon to the telco.
It has yet to provide a formal comment on the OECD report though.
The OECD argues that granting a TV licence to America Movil would act as an incentive for the wholesale provider to invest in high-speed infrastructure, since demand would increase at the retail level.
In addition, America Movil would be a strong competitor in pay TV, improving customer choice, it said. And such a move could help spread access to pay TV services to more locations.
"If considered necessary, after a thorough assessment, a scheme could be initiated for granting a pay TV licence to allow a gradual convergence (temporarily and geographically), replacing the restrictive rule which currently applies to America Movil," the OECD suggested.
The OECD’s conclusions are merely recommendations at this stage. However, the advice given in the body’s 2012 report fed into the recent telecoms industry reform in Mexico, so America Movil could be forgiven for getting its hopes up.
Indeed, the latest review claims that 28 out of the 31 recommendations made in the 2012 report have been fully implemented in Mexico and the other three partially implemented.
"Mexico’s 2013 telecom reform has brought tangible benefits, spurring competition that has increased access and brought down mobile Internet costs from among the highest in advanced economies to among the lowest," the OECD said.
"Mexico should now consolidate this overhaul of telecommunications and broadcasting so that households, businesses and the economy can reap maximum benefits from the digital transformation."