Mexican telecom regulator warns of reform risks as it faces extinction

The constitutional reform approved by the Mexican congress that does away with telecom regulator IFT and other agencies “could generate uncertainty and limit the proper application of sectoral and competition regulation,” the IFT said in a statement.

The bill, which had already passed through the lower house, was approved on Thursday in the senate by 86 votes in favor and 42 against. It must now be approved by the state legislatures.

The reform, which was initially presented by former president Andrés Manuel López Obrador, eliminates the IFT and six other authorities, including the electric energy (CRE) and hydrocarbons (CNH) regulators.

“This regulatory body has been emphatic, and we have made this public through various positions since the reform initiative was presented in February, that the evidence shows that the best institutional design for the regulation of these important sectors in our country has been constitutional autonomy,” said the IFT.

“Combining the powers of sectoral regulation and economic competition in a convergent regulator with a comprehensive and coherent vision of the functioning of markets has made it possible to implement effective regulation and a deep transformation of the telecommunications and broadcasting sectors,” it added.

The Mexican association for the right to information (Amedi) also voiced its opposition to the reform earlier this month: “The extinction of this body [IFT] implies that its powers will be assumed by the federal executive through the agency in charge of telecommunications and broadcasting policies, even though it has been shown in several six-year terms to be a mechanism with little effectiveness.”

Reform risks

The IFT has called for the secondary legislation to address certain issues in the reform to avoid a number of risks.

Among them, it said that technical and impartial decision-making must be guaranteed.

“Technical impartiality, budgetary independence and colegial decision-making are essential elements for the implementation of regulation and the application of competition policy in the telecommunications and broadcasting sectors.”

According to local press, the functions of the IFT could be divided into different departments of the federal administration.

The bill transfers IFT's functions to the infrastructure, communications and transport ministry. However, the government has also discussed the possibility of creating a decentralized agency dependent on the economy ministry.

It will ultimately depend on the outcome of the secondary legislation. 

“Segmenting regulatory powers can lead to inconsistencies, inefficiencies and inadequate implementation of economic competition and regulatory policies in the telecommunications and broadcasting sector,” the IFT said, adding that it is key to maintain the agency's specialized human capital.

An independent ICT regulator is required under the USMCA free trade agreement that Mexico has with the US and Canada, representing a potential clash with its trading partners.