Mexico takes on TV, telephone tycoons

President proposes overhaul of weak regulatory system

MEXICO CITY — President Enrique Peña Nieto yesterday proposed a sweeping overhaul of the weak and chaotic regulations that have allowed the world’s richest man and the largest Spanish-language media empire to exert near-total control of Mexico’s lucrative telephone and television markets.

The reforms backed by Mexico’s three major political parties would create two new national television channels and form a powerful independent regulatory commission along the lines of the US Federal Communications Commission.

It would require TV networks to provide their programming free to most cable operators, and require cable operators to carry all broadcast channels, measures seen as essential tools for opening television markets to competition.

The reform takes on two of the two most influential men in Mexico, multibillionaire telephone tycoon and richest man in the world Carlos Slim and Televisa CEO Emilio Azcarraga, rivals whose dominance of their respective markets have become widely seen as emblems of regulatory dysfunction in a country aspiring to join the ranks of the world’s economic superpowers.

Televisa’s political influence has also become one of the rallying cries of the Mexican left, which often accuses the conglomerate of trading positive coverage of politicians for favourable regulatory treatment. Pre-election protests against Peña Nieto focused on his ties to Televisa, a historic ally of his Institutional Revolutionary Party, which ruled Mexico for seven decades before losing the presidency 12 years ago.

Peña Nieto has spent his first 100 days reasserting the power of Mexico’s once-imperial presidency, most dramatically jailing the head of the teachers’ union in the midst of a fight over reforms to the country’s sclerotic education system.

Backers of the new reform cast it as a similar blow against entrenched special interests, pledging that it would open Mexico’s multi-billion dollar a year telecommunications business to true competition that would drive down some of the world’s highest prices for telephone service and diversify a television market dominated by a single company.

Slim’s Telmex, the privatized former national phone company, controls 80 percent of Mexican landlines and 70 percent of the mobile-phone market. Azcarraga’s Televisa has 70 percent of the broadcast TV market and more than 45 percent of cable television.

Slim’s companies have maintained profit margins nearly double the average in the 34-nation Organization for Economic Cooperation and Development, while Mexico has the group’s lowest rate of telecommunications investment per capita and sat at or near the bottom in terms of number of fixed and mobile phone lines per capita, according to a scathing OECD report last year.

The report, much of which was disputed by Slim, found that what it called the dysfunction in telecommunications cost the Mexican economy more than US$30 billion a year.

A newspaper in the northern border state of Coahuila announced yesterday it will no longer cover information related to drug cartels, citing safety concerns.

Zocalo published a front-page editorial explaining the move and said the decision “is based on our responsibility to watch out for the safety and security of over 1,000 workers, their families and our own.”

Just last week a printed banner, similar to the kind frequently used by drug cartels, was found with a message threatening a violent reprisal against the paper’s director. It was signed by “42,” an apparent reference to a top member of the Zetas drug gang.

Herald with AP, Reuters