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Regulation

Slim's Bundle: Telmex Could Offer TV Services Soon

Billionaire Carlos Slim's company America Movil should enter Mexico's pay-TV market as soon as possible, according to a new report from the Organization for Economic Co-operation and Development (OECD).

The report, released on August 31 to review the state of Mexico's television and telecom industries, follows regulation enacted in 2013 to drive competition, reduce prices and improve service quality in telecom and television services.

That regulation was guided by a 2012 OECD study which determined that Slim's dominance of the telecom market was resulting in overly high prices -- he controlled 80% of Mexico's landline market and 70% of its mobile market. It also found that Emilio Azcarraga (owner of Televisa, which controlled 70% of Mexico's TV audience) was able to follow similarly monopolistic practices in the TV market.

This review concluded that Mexico has fully implemented 28 out of 31 recommendations from the 2012 study, and it had partially implemented the other three recommendations as well. It credited the new regulation with helping drive price reductions of up to 75% in mobile broadband packages, taking Mexico from one of the most expensive mobile broadband markets to one of the cheapest, and helping drive the addition of 50 million additional broadband subscriptions. Market share for America Movil's mobile division Telcel also dropped 12% during this time.

However, in the TV market Televisa and TV Azteca continue to dominate, and the OECD concluded this sector had seen less progress. América Móvil S.A. de C.V. has been banned from providing pay-TV or broadcast services in Mexico, though developing a triple-play bundle has been a major ambition for Slim.

The OECD report suggested that regulator IFT should "should assess the entry of Telmex (an America Movil unit) into pay-TV as soon as possible, following the successful implementation of its functional separation" (referring to the separation of America Movil's network infrastructure into a distinct entity). The OECD felt this would help it "compete with rivals by offering a full bundle of services including pay TV."

This could help lower prices for consumer in Mexico, but also help America Movil develop a video strategy. Not only will video help anchor the multi-play bundle, but operators also need a video strategy when such an overwhelming majority of traffic on their network is being dictated by video services.

— Aditya Kishore, Practice Leader, Video Transformation, Telco Transformation

kq4ym 9/15/2017 | 4:25:44 PM
Re: Competition I've always wondered if super rich business owners are in fact abusing customers with prices higher than they should be as a near monopoly would allow setting prices pretty much a bit higher than supply and demand equations might suggest. This appears to be what's happened in Mexico. I wonder how many other countries might provide incentives to get more competition and thus lower consumer pricing?
242ak 9/6/2017 | 5:28:53 AM
Re: Competition danielcawrey - Good point. I wondered about that too -- that the growth of OTT would solve this problem anyway, by driving cord-cutting and moving eyeballs away from overpriced broadcasters and pay-TV providers. But that transition will take time, so it would still probably be useful to get more competition -- particularly robust, well-funded competition -- into the Mexican broadcast and pay TV space.
danielcawrey 9/5/2017 | 11:44:38 AM
Competition It seems that there needs to be more competition in this market. Having OTT options is one avenue towards doing that. Pay-TV is quite advanced in other markets, and it seems folks in Mexico are paying attention to that. 
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