Mexico telecom regulator Instituto Federal de Telecomunicaciones' (Ifetel) move to give competitors equal access to Telmex's last mile network to other providers could usher in a new era of competition from local providers and even AT&T (NYSE: T), which is making a big push into the country via its pending DirecTV (NASDAQ: DTV) deal.
Citing two unnamed sources, Reuters reported that Ifetel's decision is designed to enhance competition in a market where Carlos Slim's Telmex has enjoyed a long-running monopoly in the local service business for over two decades.
However, the sources added that terms of the new agreement are "unclear."
Ifetel said in an announcement that America Movil has 60 days to provide wholesale pricing terms for competitors that want access to it local access networks.
"Effective unbundling of the local network will allow other concessionaires to provide telecommunications services through the infrastructure of the AEP," Ifetel said. "The conditions for this process help ensure effective access to the local network of the leading company in the telecommunications sector, in order to remove barriers to competition and market entry."
This measure has been a number of years in the making.
After finding that America Movil was the dominant telco in Mexico last year, Ifetel unveiled a number of proposals to enhance competitors' access to their networks. Today, America Movil operates nearly 70 percent of Mexico's wireless and wireline network infrastructure.
In July 2014, the Mexican government developed a new law that they said would open up the local telecom market that has been nearly non-existent since the state's monopoly service, Telefonos de Mexico (Telmex) was privatized and acquired by billionaire Carlos Slim in 1990.
A decision on local loop unbundling (LLU) has been in the works since Ifetel took over from the Comision Federal de Telecomunicaciones (Cofetel) in September 2013, with legislation passed in April 2013 that drove the incoming regulator to enact new changes.
Interestingly, the new measure comes on the heels of Telmex's recently announced plans to build a 500,000-kilometer fiber network that will support an enhancement of its residential service set with a focus on pay-TV services.
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