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Mexico telecom regulator can police dominant firms: draft

By Simon Gardner and Dave Graham

MEXICO CITY (Reuters) - Mexico will give its new telecommunications regulator sweeping powers to police dominant telecommunications companies and TV broadcasters, right down to their prices and discounts, a draft bill that fleshes out a landmark reform passed last year shows.

The Federal Institute for Telecommunications (IFT) will have far-reaching powers to order companies to sell assets, revoke concessions and share networks and infrastructure.

It will also be able to force companies to seek approval annually for interconnection and infrastructure-sharing terms, according to the draft obtained by Reuters.

Major market players like billionaire Carlos Slim's phone and Internet company America Movil, his fixed-line operator Telmex and TV broadcaster Televisa are widely expected to be declared dominant by the regulator.

Slim controls around 80 percent of Mexico's fixed-line business and about 70 percent of the mobile sector, while Televisa has more than 60 percent of the TV market.

The telecoms overhaul has raised hope that the government is serious about finally breaking the stranglehold of a select few over Latin America's No. 2 economy.

The 134-page draft, which comprises hundreds of articles, combines two existing laws and reforms several others, is a working document and is subject to change.

The bill, which governs the implementation of the telecoms reform, is expected to be sent to Congress in the next few days. It is a key element of a wider economic reform package spanning taxes to energy that President Enrique Pena Nieto pushed through Congress last year.

The dominance ruling from the IFT, expected next week, will be critical to the implementation of the reform.

The bill gives the regulator hefty powers to deal with dominant parties.

They could have to "submit to the IFT annually for approval" a host of services for other companies connecting to their infrastructure and network.

The regulator will also have the power to vet proposed plans by companies to divest assets if the companies are so ordered.

Many of the powers detailed in the draft existed under the previous telecom law. But the former regulator, Cofetel, was unable to apply them because companies were able to file injunctions preventing the previous antitrust watchdog, Cofeco, from declaring them dominant.

The constitutional reform passed last year handed the IFT jurisdiction over antitrust issues in telecommunication and broadcast businesses, while separate legal changes mean companies can no longer seek injunctions against decisions by the regulator.

The IFT said last week Mexico's broadcasters must offer public channels to their pay TV competitors at no charge.

That would require dominant market players Televisa and TV Azteca to allow competitors like Dish Mexico to transmit their so-called free-to-air channels on its own satellite system.

New rules known as "must offer, must carry" oblige pay television services to offer the public channels.

(Additional reporting by Elinor Comlay and Christine Murray; editing by Jonathan Oatis and Matthew Lewis)