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06 December 2019
As there was no real interest from the private sector in a draft bid issued by the Federal Electricity Commission (CFE) for two strands of dark fibre to provide free internet services to all citizens in Mexico, as anticipated by the president, a new state-owned company has been established (for further details please see "Internet for everyone?").
The decree that created CFE Telecommunications Internet for Everyone (CFE Telecom) as a subsidiary of CFE was published in the Federal Official Gazette on 2 August 2019. The goal of CFE Telecom is to:
CFE Telecom is expected to use all CFE's infrastructure (eg, fibre optic cable, towers, ducts and posts) to fulfil this goal.
As a result of CFE Telecom's establishment, the Ministry of Communications and Transportation cancelled the Red Troncal auction, which was another project involving CFE's fibre optic cable for which there were some interested parties (for further details please see "TELECOMM invites applicants to bid for National Backbone Network").
Further, the Federal Telecommunications Institute (IFT) granted CFE Telecom a master concession for public use in record time (less than one month) to provide non-profit telecoms services. This concession established the following specific limitations:
CFE Telecom must comply with the competition neutrality principle, which implies avoiding market distortions due to its public nature (eg, receiving subsidies, transfers or other resources from other public entities) and any licensed party can submit a claim before the IFT.
Conversely, in October 2019 Raymundo Artís was appointed as CFE Telecom's general director. He had previously been in charge of the National Digital Strategy. Further, CFE Telecom's other six board members were selected on the understanding that only one of them is independent of the government.
In the 2020 Federal Expenditure Budget pending approval, CFE Telecom will be assigned $56 million, which appears to be below the amounts invested by current telecoms operators in Mexico.
There is no certainty about the business and technical plans that CFE Telecom will implement or how, when and where it will start providing services. However, more information should be available in that regard in the following year – in particular, once CFE Telecom has the resources to start operations. Hopefully, this project can fulfil its main goal to provide internet access to people that currently lack such services, but its development will need to be monitored as the new government has implemented a number of populist policies that may not necessarily be as efficient as they appear.
For further information on this topic please contact Federico Hernández Arroyo at Hogan Lovells BSTL by telephone (+52 55 5091 0000) or email (email@example.com). The Hogan Lovells website can be accessed at www.hoganlovells.com.
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