Calls by the US Trade Representative (USTR) for the Mexican government to be stricter with fixed-line and mobile operators Telmex (NYSE: TMX) and Amйrica Mуvil (NYSE: AMX) as regards obeying regulations may be bolstered by a proposal by President Felipe Calderуn to clamp down on monopolies.

President Calderуn proposed on Monday (Apr 5) to reform competition laws with tougher sanctions of up to 10% of annual revenue and possible jail terms. The proposal puts more power in the hands of the antitrust authority CFC, which would be able to perform audits at short notice and demand information from companies suspected of unfair practices.

The announcement coincided with an annual report released by the USTR which raised concerns about the ability of Mexico’s telecoms regulator Cofetel and anti-trust body CFC “to impose meaningful dominant carrier regulation” on Telmex and Telcel, which have successfully challenged numerous mandates from Cofetel.

The issue of local calling areas (ASLs) is of particular concern to the US, given the number of Mexican Americans wishing to call relatives but that are forced to pay premium rates because of high interconnection rates charged by Telmex.

Telmex has disobeyed Cofetel’s order to eliminate 70 of the country’s 397 local dialing areas, which it has argued are technically too complicated to interconnect, a USTR spokesperson told BNamericas.

That has led Telmex to charge retail rather than interconnection rates.

The spokesperson said that the USTR’s critique is not of the regulator, which has tried to do the right thing, but rather the court system that has allowed Telmex to repeatedly challenge orders from Cofetel and drag the process out indefinitely.

“Telmex is basically thumbing its nose at the regulator, fighting everything in court and refusing what the regulator says it should do. So it’s not like the regulator is not trying to do the right thing; they don’t have some of the sanction power that maybe this additional competition enhancement [from President Calderуn] would help create,” the spokesperson said.

This view is shared by Enrique Melrose, a telecoms research professor at the Monterrey technical institute (ITAM).

“This is an important point for them – [the CFC] and the USTR – because it appears to open up the possibility of imposing fines or having a stronger stance against monopolies, in particular thinking of Telmex and Telcel,” Melrose told BNamericas.

In its report, the USTR called on Cofetel to do “what is necessary” and “as soon as possible” to pressure Telmex.

However, the critique has already rubbed Amйrica Mуvil up the wrong way, which said this week it will file a response with technical evidence that demonstrates no wrongdoing.

Local press quoted Amйrica Mуvil’s legal representative Alejandro Cantъ as saying that the USTR’s accusations were serious, as they were questioning the capacity of Mexican government bodies to act.

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