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### Viewing cable 07MEXICO4334, MEXICAN TELECOMMUNICATION POLICY TARGETS TELMEX

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Reference ID | Created | Released | Classification | Origin
--- | --- | --- | --- | ---
07MEXICO4334 | 2007-08-14 15:03 | 2011-03-17 12:12 | UNCLASSIFIED//FOR OFFICIAL USE ONLY | Embassy Mexico
Appears in these articles: http://wikileaks.jornada.com.mx/notas/hay-preocupacion-de-que-el-duopolio-televisivo-sigue-ejerciendo-influencia-sobre-poderes-judicial-y-legislativo

`

    VZCZCXRO9872
    PP RUEHCD RUEHGD RUEHHO RUEHMC RUEHNG RUEHNL RUEHRD RUEHRS RUEHTM
    DE RUEHME #4334/01 2261531
    ZNR UUUUU ZZH
    P 141531Z AUG 07
    FM AMEMBASSY MEXICO
    TO RHEHNSC/NSC WASHINGTON DC PRIORITY
    RUEAFCC/FCC WASHINGTON DC PRIORITY
    RUCPDOC/DEPT OF COMMERCE WASHINGTON DC PRIORITY
    RUEHC/SECSTATE WASHDC PRIORITY 8425
    INFO RUEHXC/ALL US CONSULATES IN MEXICO COLLECTIVE PRIORITY
    RUEATRS/DEPT OF TREASURY WASHINGTON DC PRIORITY

` `

    118838
    2007-08-14 15:31:00
    07MEXICO4334
    Embassy Mexico
    UNCLASSIFIED//FOR OFFICIAL USE ONLY
    07STATE45618
    VZCZCXRO9872
    PP RUEHCD RUEHGD RUEHHO RUEHMC RUEHNG RUEHNL RUEHRD RUEHRS RUEHTM
    DE RUEHME #4334/01 2261531
    ZNR UUUUU ZZH
    P 141531Z AUG 07
    FM AMEMBASSY MEXICO
    TO RHEHNSC/NSC WASHINGTON DC PRIORITY
    RUEAFCC/FCC WASHINGTON DC PRIORITY
    RUCPDOC/DEPT OF COMMERCE WASHINGTON DC PRIORITY
    RUEHC/SECSTATE WASHDC PRIORITY 8425
    INFO RUEHXC/ALL US CONSULATES IN MEXICO COLLECTIVE PRIORITY
    RUEATRS/DEPT OF TREASURY WASHINGTON DC PRIORITY

    UNCLAS SECTION 01 OF 03 MEXICO 004334

    SIPDIS

    SENSITIVE
    SIPDIS

    STATE FOR WHA/MEX AND EB/CIP
    STATE PASS TO USTR FOR JONATHAN MCHALE AND CATHERINE
    HINCKLEY
    FCC FOR HELEN DOMENICI, KATHRYN O'BRIEN, AND DAVID FURTH,
    FCC FOR LARRY OLSON, BRIAN MARENCO AND EMILY TALAGA
    NTIA FOR KARL NEBBIA AND JANE COFFIN
    USDOC FOR 4320/ITA/MAC/WH/ONAFTA/GWORD
    ITA FOR MICHELLE O'NEILL AND DAMON GREER

    E.O. 12958: N/A
    TAGS: ECON ECPS ENIV PGOV MX
    SUBJECT: MEXICAN TELECOMMUNICATION POLICY TARGETS TELMEX

    REF: STATE 45618

    Summary
    -------

    ¶1. (SBU) On August 3, as part of the Ninth Meeting of the
    High Level Consultative Commission (HLCC) on
    Telecommunications, Rafael del Villar, Under Secretary for
    Communications at the Secretariat of Communications and
    Transportation (SCT), briefed a small group of Department of
    State (DOS), Federal Communications Commission (FCC), and
    Department of Commerce (DOC) officials on Mexican President
    Felipe Calderon's telecommunications policy.  SCT Secretary
    Luis Tellez Kuenzler joined the meeting and supported del
    Villar's assertions.  Del Villar emphasized that SCT's
    primary concern is the lack of penetration of landline
    telephone and broadband services.  Among other proposals, del
    Villar suggested that while participating in the upcoming
    Security and Prosperity Partnership in Canada, the three
    Leaders propose to dramatically lower long distance
    interconnection rates to make calling within North America
    within reach for even the poorest citizens.  With the "social
    good" argument as a backbone, it appears that the SCT and
    possibly the Calderon Government may try to tackle the
    Mexican telecom monopoly, Telmex's dominance in the sector.
    End Summary.

    Clarifying Roles in the Sector
    ------------------------------

    ¶2. (SBU)  Summarizing the current state of Mexico's telecom
    sector, del Villar said the Calderon administration will seek
    to clarify the roles SCT, the Federal Telecommunications
    Commission (Cofetel), and the Federal Competition Commission
    (Cofeco) play in the sector.  He highlighted the political
    role of the SCT as a planning and policy body with the power
    to decide which radio frequency bands will be auctioned and
    when.  He stated that, for the first time since 1990 (when
    Telmex was privatized), the SCT is more willing to support
    competition and openness than the regulator (Cofetel), a
    situation he termed a "political anomaly."  Also, for the
    first time in Mexican history, the President is keenly aware
    of the important issues facing the telecom sector and is
    creating a political climate that is conducive to moving
    forward with telecom policy.  He pointed out that Cofetel is
    a part of the SCT (and hence Executive Branch) and not an
    independent regulator like the FCC in the U.S.  He also
    stressed that the SCT currently enjoys an excellent working
    relationship with Cofeco.

    Social Good Argument
    --------------------

    3.(SBU)  Del Villar observed that the rural areas of Mexico
    have been devastated by migration.  He cited "heroic
    families" in which the husband travels to the U.S. to work to
    send money home, yet his wife is left in Mexico, unable to
    call her husband in the U.S. because of prohibitively high
    telecommunication rates.  High fixed and mobile
    interconnection rates; the lack of unlimited calling plans;
    and the need for technology to decrease overall telecom costs
    drive SCT telecom policy.  He reiterated Mexico's commitment
    to "Calling Party Pays," but also his concern with the level
    of tariffs.  He might seek to implement a "Bill and Keep"
    regime in mobile telephony in Mexico in which each network
    agrees to terminate calls from the other network at no
    charge. Cofetel is in the process of developing its
    Fundamental Technical Plan for Interconnection and is holding
    a second period for public comment that ends August 10.

    Broadband Penetration Lacking
    -----------------------------

    ¶4. (SBU)   Del Villar suggested possible policy changes to
    promote broadband penetration in Mexico. Broadband network
    "unbundling" would foster increased network investment by
    outside players.   Del Villar added that Mexico would label
    this proposal "leasing of the last mile" to avoid any

    MEXICO 00004334  002 OF 003

    negative stigma.  He noted that while this policy would be
    tough to implement, it was nonetheless being considered
    because SCT has not seen sufficient investment by Telmex in
    its network. Second, he suggested that Mexico allow the
    resale of broadband in the marketplace.  Third, because
    approximately twenty-six percent of Mexican mobile users do
    not have access to a fixed line, he would like broadband to
    be offered on a stand-alone basis instead of solely with a
    package.  Last, he suggested one option for Mexico might be
    public-private partnerships in which the government might be
    the owner of spectrum that is operated by a local government
    or community mechanism.  Mexico, he continued, has the
    spectrum available to do this with the ultimate goal being
    increased rural access to the Internet.

    Broadcasting Sector in the Hands of the President
    --------------------------------------------- ---

    ¶5. (SBU)    Throughout the conversation, del Villar was
    careful to reiterate that he was referring only to Mexican
    telecommunications policy, not broadcasting.  Because of the
    political fallout that licensing a third broadcasting network
    would cause, the decision on whether to move forward rests
    with President Calderon.  Del Villar did mention that through
    changes in the existing licenses of current broadcasters, the
    Government may impose a "must carry / must offer" policy.  He
    noted SCT fears Telmex collusion with Televisa in the video
    services market to secure cheap content, while squeezing out
    other smaller potential competitors.

    Spectrum Negotiations
    ---------------------

    ¶6. (SBU)  The U.S. and Mexican delegations also held spectrum
    negotiations during a three-day HLCC working level meeting
    (July 31-August 2) immediately prior to the Ninth HLCC on
    August 3.  As a result, at the Ninth HLCC the principals
    signed three documents:(A)A Permanent Protocol concerning the
    allotment and use of the 138-144 MHz band for terrestrial
    non-broadcasting radio communication services along the
    U.S.-Mexican border; (B)  A Joint Statement of the principals
    at the Ninth HLCC; and (C) A Directory of Bilateral Issues
    for 2007-2009 (DBI).  In terms of ongoing negotiations to
    reconfigure the allotment plan of the 800 MHz band, del
    Villar noted that the SCT is actively engaged in negotiations
    with Nextel Mexico and Intercomunicacion del Pacifico, a
    subsidiary of Telmex, the two most affected Mexican carriers.
    The SCT also requested assistance from the FCC in determining
    a realistic cost for network carrier actions to relocate the
    affected Mexican carriers within the 800 MHz band as well as
    to move them to an alternate  band.

    ¶7.  (SBU) On the topic of increasing broadband penetration by
    means of near-term spectrum auctions, (para.4 above), in the
    three-day working level meeting, SCT and Cofetel officials
    pressed U.S. representatives to identify additional radio
    bands suitable for broadband applications and place them in
    the DBI so that new cross-border sharing agreements could be
    reached.  These bands included:  420-450 MHz, 698-806 MHz
    ("700 MHz"), 2300-2400 MHz and 3300-3700 MHz bands.  All of
    these bands were included in the DBI except the 2300-2400 MHz
    which will be discussed informally in upcoming HLCC working
    level teleconferences.  (The U.S. and Mexico currently have
    an agreement in place for the 2310-2360 MHz band for the
    Digital Audio Radio Satellite Service used extensively by
    U.S. providers XM Satellite Radio and Sirius Satellite
    Radio).  SCT and Cofetel also mentioned their interest in
    amending the existing Protocol for Personal Communications
    Services in the 1850-1990 MHz band to also support wireless
    broadband.

    The three HLCC documents that were signed will be posted
    shortly on the Department's public website at :
    http://www.state.gov/e/eeb/cip/c622.htm.

    Improvements for Cross Border Security Communications
    --------------------------------------------- --------

    ¶8.  (SBU)  Representatives of Mexico's Secretariat of Public

    MEXICO 00004334  003 OF 003

    Safety (SSP) and the U.S. Department of Homeland Security
    reported in the working level meeting that the HLCC Security
    Communications Task Group plans to complete its Plan for the
    Long Term Solution for Cross Border Security Communications
    shortly and submit the Plan to the HLCC for adoption.  The
    Plan reportedly includes establishment of six cross border
    microwave links in the 7-8.5 GHz band that will allow voice,
    data and video intercommunications between communications
    centers of law enforcement agencies on both sides.   In the
    principals meeting, DOS also mentioned the need for a second
    phase of the "Long Term Solution" that would address
    reciprocal licensing for mobile and portable equipment of
    public safety agencies on both sides as well as improving
    mutual-aid communications for specific individual public
    safety agencies on each side.    These are the continuing
    actions described in reftel, and the Plan will be distributed
    to border consulates when completed.

    Del Villar Proposes a North America-wide Calling Area
    --------------------------------------------- --------

    ¶9. (SBU)  Lowering interconnection rates is high on SCT's
    agenda, justified to the public and the industry by the
    "social good" argument.  At the meeting, del Villar and
    Tellez said that if the U.S., Canada and Mexico could come to
    an agreement to trilaterally lower interconnection rates for
    telephony across the region, this would help the GOM to
    convince Telmex to relinquish some hold on the sector.

    Comment
    -------
    ¶10. (SBU) Telmex seems to be feeling the pressure as there is
    already speculation in the industry that the monopoly will
    file an injunction against Cofetel's proposed interconnection
    plan.  The SCT appears to have firmly taken control of
    telecommunications policy in Mexico and has an arsenal of
    ideas for progress in the sector.  In telecommunication
    negotiations, we are seeing unprecedented levels of positive
    engagement from our Mexican counterparts.  SCT Under
    Secretary del Villar has a lot of energy and progressive

    SIPDIS
    ideas, now it's a matter of how much momentum he can gather
    to push for change in the industry.  End comment.

    ¶11.  (U) This cable was prepared jointly with collaboration
    of members of the U.S. delegation from EEB/CIP.

    Visit Mexico City's Classified Web Site at
    http://www.state.sgov.gov/p/wha/mexicocity and the North American
    Partnership Blog at http://www.intelink.gov/communities/state/nap /
    BASSETT

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