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October 26, 1995
INTERNATIONAL BUREAU
ISSUES
SPECIAL REPORT ON MEXICO
The International Bureau today released a Special Report on Mexico: 1995
Federal Telecommunications Law and Reorganization of Secretaria de
Comunicaciones y Transportes (SCT). The Report analyses the reorganization of
SCT, the Mexican Telecom regulator, and the new Mexican telecommunications
law. It was prepared by the International Bureau's Planning and Negotiations
Division.
The Report is the first of a series intended to help guide Commission policy,
and to assist U.S industry and consumers. This is the first time the
Commission has issued an analysis of foreign law for use by industry and
consumers. The analysis is based both on the text of the statute and
discussion with Mexican officials.
Mexico is the second most important trading partner of the U.S. Mexico is now
undergoing significant legal and regulatory changes preparing for increased
liberalization of the communications industry. Understanding these changes is
critical for the Commission in the negotiation of border frequency sharing
arrangements as well as in the development of international policies that
affect both countries. Knowledge of the changing Mexican legal and regulatory
regime also is criticial to U.S. industry which does or wishes to do business
there.
Some of the more important features of the new Mexican legal framework noted
in the Special Report include: 1) amendment of Article 28 of the Mexican
Constitution to permit privatization of, and encourage competition in, the
Mexican satellite industry; 2) increase of foreign ownership limits to 49% for
most services; 3) establishment of new spectrum use categories and
specification of corresponding spectrum authorization requirements (e.g.,
"concessions" required for public telecommunications networks and spectrum
use, "permits" generally required for resale services and transmitting earth
stations, and "registration" required for value added services); 4)
elimination of restrictions on services that can be provided by competitive
public telecommunications networks including provision of long distance
services after August 10, 1996; 5) authority for use of auctions to grant
concessions for any non-governmental frequency use; 6) deregulation of
receive-only earth stations; 7) adoption of open architecture principles for
network interconnection; and 8) establishment of non-discriminatory tariffing
principles. The new telecom law also provides that a new regulatory
authority, independent from the SCT, shall be created by presidential decree
no later than August 10, 1996.
The Special Report also identifies the current structure of the reorganized
SCT, which now includes the Subsecretaria de Comunicaciones y Desarrollo
Tecnologico (SCDT) (Subsecretary of Communications and Technological
Development) headed by Carlos Casasus. SCDT is divided into four General
Directorates: 1) Networks and Radiocommunications, 2) Broadcasting Systems, 3)
Telecommunications Policy and International Negotiations, and 4) Spectrum
Administration. There is also a separate office for International Relations
Coordination.
The Bureau's Special Report on Mexico will be followed in the near future by a
series of additional reports on a variety of emerging international issues.
Inquiries concerning the Report may be directed to Aileen A. Pisciotta, Chief,
Planning & Negotiations Division at (202) 418-2150.
-- FCC --
INTERNATIONAL
BUREAU
PLANNING STAFF
__________________________
SPECIAL REPORT
MEXICO
1995 Federal Telecommunications Law
and
Reorganization of
Secretar¡a de Comunicaciones y Transportes (SCT)
Scott Blake Harris
Chief, International Bureau
Aileen A. Pisciotta
Chief, Planning & Negotiations Division
Prepared by Joslyn Read October 1995
PREFACE
The Planning and Negotiations Division of the International Bureau is
responsible, among other things, for conducting technical negotiations with
Mexico on a broad range of issues. In the course of these activities, we
maintain daily contact with Mexican regulatory officials in the Secretar¡a de
Comunicaciones y Transportes (SCT). Our frequent contacts have given us
unusual opportunities to obtain information about recent important changes in
the telecommunications law and regulatory framework in Mexico. We are issuing
this Special Report to make this information more broadly available.
In particular, we have obtained and reviewed the new Mexican
Telecommunications Law, which was enacted in May 1995 and came into force in
June 1995. The attached report provides a quick summary of some of the more
important provisions of this new law, which introduces significant
liberalization into the Mexican telecommunication legal framework. Copies of
the new law, in Spanish or English, are available on request.
We also have closely followed significant internal reorganizations within SCT.
The attached report reviews the main features of this reorganization and the
redistribution of responsibilities among four new general directorates: 1)
Networks and Radiocommunications, 2) Broadcasting Systems, 3)
Telecommunications Policy and International Negotiations and 4) Spectrum
Administration. Direct contact information for the officials named is also
available on request.
This report was prepared by Joslyn Read who, at the time of writing the
report, was Chief of the Division's Negotiations Branch.
Please feel free to direct any inquiries on this material to me at 418-2150.
Aileen A. Pisciotta
Chief, Planning & Negotiations Division
MEXICO
1995 TELECOMMUNICATIONS LAW
AND
SCT REORGANIZATION
International Bureau
Planning & Negotiations Division
October 1995
Since January 1995, Mexico has taken a number of significant steps towards
increasing competition in its domestic telecommunications market. Fundamental
to these steps is Mexico's decision that individual and corporate initiatives
and investments are critical for national development, and for the country to
keep pace with the global economy.
Starting in mid-January 1995, the Mexican Congress agreed to President Ernesto
Zedillo's proposals to amend Article 28 of the Mexican Constitution in order
to remove satellite communications from the list of strategic areas in which
the Mexican Government is required to hold a monopoly, and thereby facilitate
the privatization of Telecomunicaciones de Mexico, the national satellite
carrier, in the future. In May 1995, the Mexican Congress passed a dramatic
new telecommunications law which introduced broad opportunities for
competition and new entry (domestic and foreign) into the domestic
telecommunications market. To further cement the changes, in June 1995, a
full reorganization of the Mexican Secretar¡a de Comunicaciones y Transportes
(SCT), the Mexican telecommunication regulatory agency, was approved by
President Zedillo and implemented. The highlights of each of these
legislative actions are described below.
1995 Satellite De-Monopolization
In 1983, satellite communications was incorporated into the Mexican
Constitution as a "strategic area" to be developed and controlled exclusively
by the Mexican Government (both space and ground segments). In 1989, this
broad-based responsibility was redefined to encompass only the installation,
operation, control and exploitation of the space segment, while private
investors were permitted to establish and operate related terrestrial
infrastructure, except for international links. By late 1994, with the growth
in demand for domestic satellite capacity, the imminent launch of the new
Morelos satellite series, and expectations of moving the nation quickly into
the high technology world, the Mexican Government decided to open investment
and operational opportunities in Mexican space segment facilities to private
investors. The President's amendment to Article 28 of the Mexican
Constitution was passed by the Congress on January 16, 1995, and entered into
force on March 2, 1995. In essence, the amendment converts satellite
communications from being a "strategic" activity reserved exclusively for the
State to a "priority" activity where private investors may participate and
compete. The following principles were also outlined:
(1) The Mexican Government will maintain leadership in satellite
communications with the objective of safeguarding, at all times, the
security and sovereignty interests of Mexico;
(2) Individuals may participate in the "establishment, operation, and
exploitation" of satellites, through concessions which are granted by
the Federal Government, with the understanding that the orbital
positions and corresponding frequencies will stay under the control of
the State;
(3) The development of satellite communications will take place in an
orderly manner, in accordance with the corresponding international laws
and treaties. The provision of efficient and accessible services should
be fostered at the same time;
(4) At all times, competition in the sector should be encouraged,
avoiding practices which restrict access to those services or that are
discriminatory, against the interests of consumers;
(5) The content of satellite transmissions should contribute to the
strengthening of cultural values and to the symbols of Mexico's national
identity; and
(6) The availability of satellite capacity will be maintained for
networks of national security and the provision of services of a social
character, such as rural telephony and distance education.
1995 Mexican Telecommunications Legislation
This law was passed by the Congress in May 1995, and formally entered into
force on June 7, 1995. The SCT is required to follow up with a full set of
rules, regulations and procedures for implementing and enforcing the
principles of this legislation. The key elements of the new law include:
* Foreign Ownership. The new telecommunication law permits up to 49%
foreign investment (ownership of capital stock) for all services except
for cellular telephone which may exceed 49% (unspecified limit), subject
to specific permission by the National Commission of Foreign Investment.
* Stronger Competitive Forces. The new law emphasizes a solid commitment
to fair and strong competition between telecommunication service
providers with protection for competitors against monopolistic market
behavior.
* Increased Regulatory Transparency. The new law introduces greater
transparency in Mexico's developing telecommunication regulatory
process, and imposes response times for the government to process
service and other applications. Information about all holders of
concessions and permits will be available to the public.
* New Spectrum Use Classifications. Five types of spectrum use were
defined in the new law:
(1) Spectrum for Free Use. Frequency bands which can be used by the
public without the need for a concession, permit, or registration;
(2) Spectrum for Specified Uses. Frequency bands which can be used
subject to grant by means of a concession;
(3) Spectrum for Official Use. Frequency bands designated for the
exclusive use of the federal, state and city governments, which
will be authorized by direct assignment;
(4) Spectrum for Experimental Use. Frequency bands which may be used
under grant of a direct and non-transferrable concession to verify
the technical and economic viability of technologies under
development both in Mexico and in foreign countries, for
scientific purposes or temporary equipment tests; and
(5) Reserved Spectrum. Frequency bands not assigned.
* New Service Authorization Requirements. Three types of authorizations
were defined in the June 1995 legislation:
(1) Concessions are required to use or "exploit" frequency bands in
national territory (except those designated as "free use" or
"official use"); to install, operate and exploit public
telecommunications networks; to occupy geostationary orbital
positions and satellite orbits assigned to Mexico, and to exploit
their respective frequency bands; and to exploit the transmission
and reception rights in frequency bands associated with foreign
satellite systems which cover and can provide services in Mexico.
Concessions will be awarded for spectrum frequency bands for
specified uses. Concessions generally will be granted by means of
public bids, except that for experimental uses they will be
awarded directly by SCT.
(2) Permits are required in order to establish, operate or exploit the
commercialization of telecommunications services that do not
constitute a public telecommunications network; and to install,
operate or exploit transmitting earth stations.
(3) Registration is required for the selling of value added services.
* Flexible Service Provision Rules. Public Telecommunications Networks
(PTNs) will be able to offer all types of services over their networks
(unrestricted). Private telecommunication networks generally do not
need authorization to operate, but will require a concession if they use
radio spectrum or are used to provide commercial services. In general,
new PTN concessions may not begin sale of basic long distance telephone
service until after 10 August 1996.
* Auctions Feasible. The new law gives the Secretary of Communications
the authority to publicly bid all concessions, which may be granted for
any non-governmental use of the frequency spectrum (including for
satellite orbital positions and orbits, but excluding traditional radio
and television).
* Satellite Service Provision. Concessions may be granted to individuals
or firms constituted under Mexican law for the right to transmit and
receive signals associated with foreign satellite systems which cover
and can provide services in Mexico to businesses organized under Mexican
law, as long as (1) there are treaties on the subject with the country
which has licensed the satellite, and (2) the administration of the
country of the foreign satellite system contemplates reciprocity for
Mexican satellites. International satellites established through
multilateral treaties can also operate in Mexico. Domestic Mexican
concession holders may sell satellite services in other countries in
accordance with relevant laws of recipient countries.
* Intellectual Property Rights (IPR). Concession holders which distribute
signals in Mexico must respect the intellectual property rights of the
programs they transmit. Holders of concessions to transmit/receive
foreign satellite signals must ensure the same legal respect for
intellectual and industry property rights.
* Earth Station Operation. Permits are required for transmitting earth
stations. No permit is required for the installation or operation of
receive-only earth stations.
* Value-Added Services. Value-added service provision only requires
registration with the Secretary of Communications.
* Interconnection. PTNs are required to adopt designs of open network
architecture. Interconnection must: (1) be offered through
disaggregated (unbundled) and non-discriminatory tariffs, (2) be
available to all members of the public as defined in the concession, (3)
be available at every switching point or other points where technically
feasible, (4) permit resale, (5) provide all necessary billing
information to users and resellers, (6) enable telephone number
portability, and (7) permit the connection of terminal equipment, inside
wiring, and private user networks. Interconnection networks must
maintain separate accounting for services with disaggregated tariffs
starting January 1, 1996.
* Tariffing. Proposed tariffs, including those for interconnection, must
be registered with the Secretary of Communications for public review.
No discriminatory practices in tariffing will be accepted. Tariffs
should seek to recover at least long-term average incremental cost.
Interconnection tariffs must be registered and applied for beginning
September 1, 1995.
* New Independent Regulatory Organization. No later than 10 August 1996,
the Federal Government must create an independent organization with
procedures and operations which are autonomous from the Secretary of
Communications and Transportation, and with the organization and
facilities necessary to regulate and promote the efficient development
of telecommunications in the country. The new regulatory entity will be
created by presidential decree, and details on its design, jurisdiction
and procedures are just now being developed.
Reorganization of Mexico's SCT and SCDT
The Mexican Secretar¡a de Comunicaciones y Transportes (SCT) is a broad
ministry encompassing not only telecommunications, but also highways,
railways, aviation, ports, and the national merchant marine. Within the SCT
is the Subsecretar¡a de Comunicaciones y Desarrollo Tecnol¢gico (SCDT) under
which telecommunications are regulated and controlled. The law authorizing
SCT's reorganization entered into force on June 21, 1995. The following
description of the reorganization and attached organizational chart are
current as of October 1995.
SCDT Undersecretary. Starting in late 1994, Carlos Casasus was appointed to
the post of Undersecretary of SCDT. During the first half of 1995, he
appointed four Director Generals in anticipation of the establishment of four
General Directorates under the new law.
Director General - Networks and Radiocommunications. Luis Miguel Alvarez.
Responsibilities include to:
... Implement policies and licensing for, and oversee the provision of all
radiocommunications and telephone network services - both private and
public.
... Develop tariffing rules and procedures for radiocommunications and
telephone networks, and register, modify or cancel tariffs, in
coordination with the DG Telecommunication Policy.
... Integrate programs for domestic telecommunications development.
... Collect fees and control the rights relating to radiocommunications and
telephone networks.
... Monitor the observance of the State's exclusivity in the provision of
telegraph, post and satellite services.
... Foster development of rural telephone services.
... Implement reclamations, seizures, expirations, revocations, and
abandonments related to telephone, radiocommunications, and other
services.
... Inspect the provision of postal services.
Director General - Broadcasting Systems. Starting in July 1995, Federico
Gonzalez Luna. Responsibilities include to:
... Apply and monitor regulatory compliance for radio and television
stations, as well as for cable television (CATV), "restricted" (or
"limited") television and other similar services.
... Establish the technical characteristics, equipment, and devices which
may be applied to radio, television, CATV and restricted TV systems.
... Establish measures to prevent non-compliance with the legal, technical
and administrative rules, to advise offenders, and to impose, reduce or
cancel sanctions.
... Authorize modifications to the operational characteristics of radio
stations, restricted television, and other services.
... Advise on the exportation of equipment, devices, and material used in
radio, television, CATV, and restricted TV signals.
... Implement reclamations, seizures, expirations, revocations, and
abandonments related to radio, television, CATV, restricted TV and
other
similar services.
... Define and apply specific tariff policies, in coordination with the DG
Telecommunication Policy.
... Assist, through research, improvements in service quality.
Director General - Telecommunications Policy and International Negotiations.
Dr. Rafael del Villar Aldrich, PhD. Responsibilities include to:
... Develop and propose the policies for the establishment and use of
telecommunications services, radio, television, CATV, restricted TV,
and
other services.
... Develop coordinated programs and projects to foster new
telecommunications services.
... Participate in the definition of policies for post and telegraph
services.
... Carry out coordinated studies on the development of new
telecommunications services.
... Publish the laws relating to available frequencies and channels for
telecommunications services, radio, TV, CATV, restricted TV and other
services.
... Manage the applications for concessions, permits, and authorizations
for
installation, operation, and exploitation of telecommunications, radio,
TV, CATV, and restricted TV systems and services.
... Design and prepare the basis for specific tariff policies for the
different communications and postal services.
... Sanction or approve telecommunication networks interconnection
agreements.
... Propose coordinated positions of the SCT at international meetings;
oversee compliance with agreements reached at those meetings.
... Participate in the preparation of the annual program to release,
retire,
or substitute postal stamps and franked forms.
... Formulate policies and directives for the preparation of
telecommunications statistics in coordination with other parts of the
Government.
... Negotiate and authorize all the actions which modify the operational
characteristics of radio stations, restricted TV, and other services.
... Promote new strategies for private investors to participate in
communications development.
... Conduct studies on the development of the postal services and postal
shipments other than mail.
... Establish the positions of the SCT and define delegations for fora and
international organizations specialized in communications, through
inter-agency coordination, and comments from industry, service
providers, associations and professional colleges.
... Survey international telecommunications markets, new technologies, and
regulatory trends in order to inform other agencies in the Government
and national public and private institutions.
... Coordinate international communications matters and efforts with the
Secretariat of Foreign Relations, Commerce and Industrial Development.
... Coordinate and apply the procedures for obtaining and coordinating
orbital positions and satellites.
Director General - Spectrum Administration. Starting in August 1995, Dr.
Enrique Melrose. Responsibilities include to:
... Authorize the assigned frequencies which correspond to all applications
for concessions and permits and authorizations recommended by the DG
for
Telecommunications Policy and International Negotiations.
... Coordinate the allocation of frequencies and the use of computerized
frequency management systems with the SCT Centers.
... Regulate the functions, develop appropriate objectives and goals, and
evaluate the operations of the SCT Centers and Monitoring Centers at a
national level in coordination with the competent administrative
departments.
... Participate in international meetings in order to oversee agreements on
the use of the radioelectric spectrum.
... Conduct studies on the use and development of the radioelectric
spectrum; plan, register and monitor the functioning of radio (and TV)
broadcasting, CATV, restricted TV and other services.
... Prepare and maintain the Public Spectrum Register, and develop the
means
to make it available and accessible to users.
... Conduct technical inspections on telecommunications service systems or
networks which are subject to concessions, permits, or registration.
... Develop computer communications with SCT Centers.
... Assess the competency of technical personnel providing services,
design,
installation, and construction of equipment or instruments for
operation
in telecommunications systems subject to concession or permits; grant
certifications and maintain a registry of telecommunications experts.
... Design and install the SCDT telecommunications network at a national
level.
... Approve certification entities, test laboratories and validation units;
issue such certifications.
... Recommend procedures for exporting franchise machinery.
... Establish the specifications and characteristics under which all
systems, services, apparatus, and devices shall be subjected.
.. Initiate reclamations, seizures, expirations, revocations, and
abandonments of frequency assignments.
... Define tariffs for those activities under its responsibility, in
coordination with the DG Telecommunication Policy.
General contact information for SCT is:
Secretariat for Communications and Transports
Subsecretariat of Communications and Technological Development
Ave. Universidad y Ave. Xola
Cuerpo 6, 1er Piso
Colonia Narvarte
03028 Mexico, D.F.
Tel: (52-5) 530-3060
Secretariat for Communications and Transports
International Relations Coordination
Avenida Eugenia No. 197
Col. Vertiz Narvarte
Del. Benito Juarez
03600 Mexico, Mexico D.F.
Tel: (52-5) 669-0561
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