Convergencia Research, Consultoría especializada en Latinoamérica y Caribe
Monday, July 02, 2012

Return of PRI to government will increase the power of Telmex and Televisa

The president-elect Enrique Peña Nieto will maintain the 49% cap on foreign investment. Legislators regarding media networks gain presence in Congress.

The triumph of Enrique Peña Nieto in the presidential election last night will substantially change the Mexican media and telecommunications environment. The candidate of the alliance between the Institutional Revolutionary Party (in Spanish: Partido Revolucionario Institucional, PRI) and the Mexican Green Party (in Spanish: Partido Verde Ecologista Mexicano, PVEM) -which reached 37.35% of the vote, with 78.98% of the ballots counted- has not given any definition to the Policy for the sector nor who, will be appointed within the cabinet, as next head of the Secretariat of Communications and Transport.

Beyond the rhetoric, proposals such as "to promote competition and fight monopolies" and in a more explicit definition, as the fund of US$ 100 million annually with soft loans and support programs to enable SMEs to incorporate ICT in their processes, Peña Nieto has not included telecommunications in his schedule of commitments, containing from reform proposals -such as reducing the number of deputies in Parliament-, up to infrastructure projects such as the construction of highways and extensions  of railway networks.

Nevertheless, the return of the PRI government will not alter the map of the area, set in the last twelve years of  Governments belonging to the National Action Party (in Spanish: Partido de Acción Nacional, PAN). Despite promises to "due away with monopolies," the management of outgoing President Calderón helped shape a market split up between giants Televisa and América Móvil (Telmex), with little room for new players. While Calderon presented some measures of importance, such as spectrum and fiber optic auctions, pressure from Televisa and Telmex slowed down reforms to regulations as well as executive measures, such as bidding for a third TV network, planned since 2007 and recently announced this year. To make matters worse, during 2012 the Federal Competition Commission (in Spanish: Comisión Federal de Competencia, COFECO) reversed two key measures for both groups: first, gave up the fine of nearly US$ 1 billion applied to América Móvil for monopolistic practices, and secondly, authorized Televisa to acquire 50% of the mobile operator Iusacell, owned by TV Azteca, the second largest television station in the country.

Calderón has never presented a strategic plan to unblock negotiations and disputes of two key issues:  -that he has not been able to solve- the entry of Telmex to Triple Play and removing restrictions on foreign direct investment, which is limited to 49% -with the exception of mobile telephony-. With the approval of the Interconnection Framework, this year, Telmex could directly enter the video market, which already competes with packages of services that include Dish’s DTH offer. As for the full opening to foreign capital, Peña Nieto manifested his rejection in one of his few explicit definitions for the sector. Speaking to the press, Peña Nieto said that telecommunications is "strategic, countries have very restrictive and very nationalistic policies where other countries are not allowed to invest.  One should prioritize national investments in strategic issues, such as telecommunications. "The position of the president-elect is in line with PRI's policy, which in the past six years refused to discuss the issue in Congress.

One of the controversial issues of the campaign was the debate on the extent of the relationship between Peña Nieto and Televisa. Manuel López Obrador,  the defeated presidential candidate for the center-left alliance led by the Democratic Revolution Party (in Spanish: Partido de la Revolución Democrática, PRD) -won 32.53% of the votes-, had accused Peña Nieto for being a little more than a spokesperson of the media chain. Meanwhile, the U.S. newspaper The Wall Street Journal (WSJ) said that behind the political career of Peña Nieto, one can find the station's vice president, Alejandro Quintero. The newspaper said Quintero, vice president of sales and marketing for Televisa, was responsible for the strategy to position Peña Nieto.

But aside from the fireworks of the election campaign, it became clear that the presence of lawmakers tied to the interests of the broadcasting sector is a phenomenon that will continue with the new government of the PRI. The ' Election Observation Committee (in Spanish: Comité Ciudadano para la Observación Electoral, CCOE) announced last June that at least 18 candidates for deputies and senators are linked to media networks. Among them: Enrique Cárdenas del Avellano (PRI), broadcaster, shareholder of Organización Radiofónica Tamaulipeca and of Victoria Radio Publicidad, Jorge Mendoza, who served as Vice President of Information and Public Affairs at Televisión Azteca and president of the Chamber of the Radio and Television Industry (in Spanish: Cámara Nacional de la Industria de la Radio y Televisión, CIRT), is currently a senator and will go to the Lower House; congressman Gerardo Flores, president of the Committee on Radio, Television and Film, who worked in the Regulatory Analysis of Televisa, also held a seat for the same party in the Senate.

The PRI-PVEM has even presented as candidates: Fernando Azcárraga López, a cousin of Emilio Azcárraga,  owner of Televisa and Ninfa Salinas, daughter of the owner of TV Azteca, Ricardo Salinas Pliego.

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