Mexican Dark-Fibre Auction Kicks Off

The Communications and Transport Ministry (SCT) launched yesterday an auction for three concession licences to operate two strands of dark fibre belonging to the Federal Electricity Commission (CFE). The CFE's network consists of 295 segments with a total length of 19,647 kilometres and an additional 34 segments of 1,739 kilometres, which are expected to be built by the future winners of the auction. As part of the tender process, the network has been divided into three main routes:

Concessions, valid for 20-year period and renewable for an additional 10, are expected to be awarded on 9 June.

Outlook and Implications

Competition in the Mexican fixed-line market is currently restricted by Telmex's monopolistic position; the operator controls more than 90% of fixed lines (see Mexico: 7 July 2009: Mexican Anti-Monopolies Commission Ratifies Ruling on Telmex's Dominant Position). The Comisión Federal de Competencia (CFC) issued a final ruling on 6 July 2009 confirming the dominant position of fixed-line incumbent Telmex in local transit and wholesale leasing of dedicated lines. According to the resolution, Telmex has substantial power in 191 areas of local telephony service, 7 of which are shared with its subsidiary operator, Telenor. Telmex is also considered dominant in dedicated lines for national and international long-distance interconnection (see Mexico: 7 July 2009: Mexican Anti-Monopolies Commission Ratifies Ruling on Telmex's Dominant Position). 

The auction is expected to create an alternative to Telmex, helping to raise competition levels and reduce the cost of telecoms services in the country. The measure will also improve network coverage in underserved areas of the country, such as the states of Oaxaca and Chiapas. Spanish operator Telefónica has already expressed its interest in participating in the CFE's fibre-optic tender (see Mexico: 21 May 2009: Telefónica to Participate in CFE's Fibre-Optic Tender). In 2009 the Spanish operator confirmed its interest in increasing its network coverage in Mexico, paying special attention to the broadband market as a key segment in its future development strategy. The head of Telefónica Latinoamérica, Eduardo Navarro, said in 2009 that the company had shifted its focus away from local loop unbundling—a process highly opposed by national incumbent Telmex—towards issues such as interconnection, interoperability, and the dark-fibre concessions. Other companies, such as Grupo Televisa, which controls major cable operators Cablevisión, Cablemás, and Televisión Internacional (TVI); and trunking operator Nextel of NII Holdings could be interested in the process.