Zero Rate: An issue to be resolved in Mexico’s Supreme Court of Justice

24 July 2017
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In the next weeks, the Second Chamber of Mexico’s Supreme Court of Justice (Suprema Corte de Justicia de la Nación – “SCJN”) will analyze, discuss and resolve on the various writs of amparo promoted by America Movil, against the prohibition to charge other telecommunications service providers for terminating calls on its network, also known as zero rate.

Zero rate is regulated in section a) of article 131 of the Federal Telecommunications and Broadcasting Law (Ley Federal de Telecomunicaciones y Radiodifusión – “LFTR”) that established the following:

Article 131. When the Institute considers that there are effective competition conditions in the telecommunications sector, it shall determinate the criteria according to which concessionaires of fixed and mobile public telecommunications networks shall enter into, as mandatory, agreements for the reciprocal compensation of traffic, without any charges for termination, including calls and short messages.

During the time when it exists a predominant economic agent in the telecommunications sector or an economic agent that has direct or indirect national participation of more than 50% in the telecommunication sector, measured this percentage, either by the number of user, subscribers, traffic in its networks or its used capacity according to the data available to the Institute, the fixed and mobile traffic termination rates, including calls and short messages, will be asymmetric according to following:

a) Agents referred to in the previous paragraphs, will not charge the other concessionaires for the traffic that terminates in its network, and

b)...

In this case, America Movil, as a preponderant economic agent, cannot charge concessionaires that provide similar services for using its infrastructure for the termination of calls on its network.

One of the main objectives of the writs of amparo promoted is to declare the unconstitutionality of the aforementioned precept, as America Movil considers that Congress invaded the Federal Institute of Telecommunications (Instituto Federal de Telecomunicaciones – “IFT”) powers to regulate the telecommunication services rates.

This issue is of absolute importance in the light of the telecommunications constitutional reform because, if the unconstitutionality of section a) of article 131 of the LFTR is declared, America Movil may, among other things, request the payment of what it ceased to receive for said prohibition and it will be able to charge from now for the termination of traffic on its network.

There are opinions that consider a resolution in this regard as a serious blow against the telecommunications reform and its effects, having serious consequences for competitors and users, and reversing the price reduction for telecommunication services, as well as the preponderant economic agent’s possibility to increase its power in the market by displacing other telecommunications service concessionaires.

On the other hand, some parties consider that the telecommunications market would not be affected, since it opens the competitor’s possibility for investing in telecommunications infrastructure development, as well as considering IFT would regain power on its constitutional autonomy, which should impose the zero rate to the said preponderant economic agent and no the Mexico’s Congress through the LFTR.

Some legislators who participated in the telecommunications constitutional reform implementation have come to defense of the same arguing that Mexico’s Congress acted within its powers to issue laws on general channels of communication, information and communication technologies, broadcasting, telecommunications, including broadband and Internet, among others, in terms of the section XVII of the article 73 of the Political Constitution of the United States of Mexico, it has even been argued that such zero rate does not have the nature of a rate to be imposed by IFT, but is an express prohibition in the LFTR as part of a public policy in the telecommunication sector.

Related items

  • Interconnection rates for mobile telecommunications services that will govern in 2018

    The Federal Institute of Telecommunications (Instituto Federal de Telecomunicaciones – “IFT”) resolved the necessary technical conditions for the interconnection between concessionaires, and determined the interconnection rates that will be used in the face of disagreements that arise in this regard.

    The IFT resolved unanimously that the concessionaries must pay the Preponderant Economic Agent (Agente Ecconómico Preponderante – “AEP”) the following rates:

    • For termination in the mobile network of the AEP by the Local Service in users under the modality "caller pays": $0.028562 pesos per minute of interconnection.
    • For short message termination services (SMS) in mobile users: $0.007269 pesos per message.
    • For origination services of the Local Service in fixed users: $0.003092 pesos per minute of interconnection.
    • For transit services: $0.003809 pesos per minute.

    The interconnection rates that will be paid to concessionaires other than the AEP will be the following:

    • For termination in the mobile network of the AEP by the Local Service in users under the modality "caller pays": $112799 pesos per minute of interconnection.
    • For short message termination services (SMS) in mobile users: $017355 pesos per message.
    • For origination services of the Local Service in fixed users: $002836 pesos per minute of interconnection.
    • For transit services: $016082 pesos per minute.

    The resolution of the IFT will be published in the Federal Official Gazette (Diairio Oficial de la Federación – “DOF”) in the coming days, and will enter in force as of January 1st, 2017.

    With the previous resolution, the IFT exercised its authority to regulate asymmetrically the telecommunications service concessionaires in order to eliminate the barriers to free competition, and it complies with what was ordered at the ruling of the Supreme Court of Justice of the Nation in the case of the "Zero Rate" already analyzed.

  • Tarifas de Interconexión para servicios de telecomunicaciones móviles que regirán en 2018

    El Pleno del Instituto Federal de Telecomunicaciones (“IFT”) resolvió las condiciones técnicas necesarias para la interconexión entre concesionarios, y determinó las tarifas de interconexión que utilizará ante los desacuerdos que al respecto se presenten.

     

    El Pleno del IFT resolvió por unanimidad que los concesionarios deberán pagar al Agente Económico Preponderante (“AEP”) las siguientes tarifas:

    • Por terminación en la red móvil del AEP por el Servicio Local en usuarios bajo la modalidad “el que llama paga”: $0.028562 pesos por minuto de interconexión.
    • Por servicios de terminación de mensajes cortos (SMS) en usuarios móviles: $0.007269 pesos por mensaje.
    • Por servicios de originación del Servicio Local en usuarios fijos: $0.003092 pesos por minuto de interconexión.
    • Por servicios de tránsito: $0.003809 pesos por minuto.

    Las tarifas de interconexión que se pagarán a concesionarios distintos al AEP serán las siguientes:

    • Por terminación en la red móvil por el Servicio Local en usuarios bajo la modalidad “el que llama paga”: $0.112799 pesos por minuto de interconexión.
    • Por servicios de terminación de mensajes cortos (SMS) en usuarios móviles: $0.017355 pesos por mensaje.
    • Por servicios de terminación del Servicio Local en usuarios fijos: $0.002836 pesos por minuto de interconexión.
    • Por servicios de terminación de mensajes cortos (SMS) en usuarios fijos será de $0.016082 pesos por mensaje.

    La resolución del Pleno del IFT será publicada en el Diario Oficial de la Federación (“DOF”) en los próximos días, y entrará en vigor a partir del 1 de enero de 2018.

    Con la anterior resolución, el IFT ejerció su autoridad para regular de manera asimétrica a los concesionarios de servicios de telecomunicaciones con el fin de eliminar las barrares a la libre concurrencia, y da cumplimiento a lo ordenado en la sentencia de la Suprema Corte de Justicia de la Nación en el caso de la “Tarifa Cero” ya analizada.

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    Practitioners from the civil and commercial litigation area of Acedo Santamarina designed the case based on disputes in which the firm's lawyers have successfully represented the interests of our clients, combining litigation, negotiation and other alternative dispute resolution processes.

    The students were evaluated by lawyers from our firm, government agencies and other well-known firms in Mexico City.

  • Acedo Santamarina has been recognized by The Legal 500

    acedo santamarina es reconocido por the legal 500

    For the top law firms for 2018

  • Acedo Santamarina has been recognized by The Legal 500

    The Legal 500 has published its research for the top law firms for 2018. Our firm has been recognized as a Band 1 leading firm in TMT (Telecoms, Media, Technology) practice area in Mexico. Likewise, our Partner Andrés Acedo Moreno has been recognized as a Band 1 leading lawyer in the TMT practice area, and our associate Juan Fernando Espinosa as a next generation lawyer in the TMT practice area.

    Also, our firm has been recognized as Band 6 leading firm in Tax practice area in Mexico.

    Some of the comments of the publication are the following:

    • Andrés Acedo Moreno, highly knowledgeable in telecoms matters, leads a five-strong team. The practice group has extensive experience advising both international and domestic telecoms companies as well as state bodies (such as the IFT) on transactional and regulatory telecoms matters.
    • Associate Juan Fernando Espinosa’s practice includes administrative and contentious administrative matters, particularly in relation to government bidding procedures and telecommunications projects, and also has extensive niche expertise in the satellite sector.
    • Rafael Tena Castro an expert in his field (Tax) who develops innovative solutions and ensures delivery within agreed timeframes, moreover, he grasps the importance to of the transactions.

    We are very honored to be recognized and we confirm our commitment with our clients in providing excellence in our legal services.

    http://www.legal500.com/c/mexico/tmt#table_2833

     

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