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Telmex pay TV service nixed

Mexico's government denies permit

MEXICO CITY — Billionaire Carlos Slim’s long-deferred dream of entering Mexico’s TV market is back on ice, following last Friday’s ruling that denied his Telmex telco access to the smallscreen promised land once again.

The Secretariat of Communication and Transportation ruled that Telmex did not meet federal requirements for connecting other carriers to its network efficiently and failed to provide enough information for the government’s consideration of the matter.

The decision followed a recent federal court order telling SCT to rule on the matter after years of relative inaction.

“What surprised us about the response was that the basis is the lack of compliance with the Convergence Agreement,” Mexico’s longterm communications master plan for convergence, said Tomas Lajous, a media analyst with investment bank UBS. “The court order that obliged the (Secretariat) to resolve, established that the decision had to be taken under the notion that such requirements had been met.

“With this, we expect Telmex to go back to the courts and ask for reconsideration.”

Market leader Televisa, headed by Emilio Azcarraga, and No. 2 web TV Azteca, founded by Ricardo Salinas Pliego, control some 94% of the terrestrial TV market.

The owners of both recently announced their decision to become partners in the mobile venture Iusacell, going head-to-head with Slim’s wireless empire Telcel.

While that move is largely considered to be a shoo-in with regulators, the administration of President Felipe Calderon has been standing up to Telcel and Telmex in the last couple of months, forcing down some of the highest interconnection rates in the world and handing Telcel a hefty $1 billion fine that appears to be sticking.

The so-called Battle of the Billionaires centers around the future of media and content distribution in Mexico and could have a larger impact for other nations preparing their own leap to triple-play and four-play services, bundling TV, voice, internet and mobile services.

In the end, analysts like Lajous see regulators folding to Slim eventually:

“The decision increases the noise level for the sector, as the government continues to resist extending Telmex’s services and gives arguments to challengers disputing interconnection with the incumbent. But all other actors are pressing the government to agree to Telmex’s pay TV, or look for a way to get around it,” said Lajous. “In the end, Telmex should get its pay TV and this still could come as early as this year.”

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