Mexico’s Federal Institute of Telecommunications, Ifetel, which assumed oversight of the country’s $30 billion telecommunications industry last September, is busy making moves that could reshape the country’s TV, cable and telco businesses — and open up the field to outside investors.

In the past few weeks, it enacted regulations meant to smooth the way for new over-the-air broadcasters to enter the market, enacted must-carry, must-offer rules that apply to the nation’s TV duopoly of Televisa and TV Azteca — which together have about a 95% market share — and also announced auction rules for as many as two new over-the-air broadcasters, which must be majority owned by Mexican interests.

At this point, no U.S. player appears to be mounting an effort to try to take a minority stake in advance of the June 17 deadline to apply to be included in the bidding process.

Ifetel, which replaced the old Federal Telecommunications Commission, Cofetel, was launched after last year’s sweeping telecom bill was pushed through as part of Mexico President Enrique Pena Nieto’s historic reform blueprint, dubbed the Pact for Mexico, which also saw passage of major new regulations in energy, tax, finance, education and politics.

Televisa and Azteca have been accused of influencing elections, giving free publicity to friends and punishing enemies. But an emboldened Ifetel on March 6 declared Televisa, held by Emilio Azcarraga, and Grupo Carso, the umbrella corporation owned by Carlos Slim, to be dominant players in TV and telco, respectively. This opened the door to regulations meant to level the national playing field.

The biggest impact of the new rules and regs will be felt by Televisa, with a 70% share of the Mexican terrestrial market. Some insiders suggest the company will suffer a possible 10% to 20% market share loss over the next few years due to the new laws.

Televisa also owns a host of cablers, outright or in partnership, and satcaster Sky; holdings in the sector are increasingly important revenue generators, with Mexico’s pay TV penetration growing to 48% this year from 27% at the end of 2010.

Ifetel’s decisions came with a list of new rules that Carso, Televisa and in some cases Azteca must now follow, and in Televisa’s case require it to make its ad rates and fee structures public, and share its massive infrastructure for a set fee to any broadcaster that asks to use its pipes.

Further, the law blocks companies with more than 12 MHz in any market — which includes Azteca — from gaining exclusive rights to premium events such as the Olympics, the World Cup finals and the Mexico Soccer League playoffs; Televisa’s soccer league coverage is second only to telenovelas as a ratings generator for the conglom.

“It’s a demonstration that the government is taking the implementation of the reforms seriously,” says Marco Oviedo, chief economist at Barclays Mexico.

In a separate ruling a week earlier, Ifetel ordered must-carry and must-offer rules be applied to two channels each owned by Televisa and Azteca, requiring them to supply their feeds for free, in markets where their signals are available over the air, to all pay TV operators.

That includes offering the free feeds to Dish Network — over recent formal protests from Azteca. Dish has a partnership with Slim’s fixed-line service, Telmex. And more good news for Slim: The regulator ruled the Dish-Telmex partnership does not constitute a violation of a previous regulation that forbade any of Grupo Carso’s subsidiaries to enter the feevee market, long an aspiration of Slim, whose mobile services unit Telcel holds about 70% of the cell-phone market in Mexico, with his Telmex representing 80% of fixed-line subscriptions.

Ifetel’s regulatory moves are opening the market to new over-the-air broadcasters, too, inasmuch as they bar Televisa and Azteca from influencing or participating in license auctions, partnering with bidders, owning stock in any companies that bid or sharing board members with them.

Ifetel commissioner Fernando Borjon said at a press conference last week that the government expects rollout of a new television channel within five years, noting that the new rules forcing Televisa to share its infrastructure at set fees should help reduce the level of investment needed by the new player.

Televisa has said on multiple occasions that it welcomes greater competition in the TV marketplace and is not looking to fight the changes. But last month Televisa questioned the regulator’s ability to enforce the must-carry, must-offer rules, moving Pena Nieto to intervene, asking the Supreme Court to clear the way
for the Ifetel to carry out its ruling. Clearly, the fight is not yet over.