Mexico: TMT Comparative Guide

1 Legal and enforcement framework

1.1 Which legislative and regulatory provisions govern the following in your jurisdiction: (a) Telecommunications; (b) Internet; (c) Media and (d) Social media?

(a) Telecommunications

Telecommunications and media are hot topics for the Mexican government, telecommunications carriers and media operators alike. The modern era began with the privatisation of the Mexican state telecoms company and the liberalisation of the telecommunications sector in 1996. In 2014, the Mexican Constitution was amended to include key concepts and structural provisions related to these fields. Following the amendment of the Mexican Constitution, the Mexican Congress enacted the Federal Telecommunications and Broadcasting Law (published in Mexico's Official Daily on 14 July 2014) as the primary statute governing telecommunications and media.

The Federal Telecommunications and Broadcasting Law constitutes the primary regulatory framework in the fields of telecommunications and media. It is supplemented to a certain extent by:

• the General Communications Law (principally as regards the creation of security interests); and
• the Telecommunications Regulations of 1990 to the extent not superseded by the Federal Telecommunications and Broadcasting Law.

The North American Free Trade Agreement and the US-Mexico-Canada Agreement also provide for certain protections to foreign investment not addressed by the Federal Telecommunications and Broadcasting Law. There are also several official standards that relate to the more technical issues of the industry.

(b) Internet

The Internet is not specifically regulated in Mexico. Rather, it is regulated by scattered provisions stemming from:

• the Constitution (the right to information and to freedom of expression);
• the Federal Telecommunications and Broadcasting Law (net neutrality); and
• the Copyright Law.

There are also relevant provisions in:

• the Code of Commerce, the Banking Law, the Consumer Protection Law and the Civil Law, related mainly to the regulation of electronic signatures and the perfection of agreements;
• the Industrial Property Law related to the protection of intellectual property; and
• the Federal Personal Data Law as regards the protection of personal data.

(c) Media

See question 1.1(a); the sector is additionally regulated by the Law for the Public Broadcasting System of Mexico.

(d) Social media

See question 1.1(b).

1.2 Which bodies are responsible for enforcing the applicable laws and regulations in the relevant sectors? What powers do they have?

The main body in charge of enforcing the telecommunications and broadcasting legal framework is the Federal Telecommunications Commission (FTC). The authority and powers of the FTC stem from a specific constitutional mandate and are spelled out in detail in the Federal Telecommunications and Broadcasting Law. The FTC's authority and powers include:

• the grant and revocation of concessions and permits;
• the imposition of sanctions;
• the analysis of antitrust behaviour;
• the declaration of a concessionaire as dominant or preponderant; and
• the imposition of corresponding market measures with the aim of correcting adverse effects on the market and/or consumers.

To the extent that internet and social media issues are deemed to be connected to the actions of a carrier or permit holder or an element of a telecommunications or broadcasting service, the FTC will assert jurisdiction over them also.

If an internet or social media issue is not deemed to be an element of a service or related to a carrier, other regulators may be involved, including:

• the Consumer Protection Agency;
• the Intellectual Property Institute; and
• as regards personal data, the National Institute for Transparency and Access to Information.

1.3 What is the general approach of those bodies in regulating the relevant sectors?

The general approach of these bodies in regulating the telecommunications and media sectors is the protection of the right to compete in a free market environment without overregulation. Perhaps the sole exception is the telecommunications market, where the incumbent has been found to be preponderant in the sector and is thus subject to certain market restrictions which are intended to be phased out over time. As regards social media and the Internet, the government has struggled to identify how to directly regulate these services or and the companies providing them; thus far, it has only been able to provide for protective measures in connection with privacy, human rights and intellectual property.

1.4 What other industry codes of conduct or best practices are applicable in the relevant sectors?

As stated in question 1.1, a series of official standards have been introduced to homogenise these industries. Other than that, codes of conduct or best practices are creatures of contract and are adopted by those market players that wish to distinguish themselves from the competition.

2 Ownership

2.1 Who is eligible to provide services in the following sectors in your jurisdiction? Are there any restrictions on foreign ownership? Do any domicile requirements apply? What other requirements or restrictions apply in this regard: (a) Telecommunications; (b) Internet; (c) Media and (d) Social media?

(a) Telecommunications

Concessions are issued exclusively to Mexican entities (ie, entities incorporated under Mexican law) for up to 30 years (renewable). Concessions relating to telecoms services are applied for and granted based on the applicant's business plan. In the case of concessions relating to spectrum or orbital positions, the award is subject to an auction and bid process.

Non-concessionaires seeking to resell telecoms services or to operate as a mobile virtual network operator (or mobile virtual network enabler or mobile virtual network aggregator) must obtain a permit. Although nothing in the Federal Telecommunications and Broadcasting Law prevents foreign entities from applying for a reseller authorisation, the Federal Telecommunications Commission's position is that only Mexican entities can apply for permits. There are no restrictions on foreign ownership of a reseller. Telecoms services which are not subject to either a concession or a permit are considered to be deregulated services. As a result, so-called vintage ‘value-added services', which in the past were subject to a registration process, may now be freely offered without registration or a permit.

(b) Internet

If the internet provider is deemed to be a carrier or a reseller, it will require a concession or a permit, respectively, and the rules set out in question 2.1(a) will apply.

(c) Media

As set out in question 2.1(a), except that the maximum permitted percentage of foreign ownership is 49%, provided that such percentage is reduced based on the nationality of the foreign investor or the ultimate controlling entity to reflect such nation's foreign investment restrictions in the broadcasting sector.

(d) Social media

As set out in question 2.1(b).

3 Authorisations/licences

3.1 What authorisations and/or licences are required to operate in the following sectors? Do any exemptions apply? Do these vary depending on the service to be provided: (a) Telecommunications; (b) Internet; (c) Media and Social media?

(a) Telecommunications

Mexican law provides for two types of licences in order to provide telecoms services: concessions and permits. Concessions are issued by the Federal Telecommunications Commission (FTC) to enable the provision of public telecoms services. The Federal Telecommunications and Broadcasting Law provides for four types of concession:

• commercial use concessions;
• public use concessions;
• private use concessions; and
• social use concessions.

Permits apply to resellers of telecommunications services. Any other services are deemed unregulated and may be provided freely.

(b) Internet

An internet provider is not subject to a concession or permit, unless it provides services as a telecoms carrier or a reseller of telecommunications services, in which case it will be regulated by the Federal Telecommunications and Broadcasting Law.

(c) Media

The Federal Telecommunications and Broadcasting Law provides that broadcasting companies require a concession in order to provide media services.

(d) Social media

See question 3.1(b).

3.2 What are the key features of such authorisations/licences?

Concessions: The provision of telecoms services is subject to the grant of a concession. New sector participants must apply for a single concession (see below).

In the case of spectrum, frequency bands are subject to auction and a bidding process. The main change under the Federal Telecommunications and Broadcasting Law is that the chief consideration for the award need not be the economic component of the bid. The law has also shifted the focus of the determination of the floor price of bidding processes. The FTC determines the floor price based on the Ministry of the Treasury's prior non-binding opinion in order to migrate from a revenue collection focus to an industry development-driven focus.

The FTC must publish an auction plan annually. Industry participants may comment on the plan and request that additional frequency bands be added or that the plan be refocused to address specific needs. As in the past, the state maintains sovereign control over the means of communication within telecoms networks.

A new feature incorporated into the Federal Telecommunications and Broadcasting Law is the ‘single' (all-encompassing) concession for telecoms carriers. The single concession is effective for up to 30 years and is renewable subject to:

• an FTC ruling to the effect that the carrier is compliant with its obligations under its existing concessions; and
• the carrier's acceptance of the FTC's terms and conditions.

The acquisition of spectrum through auction is not the only means by which a concession holder can provide telecoms services using spectrum. The Federal Telecommunications and Broadcasting Law provides for two additional options:

• the leasing of spectrum between concessionaires; and
• the acquisition of spectrum from a competing carrier.

Both options require the FTC's prior approval and the acceptance of certain obligations by the lessee or the purchaser of the spectrum – primarily:

• the joint and several liability of the lessee in connection with obligations provided for in the concession of the leased frequency bands; and
• continuity of service obligations where the purchase of spectrum comes with pre-existing obligations and additional obligations imposed by the FTC.

The FTC's decision will include an analysis of the competitive effects of the lease or sale of spectrum.

Permits: Resellers and mobile virtue network operators (mobile virtual network enablers or mobile virtual network aggregators) must obtain a permit (not a concession) from the FTC in order to operate. A permit will be granted for up to 10 years and entitles the holder to:

• access wholesale services offered by concessionaires;
• sell its own services and resell those contracted on a wholesale basis; and
• access its own numbering or that of the wholesaler.

In addition, satellite landing rights (installation and operation of earth stations) and uplinks and downlinks associated with foreign satellites authorised to provide services in Mexico are now subject to a licensing process; whereas the prior telecoms law required a concession.

3.3 What are the procedural and documentary requirements to obtain such authorisations/licences?

See question 3.2. As regards concessions, the application must contain:

• the identification and characteristics of the applicant (a commercial company), its bylaws and articles of incorporation, including the identities of investors;
• the characteristics of the business (eg, business plan, including investment commitments); and
• documentation that supports the applicant's (or its principals') technical and economic wherewithal, and its legal and administrative capabilities.

3.4 What does the authorisation/licensing process involve? How long does it typically take? What costs are incurred?

Regarding concessions, the application must be resolved within 60 days of filing. If the FTC decides that relevant information is missing, it will afford the applicant 30 additional business days to provide the missing information. If the FTC resolves to grant the concession, the interested party will have 20 business days to pay the applicable fees and the FTC will issue the concession title within 15 business days of payment. Finally, once the notification of authorisation has been granted, the FTC has 15 business days to record this in the Public Registry of Concessions.

Authorisation applications will be resolved by the FTC within 30 business days of filing. If this 30-day period expires without a resolution, a favourable resolution will be deemed to have been granted and the FTC must issue a resolution to that effect within 30 business days.

3.5 What are the ongoing rights and obligations of the authorisation/licence holder? How is compliance monitored? What penalties may be imposed for breach?

The basic ongoing obligations of concessionaires or permit holders are:

• to deploy/invest/provide the services proposed in the respective business plan; and
• to abide by the neutrality, interconnection, access and competition covenants provided in the respective concession or permit documents and the Federal Telecommunications and Broadcasting Law.

The penalties that may be imposed for breach of these obligations range from monetary penalties to revocation of the concession or permit.

3.6 For how long is the authorisation/licence valid? Are variations to the terms possible? How is the authorisation/licence renewed?

See question 5.1:

• 30 years for concessions; and
• up to 10 years for permits.

The terms of concessions and permits may be varied with the prior consent of the FTC. A request for renewal of concessions and permits must be filed before the concession or permit expires.

3.7 Can an authorisation/licence be transferred? If so, what is the process for doing so?

Private and commercial concessions may be transferred to a qualified concession holder. However, this requires the consent of the FTC, which will essentially vet the new ownership of the concessionaire. The new concessionaire will be required to expressly accept the terms of the corresponding concession.

While there are no impediments to the transfer of permits, given that a permit to resell services is rather simple to obtain and readily available, in practice a new permit is obtained by the prospective purchaser, which concentrates only on the transfer of customers from one permit holder to the other. This transfer does not require the authorisation of the FTC.

4 Telecommunications

4.1 What provisions apply to the construction of telecommunications infrastructure and the installation of facilities on public and private property?

The construction of telecommunications infrastructure is regulated by the Federal Telecommunications and Broadcasting Law to the exclusion of state or local laws. The law provides for a National System on Infrastructure Information, which records and locates private and public infrastructure. While carriers must comply with zoning and city planning requirements, municipalities and state authorities cannot impose restrictions relating to the deployment or provision of telecommunications services. The installation of facilities on public and private property must comply with the requirement of equal access. Installation in private property is a creature of contract, provided that, once it is made available to one carrier, it must be made available to others on transparent and equal access terms.

4.2 Do any universal service obligations apply in your jurisdiction? If so, what are they and how are they funded?

The Constitution and the Federal Telecommunications and Broadcasting Law address the need to implement the universal service (identified as universal coverage) by increasing the network coverage of telecommunication services areas identified as a priority by the Ministry of Communications, with a focus on voice and internet services. The wholesale carrier (Altan Redes) has recently been restructured and is now controlled by the Mexican government (see question 7).

4.3 How is interconnection regulated in your jurisdiction? What rules and requirements apply in this regard? Are interconnection and network access charges subject to price regulation?

Interconnection started as a creature of contract, but now is sufficiently regulated under the Federal Telecommunications and Broadcasting Law. The law provides for transparent, prompt, non-discriminatory, obstacle-free and efficient interconnection based on networks with open architecture, devoid of contractual barriers. Interconnection agreements must be filed with the Federal Telecommunications Commission (FTC) and the FTC has the authority to resolve any disagreements in connection therewith.

Access and interconnection are regulated by the Federal Telecommunications and Broadcasting Law. The fundamental technical plans for numbering, switching, signalling, transmitting, charging, synchronising and interconnecting are issued by the FTC.

The Federal Telecommunications and Broadcasting Law clearly addresses operators' obligation to interconnect. As the sector regulator, the FTC determines effective competition conditions and issues the rules pursuant to which operators can compensate each other for interconnection. For all practical purposes, interconnection rates are determined by the FTC, particularly in connection with the preponderant carrier.

4.4 What rules and requirements govern the allocation and use of telephone numbers in your jurisdiction?

Numbering is administered by the FTC and both concessionaires and permit holders are entitled to telephone numbers.

4.5 What rules and requirements govern number portability in your jurisdiction?

The Federal Telecommunications and Broadcasting Law:

• provides for the right of customers to free number portability; and
• requires that concessionaires and permit holders permit number portability.

4.6 Are retail customer charges subject to price regulation in your jurisdiction?

Retail customer charges must be filed with the FTC in the Public Telecommunications Registry. Charges are a matter of public record and carriers may not charge prices that differ from those filed on the record.

4.7 Are retail customer terms and conditions subject to regulation in your jurisdiction?

Retail customer terms and conditions are subject to regulation under the Federal Telecommunications and Broadcasting Law and the Consumer Protection Law. The primary regulator in this area is the Consumer Protection Agency.

5 Spectrum use

5.1 How is spectrum use authorised in your jurisdiction? Do any exemptions apply?

Pursuant to the Federal Telecommunications and Broadcasting Law, there are four types of frequency bands of spectrum, as provided for in the National Frequency Table:

• free access;
• reserved;
• protected; and
• useable.

Useable spectrum is subject to concessions for commercial, social, private and/or public use. The Federal Telecommunications Commission (FTC) is required to publish an annual programme addressing the use of spectrum.

In the case of concessions relating to spectrum for private (except experimental) use or commercial use, or orbital positions, the award is subject to an auction and bidding process.

5.2 What is the procedure for allocating spectrum in your jurisdiction?

Via a public auction. The bidding process must specify, among other things:

• the investment commitments;
• the universal service contribution;
• the technical specifications of the project;
• the programming and production specifications;
• the minimal reference value; and
• all other relevant criteria, such as competition safeguards and their weight, which will be taken into consideration by the FTC in the analysis and award process.

If the bids presented are deemed to be insufficient or unsatisfactory in economic terms, or do not satisfy the social objectives identified by the government, the auction process may be cancelled.

Spectrum concessions are valid for up to 20 years and may be renewed.

5.3 How long does it typically take? What costs are involved?

Theoretically, this should not take more than six months. However, the Mexican government has not auctioned significant spectrum in the last 10 years.

5.4 What are the penalties for unauthorised spectrum use or breach of authorisation?

Primarily monetary penalties, but potentially also felony charges.

5.5 Can a spectrum authorisation be transferred? If so, what is the process for doing so?

The transfer of a spectrum concession is subject to the same requirements as the transfer of a telecommunications concession, whereby the primary concern of the FTC is the vetting of the investors acquiring control of the concessionaire.

6 Internet

6.1 What provisions apply to high-speed broadband in your jurisdiction? Are there any government incentives to promote broadband penetration?

The Federal Telecommunications and Broadcasting Law provides for the government's adoption of a policy of universal digital inclusion which includes high-speed broadband internet services in order to make these available throughout the country. The most recent government telecommunications plan includes such objectives. The preponderant telecommunications carrier has a specific obligation to file on a yearly basis its broadband topology and modernisation plans.

There are currently no generally available incentives to promote broadband penetration.

6.2 What net neutrality regulations apply in your jurisdiction? Are any exemptions and/or exceptions available?

The Federal Telecommunications and Broadcasting Law has adopted the following principles relating to net neutrality:

• free access to content, applications and services;
• non-discrimination;
• privacy and transparency of information (related to the type of services offered);
• traffic management; and
• quality of the services and of the infrastructure.

No exceptions are available.

6.3 Are internet service providers (ISPs) obliged to block or restrict access to specific websites or types of content in your jurisdiction?

Yes, where:

• a customer requests it in connection with its access to content, applications or services; or
• a governmental authority requests it in connection with its investigation of a crime.

To this effect, concessionaires must keep for 12 months the relevant data available for consultation in real time.

6.4 Is the use of virtual private networks permitted in your jurisdiction?

Yes, the use of virtual private networks is permitted in Mexico.

6.5 In what circumstances will ISPs be held liable for offending content carried on their networks? What defences are available?

ISPs will be held liable for failing to:

• block offending content once notified by the affected customer or governmental authority;
• offer a parental control feature; or
• publish instructions which allow users to block content.

The typical defence available to ISPs is that they are not required to actively monitor the content carried on their networks.

6.6 How are digital platforms regulated in your jurisdiction?

Digital platforms are not regulated in Mexico as an industry. The regulations applicable to digital platforms stem from various laws regulating commerce in general, such as those addressing:

• consumer protection;
• data privacy and protection;
• copyright; and
• criminal-related cyber activity.

7 Media

7.1 What rules and requirements apply to public broadcasters in your jurisdiction?

See question 7.2.

7.2 What rules and requirements apply to commercial broadcasters in. your jurisdiction?

Commercial broadcasters must broadcast in Spanish and, if the transmission is in a language other than Spanish, must use simultaneous subtitles or translation. Also, broadcasters must reserve certain channels for the transmission of television signals generated by the federal government, depending on the number of channels being aired.

7.3 Do any ‘must-carry' obligations apply in your jurisdiction? If so, what are they and how are they funded?

Yes, must-carry and must-offer features are a requirement of Mexican law and must be provided free of charge to the customer.

7.4 Do any local content requirements apply in your jurisdiction? Do any restrictions apply to foreign content? What exemptions and/or exceptions are available?

There are no specific limits with regard to foreign versus domestic content; except that if the domestic or national independent programming is equal to or exceeds a specific percentage of total programming (currently 20%), the broadcaster may increase advertising time by 2% and 5% respectively.

7.5 What other content requirements and restrictions apply in your jurisdiction? Do these vary depending on the distribution channel (eg, traditional broadcast media versus new media)?

There are no additional content requirements.

7.6 How is advertising regulated in your jurisdiction? Does this vary depending on the distribution channel?

See question 7.4.

8 Competition

8.1 What competition-related provisions (eg, structural or functional separation requirements; significant market power requirements; media plurality rules) apply in the following sectors: (a) Telecommunications; (b) Internet; (c) Media (broadcasting + print) and (d) Social media?

(a) Telecommunications and media

Pursuant to the Federal Telecommunications and Broadcasting Law, the Federal Telecommunications Commission (FTC) has exclusive jurisdiction in connection with the telecommunications and broadcasting sectors' interplay with competition and antitrust-related issues.

In addition to the traditional analysis of competition and antitrust matters, the FTC is vested with the authority to declare and impose restrictions on dominant and preponderant carriers. A carrier is deemed dominant if:

• it engages in anti-competitive behaviour which is illegal by law, regardless of its size and market influence; or
• its actions are deemed to be anti-competitive because of its size and relevant market participation.

A carrier or group of persons will be deemed a preponderant carrier where, by virtue of its involvement in the telecoms sector, such person or group directly or indirectly maintains or attains a participation in excess of 50% in the sector. This percentage is measured nationwide by:

• the number of customers;
• the amount of traffic; or
• the used capacity of the network.

(b) Internet

To the extent that the ISP is a concessionaire or a permit holder, its anti-competitive or antitrust behaviour will be adjudicated by the FTC. To the extent it is not, the Mexican Antitrust Commission will have jurisdiction over such activities.

(c) Social media

See question 8.1(b).

8.2 To what extent can the national competition regulator intervene in the relevant sectors? What is the interplay between the competition regulator and the various sectoral regulators?

The Mexican Antitrust Commission has no jurisdiction over telecommunications or broadcasting matters.

8.3 How are mergers and acquisitions in the relevant sectors treated from a competition perspective?

See question 8.1.

8.4 What other specific challenges or concerns do the relevant sectors present from a competition perspective?

The preponderant carrier status imposed on the incumbent telecommunications operator is analysed every quarter by the FTC. The question is whether the Mexican telecommunications sector is ready for the deregulation of the preponderant carrier.

9 Data security and cybersecurity

9.1 What data security regimes apply in the following sectors: (a) Telecommunications; (b) Internet; (c) Media (broadcasting + print) and (d) Social media?

Data security is regulated by:

• the Mexican Constitution;
• the Federal Law on the Protection of Personal Data Held by Private Parties and its regulations;
• the Privacy Notice Guidelines; and
• the Federal Consumer Protection Law.

The financial sector and public sector have specific regulations on information security.

The regulator is the National Institute for Transparency, Access to Information and Personal Data.

9.2 What cybersecurity regimes apply in the following sectors: (a) Telecommunications; (b) Internet; (c) Media (broadcasting + print) and (d) Social media?

Mexico has no dedicated cybersecurity law; the Federal Law on the Protection of Personal Data Held by Private Parties and its regulations provide the basic framework.

9.3 What other specific challenges or concerns do the relevant sectors present from a data security/cybersecurity perspective?

The lack of a cybersecurity law is a pressing subject to address. In 2022 a US-Mexico working group on cyber issues issued a joint statement identifying a blueprint to follow.

10 Trends and predictions

10.1 How would you describe the current TMT industry landscape and prevailing trends in your jurisdiction? Are any new developments anticipated in the next 12 months, including any proposed legislative reforms?

Telecommunications remains a hot topic in Mexico. The main recent development is the empowerment of the Federal Electricity Commission as a key player (obtaining three separate concessions) in connection with the administration of the deployment of the Mexican wholesale network operated by a concessionaire (Altan Redes) and as a customer of such network. This arrangement is in the execution phase, and many fear it is contrary to the market competition principles enshrined in the Mexican Constitution and the Federal Telecommunications and Broadcasting Law.

There are no material developments to be concerned about in the other sectors.

11 Tips and traps

11.1 What are your top tips for TMT players seeking to operate in your jurisdiction and what potential sticking points would you highlight?

• Closely examine the concession and other related documents of any carrier that you are planning to acquire or partner with, and those of its closest competitors, to gain a clearer picture of the landscape, restrictions, opportunities and pitfalls.
• Engage legal counsel from the start.
• Interact with the Federal Telecommunications Commission (FTC) as early as possible in the process; the FTC – and particularly its Antitrust Division – is always willing to openly discuss structural issues that may be a concern.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.