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Mexico government telecom bill undermines watchdog: opposition

Mexican billionaire Carlos Slim attends a presentation of a digital platform, which was created in partnership with the Carlos Slim Foundati
Mexican billionaire Carlos Slim attends a presentation of a digital platform, which was created in partnership with the Carlos Slim Foundati

By Gabriel Stargardter and Tomas Sarmiento

MEXICO CITY (Reuters) - Mexico's opposition said on Tuesday a government telecom bill undermines a new watchdog by keeping key regulatory powers in the executive's hands, in a spat that could stall the passage of rules aimed at curbing cell phone mogul Carlos Slim and fellow tycoon Emilio Azcarraga's TV group Televisa.

Mexico's government on Monday sent to the Senate the fine print of its proposal to overhaul deeply uncompetitive phone and TV industries, whose high prices and patchy service are seen by many as a drag on growth.

The bill includes details on the implementation of a constitutional reform approved last year, giving a new regulator wide-reaching powers to police the operations of dominant market players like Slim's America Movil and Televisa, right down to their prices and discounts.

The telecom overhaul, part of a larger batch of reforms ranging from energy to tax pushed through by President Enrique Pena Nieto, has raised hopes Latin America's No. 2 economy is finally serious about busting monopolies.

However, Mexico's two main opposition parties, the conservative National Action Party (PAN) and the leftist Democratic Revolution Party (PRD), have been disappointed by the so-called secondary legislation presented by the ruling Institutional Revolutionary Party (PRI).

On Monday, both parties signed a joint statement saying the PRI's bill erodes the power originally destined for the new regulator, the Federal Telecommunications Institute (IFT), and instead empowers the executive branch for "political purposes."

Then on Tuesday, in a setback for the government as it seeks to sign off on legislation already months behind schedule, opposition lawmakers were joined by telecom experts and civil groups, who called it "unconstitutional," arguing it had been watered down from the original reform.

"There are clear violations to the constitutional precepts approved in the reform," said Purificacion Carpinteyro, a PRD lawmaker in the lower house's radio and television commission.

Speaking on local radio, Irene Levy, head of telecom think tank Observatel, graded the "diluted" bill a five on a scale of 10, compared with the vaunted broader reform passed last year.

Unlike the constitutional reform, which required a two-thirds majority in Congress that the PRI could not muster alone, the secondary laws need only a simple majority in the Senate, before being sent down to the lower house for approval.

The PRI, along with its allies, is just shy of a majority in the Senate, raising questions about the determination of opposition parties to derail the PRI's bill.

Interior Minister Miguel Angel Osorio Chong said it would be "a great shame" if the bill was now not passed.

Under the government's proposal, the IFT will have the power to levy fines of up to 10 percent of revenue in Mexico in the case of a repeat offence. It will also be able to force companies to seek approval annually for interconnection and infrastructure-sharing terms.

(Additional reporting by Lizbeth Diaz and Michael O'Boyle; editing by Simon Gardner and Matthew Lewis)

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