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Mexico's Anti-Trust Agency Starts Mobile Telephony Market Probe

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MEXICO CITY (Dow Jones) Mexico's anti trust agency, the Federal Competition Commission, or CFC, has launched separate investigations into the country's mobile telephony and broadband Internet markets.

In a statement published in the federal government's official gazette, CFC said it will investigate the fees mobile operators charge other telecommunications firms to terminate phone calls on their networks.

The anti-trust agency said wireless carriers charge rivals termination fees that are higher than what they bill their own clients to make on-net calls.

CFC also plans to launch an investigation into possible market dominance in the fixed-line telephony market during the next few days, said an anti-trust official who asked not to be named.

Mexico's telecommunications industry is dominated by fixed-line operator Telefonos de Mexico and the TelCel unit of wireless giant America Movil. Both firms are controlled by Mexican billionaire Carlos Slim.

TelCel had about 74% of the country's 64.6 million mobile users at the end of September, while Telmex controls more than 90% of Mexico's fixed lines with about 18.2 million lines.

"We will be following the investigation and will cooperate if asked to do so," America Movil spokeswoman Patricia Ramirez said.

TelCel and Telmex have maintained their grip on the telecommunications industry thanks in part to their size and marketing savvy, while rivals, until recently, suffered from financial problems and poor strategy.

The decision by many new entrants in the 1990s to focus on long-distance phone service and high-end cellular users left them chasing after dying or niche markets, while TelCel grew in leaps and bounds offering cheap mobile phones to the masses and Telmex moved into the lucrative broadband market.

Earlier in November, the No.2 mobile operator Telefonica Mexico, a unit of Spain's Telefonica, filed several complaints with CFC against TelCel and Telmex.

Telefonica Mexico asked the agency to force the two firms to connect rivals to their networks on non-discriminatory terms, and put an end to anticompetitive practices such as TelCel offering calls between its clients at prices below what it charges rivals to terminate calls made by their clients on its network.

Regulators and President Felipe Calderon, who made boosting competition in sectors like telecommunications part of his presidential campaign last year, have shown more willingness to boost competition in Mexico's economy than their predecessors.

A new antitrust law that went into effect last year has also given the CFC greater power to investigate and sanction monopolistic practices.

For its part, telecommunications regulator Cofetel recently ordered Telmex to allow two cable TV companies to connect to its network, and told the fixed-line giant it can't use foreign ownership restrictions as a pretext to deny network interconnection to a unit of Telefonica Mexico.

In a separate statement published in the official gazette Friday, CFC said it is also investigating possible monopolistic practices in the residential broadband market.

Although Telmex is the country's largest broadband provider, with 2.7 million accounts at the end of September, cable TV operators have started gaining market share by offering consumers pay-TV, phone and Internet services in a single package.

Telmex officials declined to comment on the investigation.

Telmex, which is prohibited from offering its own television service until it offers number portability and interconnection to all of its competitors, has complained that cable operators enjoy regional pay-TV monopolies.

In what was seen by some analysts as a bid to shield its fast-growing international operations from regulatory actions in Mexico, Telmex said earlier this month it will spin off its Latin American businesses and Yellow Pages unit into a publicly traded company.

The L shares of America Movil (AMX) closed 2.3% higher at MXN33.55 Friday, while Telmex shares surged 4.5% to MXN20.29.

-By Ken Parks, Dow Jones Newswires, 52-55-5080-3453, ken.parks@dowjones.com

(END) Dow Jones Newswires

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Tags: telefonica  america movil  anti-trust  number portability  telcel  antitrust  cofetel  termination fees  telmex  interconnection  termination  yellow pages  telefonica,  Mexico