Judicial reform threatens investments and telecommunications development

The telecommunications reform, decreed in 2013, gave rise to specialized courts and the Federal Telecommunications Institute (IFT) with the aim of ending the era in which companies in the sector constantly promoted disputes that ended up being resolved four years later, due to the lack of specialty of the judges.

But the incorporation of specialized courts – periodically trained – and the regulator – composed of officials with a technical profile in competition and telecommunications issues – streamlined the legal processes promoted by companies.

Cases such as the regulation of América Móvil, Grupo Televisa, and even the bankruptcy of Altán Redes were resolved quickly. The courts also halted the creation of the National Registry of Mobile Telephone Users (Panaut) that sought to force users to provide their personal and biometric data.

But these advances are at risk of being lost with the arrival of judges without regulatory knowledge and with the possible extinction of the Federal Telecommunications Institute, warned Lucía Ojeda, an expert in economic competition and partner at the Mexican firm SAI Derecho & Economía.

“Specialization impacts resolution times, not cases. When the IFT issued a resolution and the case escalated to court, the judges did not always side with the Institute because they are a collegiate body, that is, without a political purpose that only analyzes the case from a specialized perspective. If the new judges do not have that background, we will see many processes stopped to expand the networks,” said Lucía Ojeda, an expert in economic competition and partner at the Mexican firm SAI Derecho & Economía.

Jorge Moreno Loza, a lawyer specializing in telecommunications, believes that if the judicial reform does not modify the issue of specialization of judges in secondary legislation, telecommunications could stop its development at a time when digitalization drives new technological developments such as Artificial Intelligence, edge computing, the Internet of Things and streaming platforms themselves, but to regulate this ecosystem it is necessary to have a highly technical profile.

Uncertainty in investments

For Adolfo Cuevas, former president of the IFT, the current regulatory framework in telecommunications has been fundamental to guarantee the investments of companies that have translated into a greater expansion of networks, bringing with them new services to digitalize industries and citizens. But if judges without a technical profile or even chosen in a ‘fair’ way are assigned, companies would find themselves in an unfavorable environment for investing.

The former commissioner recalled that these types of conditions occurred prior to the telecommunications reform, when various decisions were made for political reasons, halting the development of the sector.

“This would encourage investment in the growth of networks that ultimately impact users in terms of services and prices,” said Cuevas.

Mónica Aspe, CEO of AT&T Mexico, commented that the government has the right to reform the judiciary, but it should not do so with unproven schemes, since they could bring consequences that are not the best for the country.

The director recalled that the pace of investment depends on the perceived risk contexts, and therefore considers it necessary to engage in dialogue with companies established in the country to find a route that can work for everyone.

“(What is invested) is someone else’s money. We are a public company that invests someone else’s money and we have to make sure that where we invest it there is a reasonable estimate of the risk and the possibility of having returns on that investment and that is a reality,” said Aspe in an interview with Adela Micha on September 3.

While América Móvil said last Friday that investments require the rule of law.

Currently, telecommunications companies are developing the 5G network – which aims to explode the development of new use cases for the metaverse, augmented reality, the Internet of Things, cybersecurity, artificial intelligence, among others – but it requires titanic investments that will not only return with telephone plans, but with new businesses that will come hand in hand with regulation.

But the imminent approval of the judicial reform could undermine the progress and confidence that the telecommunications sector had gained with the 2013 reform of the sector.