Mexico competition watchdog sees need for new telecom players

MEXICO CITY Aug 16 (Reuters) - Mexico's competition watchdog said on Thursday that a government bid to reclaim an important chunk of spectrum could pave the way for other telecoms firms to challenge the dominance of tycoon Carlos Slim and broadcaster Televisa.

Last week, Mexico said it was reclaiming the 2.5 GHz band, ideal for servicing data-hungry devices like tablets and smartphones, from 11 companies. The government aims to then re-auction the coveted band, but the process could take years.

Eduardo Perez Motta, the head of Mexico's Federal Competition Commision (Cofeco), said the frequency could be used to introduce new players into the telecom market, but he warned legal battles could slow the process for years.

"The 2.5 GHz opens the possibility of having an additional player, and above all, an independent competitor ... which can compete against Telmex and Televisa to offer triple-play and broadband services," Perez Motta said in a radio interview.

Slim's Telmex operates about 80 percent of the land lines in Mexico while Televisa, owned by media baron Emilio Azcarraga Jean, is Mexico's leading broadcaster, which also owns the country's three biggest cable TV companies.

Most of the 2.5 GHz frequency is in the hands of private company MVS Comunicaciones.

While the government has said it aims to recover the asset from MVS and 10 other licensees within five months, the process could drag for years as MVS prepares its legal defense to counter the decision.

Additionally, the company has other existing appeals in Mexican courts over chunks of the 190 MHz they were entitled to operate but whose licenses have already expired.

"The importance of the 2.5 GHz band is crucial. You have two networks that compete intensively between each other but in a partial way: the cable networks led by Televisa and the fixed-line phone network from Telmex," Perez Motta said in an interview with an MVS-owned radio station.

Cofeco recently cleared Televisa's $1.6 billion bid for half of Iusacell, giving the television company access to cell phone services that it needed to round out its telecom portfolio.

But Slim lost the battle to tap television services in Mexico in July after a court denied him the chance to enter that market, passing the task to the next president, Enrique Pena Nieto, who takes office in December.

Cofeco, which will be involved in the design of the new terms to re-auction the 2.5 GHz if the government successfully recovers that spectrum, has concerns over the time the rescue will take and the impact on consumers.

"I don't know what the final outcome will be but (if the government's decision) leads to no rapid use, independent from the incumbent companies, of the frequencies, I think this is a bad for competition," Perez Motta said.

"Judging by the experience at the Cofeco ... if this leads to endless lawsuits that could take three, four years, it would be unfortunate because the bands could not be used," he added.