This Informational Notice refers to the enactment of the Executive Order Establishing the Procedure to obtain a Concession to install, operate and exploit Public Telecommunications Networks pursuant to the Federal Telecommunications Law (Acuerdo por el que se establece el Procedimiento para obtener Concesión para la instalación, operación o explotación de Redes Públicas de Telecomunicaciones al amparo de la Ley Federal de Telecomunicaciones) (the “New Executive Order”), which sets forth the revised rules, requirements and timeframes regarding the filing and processing of applications (the “Applications”) before the Ministry of Communications and Transportation (Secretaría de Comunicaciones y Transportes) (the “Ministry”) and the Federal Telecommunications Commission (Comisión Federal de Telecomunicaciones) (the “Commission”) in connection with the issuance of concessions (the “Concessions”) for the installation, operation and exploitation of public telecommunications networks (the “Public Telecommunications Networks”).
1. Purpose of the New Executive Order
The New Executive Order simplifies, expedites and facilitates the granting of Concessions of Public Telecommunications Networks and buttresses competition in the telecommunications sector pursuant to the elimination of difficult barriers of entry and to provide greater certainty to individuals and entities processing Applications for the granting of Concessions which now will be issued for Public Telecommunications Networks without the restriction of having to connect three different states.
2. Superseded Agreements and Interstate and Local Public Telecommunication Networks
The New Executive Order superseded: (a) the Executive Order containing the process to establish, operate and exploit an interstate public telecommunication network pursuant to the Federal Telecommunications Law (Acuerdo por el que se establece el procedimiento para establecer concesión para la instalación, operación o explotación de redes públicas de Telecomunicaciones Interestatales al Amparo de la Ley Federal de Telecomunicaciones) (the “Interstate Telecommunications Executive Order”); and, (b) the Executive Order containing the process to establish, operate and exploit local public telecommunications networks pursuant to the Federal Telecommunications Law (Acuerdo por el que se establece el procedimiento para obtener concesión para la instalación, operación o explotación de redes públicas de Telecomunicaciones Locales al Amparo de la Ley Federal de Telecomunicaciones) (the “Local Telecommunications Executive Order”).
3. Elimination of barriers
The inequality and unnecessary need to double up on infrastructure posed by the Interstate Telecommunications Executive Order and the Local Telecommunications Executive Order on the Concessionaires to interconnect at least three different States of the United Mexican States with equipment owned by the Concessionaires in order to obtain Interstate Public Telecommunications Networks Concessions has now been repealed.
The New Executive Order no longer distinguishes between Interstate and Local Public Telecommunications Networks, granting flexibility in interconnection obligations, efficiency and savings.
4. New Electronic Filings
The Applications under the Interstate Telecommunications Executive Order and the Local Telecommunications Executive Order had to be filed physically with the Ministry. Now the New Executive Order allows the Applications to be filed physically before the Commission or by electronic means through the dedicated Portal which will enter into operation at the Commission.
5. Accelerated resolutions
The New Executive Order provides that the Ministry and the Commission shall have 120 (one hundred and twenty) calendar days: (i) to request additional information; or, (ii) notify the Applicants that their Applications are complete.
Upon the Ministry and the Commission notifying that the Applications are complete, the Commission will have 60 (sixty) calendar days to issue and communicate its opinion to the Ministry; failure to comply with such term will be deemed to be by the Ministry as a favorable opinion of the Commission.
Upon receipt of the opinion of the Commission by the Ministry or upon expiration of the term to issue same by the Commission, the Ministry will have a 60 (sixty) calendar days term to decide favorably or unfavorably on the Applications, and failure to issue a decision within the 60 (sixty) calendar days term will be deemed to be a favorable decision of the Ministry and the Applicants will be then able to request the Ministry to issue the Concession Titles to the Applicants within 2 (two) business days.
6. Restrictions applicable to Applications
The Applications may be filed by Mexican individuals or entities. Pursuant to the applicable provisions of the Foreign Investment Law (Ley de Inversión Extranjera) (the “LIE”), foreign individuals or entities may not own in excess of 49% (forty nine percent) of the voting shares of the capital of the Concessionaires. Under the LIE, foreign individuals or entities may exceed such 49% (forty nine percent) ownership; provided, however, their participation is through non-voting neutral shares which will grant only patrimonial rights to their holders. Thus, at least 51% (fifty one percent) of voting shares and effective control of the Concessionaires must be by Mexican individuals or entities which capital is wholly-owned by Mexicans.
7. Contents of the Applications under the New Executive Order
The Applications must contain information and documentary evidence describing the technical specifications of the Project, investment programs and undertakings, coverage and quality of services, business plan and evidence of legal, technical, administrative and financial capacities of Applicants.
Under the New Executive Order the term for the projections regarding coverage, requirements and investments to be contained in the Application was reduced to 3 (three) years. The Interstate Telecommunications Executive Order and the Local Telecommunications Executive Order required projections regarding coverage requirements and investments for 5 (five) years.
8. Obligations of Existing Concessionaires under the New Executive Order
Existing Concessionaries will be obligated to provide only evidence regarding financial capacity under the New Executive Order.