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The Plenary of IFT approves the 2015 Use and Exploitation of Bands Annual Program (Press Release 75/2014)

The Plenary of IFT approves the 2015 Use and Exploitation of Bands Annual Program

The Plenary of the Federal Telecommunications Institute (Instituto Federal de Telecomunicaciones, IFT) approved, in extraordinary session, the 2015 Use and Development of Frequency Bands Annual Program (Agenda 2015), which contains the frequencies and radio spectrum bands to be made available to interested parties for the provision of telecommunications and broadcasting services, through a bidding process or, if appropriate, by direct allocation next year.

Thus, the IFT implements, in a timely manner, as provided in Article 59 of the Federal Telecommunications and Broadcasting Law (Ley Federal de Telecomunicaciones y Radiodifusión, LFTR) which establishes the obligation to issue, no later than December 31 of each year, the program with the frequency bands of spectrum determined to be tendered or who may be allocated directly, and which must contain at least the services to be supplied, their category, use patterns and geographic coverage.

To prepare the 2015 Program, the Institute was based on the following criteria: promote the efficient use of radio spectrum, the benefit of the users, the development of competition and diversity and introduction of new telecommunications and broadcasting; promote the convergence of networks and services to achieve efficient use of infrastructure and innovation in application development and ensure the necessary spectrum for the purposes and functions of the Federal Executive.

In this sense, in telecommunications for commercial use, the 2015 Program provides:

a) The concessioning of 60 MHz of spectrum identified for International Mobile Telecommunications (IMT) service deployment, specifically in the segments of 1710-1725 / 2110-2125 MHz and 1755- 1770 / 2155-2170 MHz.

b) The concessioning of 10 MHz of spectrum in the lower UHF range, specifically in the 440-450 MHz segment for the provision of capacity for private radio systems.

The 2015 Program states that a decision on these tenders of commercial use must be within 2015. Also, for the first time specific bands for social services use in the telecommunications sector are determined. For this, is contemplated the concessioning of various portions of spectrum that are available within the segment known as the cellular band between 824-849 MHz and between 869-

894 MHz. For its use it is proposed that these portions of spectrum to concession for the provision of rural connectivity, which could meet the immediate needs to have basic telephone service in regions not served by existing concessionaires.

Regarding frequencies for telecommunications services for public use, the 2015 Program includes two frequency bands: 415-420 / 425-430 and 806-814 / 851-859. Those interested in obtaining a concession for public use to provide telecommunications services may submit the relevant applications for these and other bands during any working day of the year.

As for broadcasting, the 2015 Program includes the concessioning of 115 frequencies for radio broadcasting service in Frequency Modulation in different regions. Of these, 97 frequencies are for commercial use and 18 for social use, which is determined in response to expressions of interest, the economic capacity of the spaces and the available spectrum.

For broadcast television services no spectrum was considered for a concession in 2015, since they are currently ongoing procedures such as frequencies tendering to form at least two chains of digital broadcast television, the transition to Digital Terrestrial Television and the evaluation of the eventual clearance of 600 MHz band (TV channels 38 to 51).

Regarding the frequencies to grant rights for indigenous and social use, the IFT determined to reserve the frequencies contained between FM 106 and 108 MHz, which means, according to the provisions of the legal framework, 10% of the FM band; while that in the corresponding frequencies AM were reserved for his extended band from 1605-1705 kHz. For this type of concessioning is included in 2015 Program all the bands reserved and three terms are defined to present the corresponding applications: April, July and November 2015.

For concessions for public use in broadcasting applications submitted by the deadline set in the 2015 program itself, both stations AM, FM or TV are considered, the latter only in the range of 14 to 37 channels.

The Institute will establish coordination mechanisms with the various relevant bodies for the allocation of concessions for public use, to ensure the spectral requirements of the Federal Executive in terms of law and seek to meet those of other bodies to which awards may be intended for public use in terms of the LFTR.

Note that, once released the 2015 Program, a period of 30 working days is opened to allow interested parties to request the inclusion of frequency bands or additional geographic coverage or different from those mentioned in accordance with the provisions of 61 Article of Federal Telecommunications and Broadcasting Law. Once this period has elapsed, the IFT evaluate applications for inclusion received within thirty working days to, if necessary, to make the appropriate changes in the final program that will be applicable for 2015.

Thus, the IFT seeks to make available for 2015, various bands and frequency channels in suitable portions of spectrum for the provision of high impact for society, such as mobile broadband communications, rural telephony, radio and television, among others.

Fecha del Comunicado: 22 December 2014

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The Plenary of IFT approves the 2015 Use and Exploitation of Bands Annual Program (Press Release 75/2014)

The Plenary of IFT authorizes and conditions the Televisa output from Grupo Iusacell and subsequent sale of this company to AT&T (Press Release 74/2014)

The Plenary of IFT authorizes and conditions the Televisa output from Grupo Iusacell and subsequent sale of this company to AT&T

• Approves the final structural separation of Televisa and Salinas and the incursion of the US firm in Mexico

• If companies do not accept or comply with the conditions imposed, shall be deemed not approved for all legal purposes that may apply

• Resolved on Cablecom acquisition by Grupo Televisa

The Plenary of the Federal Telecommunications Institute (Instituto Federal de Telecomunicaciones, IFT) resolved to authorize two concentrations, subject to conditions, which will involve the definitive structural separation of Grupo Salinas and Grupo Televisa in the provision of telecommunications services, and the incursion of AT&T as a competitor in the provision of mobile telecommunications services in Mexico, respectively.

On December 12 of this year, the Plenary allows that the Salinas Group, that owns 50% shares of GSF Telecom Holdings (GSF), to buy to Grupo Televisa the remaining 50% stocks of this company which, through its subsidiaries, engages in the provision of fixed and mobile telecommunications.

Such approval is subject to conditions imposed by the Institute.

With this transaction, Grupo Televisa will no longer participate in the decision-making on business of fixed and mobile telecommunications that Grupo Salinas operates through GSF and its affiliates.

Moreover, on December 15th, 2014, the Plenary approved, subject to conditions, the acquisition by AT&T's mobile telecommunications business of Grupo Salinas, which is formed for assets and subsidiaries involved in the provision of telephony, messaging and mobile internet access, among which there are Iusacell and Unefon.

The concentrations to be held consecutively, are subject to the fulfillment of commitments and verification mechanisms to avoid as a result of the concentration is decreased, damage or process of free competition is prevented.

If companies do not accept the conditions imposed by this authority, or accept them but the breach, shall be considered as unauthorized for all legal purposes that may be required.

Once Grupo Salinas holds 100% of the shares of GSF, split the company into two businesses:

• The fixed telecommunications, which include Total Play; and

• The mobile telecommunications, which include Iusacell and Unefon

Grupo Salinas will retain control over the wireline business and sell the mobile business to AT&T. Thus, AT&T will enter the Mexican market as a provider of mobile telecommunications services. When ruling on the second concentration, the Plenary of the Institute took into consideration the relationship that AT&T had with America Movil (Telcel), leading operator of mobile telecommunications services in Mexico. Consequently, the conditions imposed on AT&T introduce measures to avoid risks to the process of competition in markets where these economic agents are involved.

As background of both concentrations is important to note that on December 9, 2014, the Plenary of IFT resolved a concentration which dates from 2011 and was analyzed by the former Federal Competition Commission (Comisión Federal de Competencia, CFC), which consisted on the acquisition by Grupo Televisa 49% representing stocks of the capital share of GSF, which were sold by Grupo Salinas.

The CFC initially did not authorize this concentration. However, the parties requested the authority to review its first decision and, in that process, submitted commitments based on which the CFC Plenary resolved to authorize the subject to conditions.

The consolidation was held in June 2012 and the parties subsequently promoted amparo trials against the decision of the CFC. They argued that during the first procedure, the CFC performed acts not provided for in the Federal Antitrust Law applicable and therefore improperly extended the deadline to rule on the concentration, so that the initial decision of the CFC issued outside the limit prescribed by law and operated the constructive approval for the benefit of the parties.

Subsequently, in November 2014, the Tenth Collegiate Court for Administrative Matters of the First Circuit issued a writ of execution in which he ordered the Institute, as the authority responsible substitute for extinct CFC, leaving subsistent resolutions issued earlier this concentration and issue one in which, evaluating the arguments of the parties, rule on whether operated or not constructive approval, regardless acts performed by the CFC that were not provided by applicable law.

In strict compliance with the order, on December 9, 2014, the Plenary of the Institute left without effect the resolutions issued by the CFC on the concentration and issued another in which it determined that the regulatory body ruled out the time that the law gave it, which operated the figure of constructive approval on concentration.

Televisa - Cablecom concentration

Moreover, on December 10 of 2014, the Plenary of IFT decided on the acquisition of Cablecom by Grupo Televisa, and determined that it does not have the effect of reducing, damaging or preventing free competition and competition in the sector.

On August 14 of 2014, Grupo Televisa reported a concentration through which it acquired Cablecom, a firm that provides fixed telecommunications services of voice, Internet and television networks, via a wired network; and requested to be processed under Ninth Transitional Article of the Federal Telecommunications and Broadcasting Law.

That provision states that as long as there Preponderant Economic Agents in the telecommunications and broadcasting sectors, other operators may carry concentrations without requiring prior authorization from the Institute. This procedure is temporary, it will only be in effect as long as there are Preponderant Economic Agents, and establishes an exception to the merger control provisions of Article 90 of the Economic Competition Federal Law.

While the notice procedure provided for in the first to fourth paragraphs of transitory article noted, entitles individuals the right to belong to an exception regime --for not requiring the prior approval of the Plenary of the Institute-- that the parties certify that the concentration will neither reduce, damage or prevent free competition and competition in the area of the sector concerned.

In this sense, on December 10 of 2014, the Plenary of IFT, by majority vote, determined that the concentration met the requirements set forth in subparagraphs and therefore does not have the effect of reducing, damage or impede the free competition and competition in the telecommunications sector.

In its resolution, the Plenary of the Institute identified that the concentration has positive effects on fixed telephony and internet access. In these, Grupo Televisa participates as a smaller player and announces investment to install and develop broadband networks capable of providing converged Internet, fixed telephony and television networks. The effects of the concentration were evaluated to identify their net effect on the telecommunications sector.

On the demand side, broadband networks provide a means for users to use multiple means of electronic communication; and enables the provision of a variety of end services through Internet, for example providing access to audiovisual content, information, education, cloud services or interactive games, among others.

However, the Plenary also identified that in the pay television service, the customer, Grupo Televisa accumulates the highest number of subscribers. Nevertheless, elements that can counteract this effect are also found, among them: the existence of pressure to compete in quality and price; improvements in the availability and quality of service of restricted television offering to end users; and the existence of a dynamic and converging environment in the supply of audiovisual content to end users.

Furthermore, in terms of the fifth paragraph of Ninth Transitional Article of the Federal Telecommunications and Broadcasting Law, the Institute through the Investigating Authority, has begun an investigation to determine whether this concentration confers, may confer or increase the substantial power in the field of "market" of the acquirer, Grupo Televisa, and if appropriate, impose the necessary measures to protect and promote free competition.

Fecha del Comunicado: 21 December 2014