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Carlos Slim's Mexico rivals vow to stymie his TV foray

Mexican cable television and phone companies are readying lawsuits and planning a blitz with regulators that they hope will keep billionaire Carlos Slim out of the local television market – at least for now.

Regulators locked Mr. Slim out of the broadcast market five years ago and drew up a list of tests that the tycoon would have to pass before pushing his phone empire into television.

Mr. Slim's giant fixed-line telephone business, Telmex, contends that it has passed those tests and last week welcomed court rulings that seemed to break in his favour.

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But Mr. Slim's rivals insist Telmex is far from meeting regulators' demands and that the rivals will work flat out to keep the media tycoon from winning a television concession.

"This association will use all legal means ... to enforce the constitution, federal law and international treaties," Mexico's cable trade group Canitec said after a federal court last week told regulators to settle the Telmex TV petition.

Canitec mainly protects the interests of Televisa, the country's largest broadcaster, but other Slim foes say they will join the fight to sink his television plans.

"We will not rest," said Ermilo Vazquez, head of regulatory matters for Telmex's fixed-line rival Axtel.

"In the coming weeks, you are going to see us move very hard on all these outstanding issues."

Telmex has been trying to create the impression that their expansion into television is a near-term inevitability.

Last week, the Communications and Transportation Ministry said it had three weeks to rule on the Telmex television bid. A day later, Telmex said the decision must come within 24 hours while the ministry said it would not be rushed.

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Meanwhile, Mr. Slim's rivals say they will urgently press their case with regulators while their lawyers consider legal action.

The final decision on Mr. Slim's television bid will hinge on officials' reading of a five-year-old decree.

The television and telephone "convergence agreement" from October 2006 envisions that Mexico would have a competitive telephone industry before Telmex moved into broadcast.

Specifically, the decree imagines a telecommunications service "operating with efficient interconnection and interoperability based on nondiscriminatory rates."

Mr. Slim's foes say the costs – or interconnection fees – to access the Telmex network are prohibitively high and that those charges must come down before the company can move into video.

"I have open complaints with the ministry (about the fees). They are still not in compliance with even their original telephone concession," said Axtel's Vazquez. "While the law is not enforced, they cannot get a new concession."

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Telmex is open to discussing interconnection fees but that is a false or misleading issue in the debate over broadcast rights in Mexico, the company's top lawyer said.

"It would not matter if interconnection fees were zero," said Telmex general counsel Javier Mondragon. "They simply don't want us in the market because they are afraid of the efficiencies that we would bring."

Telmex got a boost last week when a Mexican court dismissed a lawsuit by rival fixed-line operator Marcatel and insisted that the company pay $155-million in past interconnection fees.

The company could probably help its case to expand into television if it were to give ground on interconnection fees, but that does not seem like a tactic it will choose, said Adriana Labardini of consumer group Al Consumidor.

"The cost to Telmex of a local call is basically zero now. But they are not willing to give up anything there," she said. "Eventually, it will ebb because of (voice over Internet) but right now it's still a gold mine."

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