Mexico to Lease Fiber Lines to Carriers

Mexico Power Company to Lease Fiber Lines to Carriers
By Crayton Harrison and Carlos Manuel Rodriguez

May 19 (Bloomberg) -- The Comision Federal de Electricidad, Mexico’s largest state-owned power company, plans to rent unused parts of its fiber-optic network to carriers so they don’t have to use lines from Carlos Slim’s Telefonos de Mexico SAB.

Mexico is setting the bidding process for fiber lines owned by the power company, Secretary of Communications and Transportation Juan Molinar said today at a Mexico City event. The company’s main network has about 26,000 kilometers (16,159 miles) of fiber lines.

The move may potentially spur more carriers to enter the market dominated by Telmex, which controls about 85 percent of Mexico’s phone lines. Companies such as Telefonica SA and Axtel SAB, which already allow the power agency to carry some of their traffic, would be able to operate lines independently once the plan goes through.
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“The bidding process will increase the number of telecommunications companies that offer their services in Mexico,” President Felipe Calderon said at the event. Companies could begin operating the fiber within months, he said.
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Mexico’s Federal Competition Commission has urged the CFE “time and time again” to allow phone carriers to use its network, Eduardo Perez Motta, the antitrust agency’s president, said in an interview yesterday. Opening the network would help improve competition in the telecommunications industry, he said.
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Concepcion Rivera, a spokeswoman for Telmex, declined to comment.
‘Parts the Waters’
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“This is extraordinary news because it parts the waters,” said Francisco Gil Diaz, Telefonica’s executive president for Mexico and Central America, in an interview. “For all companies this offers more connectivity, better costs, more access to more places, greater speed and greater capacity.”
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Telefonica may be interested in leasing fiber lines, depending on the bidding process, Gil said.
The licensing process for the fiber lines could occur in about three months, after the technical specifications are determined, Secretary Molinar said. The Communications and Transportation ministry aims to prepare wireless airwaves to be licensed at about the same time, he said.
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Axtel, Alestra SA and other companies have said they are interested in bidding on the wireless airwaves to offer phone and Internet service using WiMax technology.
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Telmex rose 5 centavos to 11.03 pesos at 4 p.m. New York time in Mexico City trading. The shares have dropped 23 percent this year. The company had more than 107,000 kilometers of fiber-optic lines at the end of 2008, according to its annual report.
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The Comision Federal de Electricidad originally built the fiber network to use the technology to operate its power grid.
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To contact the reporter on this story: Crayton Harrison in Mexico City at tharrison5@bloomberg.net; Carlos Manuel Rodriguez in Mexico City carlosmr@bloomberg.net. Last Updated: May 19, 2009 16:15 EDT
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