U.S. Pushes to Open Up Telecom in Mexico

The U.S. asked the World Trade Organization to force Mexico to open its telecommunications industry to foreign competition or face trade sanctions, raising the stakes in a two-year dispute over the $12-billion market.

“Mexico’s market remains dominated by a single company with a government mandate to set high wholesale prices,” U.S. Trade Representative Robert Zoellick said.

The complaint to the WTO, a Geneva-based body that sets the rules for trade, boosts Avantel, part-owned by WorldCom Inc., and Alestra, part-owned by AT&T; Corp., in their competition with Telefonos de Mexico, or Telmex, a former state monopoly.

Jim Cicconi, AT&T;’s general counsel, welcomed the government’s decision to press the case because Mexico has been “ignoring its WTO telecom commitments and hoping its trading partners would go away.”

Telmex’s domination results in phone charges that “penalize American and Mexican families seeking to maintain cross-border ties, raise the price of doing business across the border and burden U.S. telecom firms with unnecessary costs,” Zoellick said.

Mexico’s government, which began opening its telecom market after an earlier U.S. challenge before the WTO, said it had no objections to settling the matter again at the trade body.

The threat of trade sanctions underlines U.S. dissatisfaction with market-opening moves that Telmex and Cofetel, Mexico’s federal communications commission, have made since the first WTO case, filed during the final months of the Clinton administration.

As a result of the earlier WTO challenge, Mexico reduced access rates to Telmex’s phone lines, lowered interconnection fees for long-distance calls over the U.S.-Mexico border and drafted new regulations.

The Bush administration said last June that Mexico had to do more to open the industry to international competition, including changing the way Cofetel deals with Telmex.

The U.S. complained that U.S. companies must pay inflated charges and are prevented from using channels outside of Telmex’s control for carrying their calls to Mexico.