Facing a breakdown in its efforts to become a major player in Mexico, MCI WorldCom is pressing the U.S. government and the World Trade Organization to force the Mexican government to further open its telecom markets.
MCI WorldCom says its Mexican affiliate - a joint venture, called Avantel, with a Mexican financial company - is having extreme difficulties getting acceptable interconnection deals with the nation's dominant carrier, Telefonos de Mexico, popularly known as Telmex. That in turn is making it difficult for MCI WorldCom to create seamless connections for multinational corporations with U.S. and other locations, as well as compromising its ability to provide consumer services such as dial-up Internet access in Mexico.
U.S. Trade Representative Charlene Barshefsky is due shortly to release a report to Congress in which her office is required to evaluate the compliance of all 65 or so countries that signed the landmark 1998 World Trade Organization agreement on telecom. The WTO accord, which Mexico signed, commits each country to end the monopoly of its dominant carrier and provide U.S.-style access and interconnection rights to competitors.
MCI WorldCom officials this week said they expect Barshefsky's report to certify that Mexico has not complied with the WTO. But they added that they are encouraging the U.S. government to go further and consider filing a formal complaint with the WTO, which could bring sanctions on the Mexican government until it improves the competitive outlook.
In exceptionally harsh language, MCI WorldCom officials all but accused Telmex and Mexican regulators of corrupting the regulatory process. Telmex has done a "magnificent job" of "neutralizing" Cofetel, the Mexican equivalent of the Federal Communications Commission, said John Stupka, MCI WorldCom's president of ventures and alliances. He said that has included threats of filing civil and criminal cases, and Cofetel in turn has become a cheerleader for the recently privatized Telmex in world stock markets. "We need a regulator that can get things done, that is interested in serving the people, not in the stock price of Telmex," Stupka said.
Stupka also charged that Telmex has used currency swings and other rationales to force through increases in the wholesale price it charges competitors for transport, while at the same time reducing retail prices to its own consumers, creating a "price squeeze" for the competitors. In addition, he and other officials charged that Telmex has denied trunking to some of the dial-up telephone numbers in competitors' Internet access points of presence, leading to congestion for those competitors' Internet services.
Telmex's two principal competitors are Avantel and an AT&T-affiliated venture, called Alestra. Purely domestic Mexican competitive operations, such as competitive local exchange carriers, are just starting to appear, according to MCI WorldCom officials.
MCI WorldCom officials say they're particularly frustrated because telecom markets in Western Europe have, by contrast, recently opened - leading to intense competition and lower prices at the wholesale and retail level. They also emphasized that their complaints in Mexico don't represent all of Latin America, pointing to Brazil as a country where telecom deregulation is proceeding faster.
Ironically, MCI WorldCom's proposed merger partner, Sprint, signed an alliance with Telmex in 1995. But that alliance broke off last year when Telmex bought out Sprint's share. That followed earlier controversies over international access rates on U.S.-Mexico phone calls.
RELATED LINKS
