Tender proposal of CFE’s owned dark fiber
| Series |
MARTA |
| Publication date |
2009 |
| Language |
Español |
| Publication type |
Paper |
Author
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Abstract
This document analyses a proposal of the Secretaría de Comunicaciones y Transportes (Communication and Transport Secretariat – SCT) for putting the Comisión Federal de Electricidad (Federal Commision of Electricity - CFE) existing telecommunications transmision infrastructure on the market. The network's unused excess capacity represents a critical resource, since Mexico’s telecommunication infrastructure is clearly unsufficient given the Nation’s economic growth and consequent rising social standards.
The assessment presented in this document argues that this proposal will meet the goals of increasing competition, bringing pressure to lower prices, increasing the available bandwidth capacity and enhancing the network’s coverage.
However, the proposal is deficient since only a couple of fiber optic strands will be made available, while there are 30 excess strands. We are convinced that the tender offer as proposed by the Federal Government lacks critical elements for transforming Mexico’s telecommunications industry. CFE's infrastructure offers a unique opportunity to encourage the development of coverage and competition in the sector, and offering significant incentives for increasing investment. However, the proposal is based on creating an artificial shortage of a national good, and thus will result in an economically inefficient solution in respect to competition and coverage. Worse, it will establish acquired rights for small private groups, reducing the possibility of modifying the inefficient status quo, and missing an opportunity for diminishing the digital exclusion of the country’s poor.
This document presents public policy alternatives together with the economic models that support them. We identify four general alternatives: 1) Tendering more optic fibers; 2) Liberalisation of rights-of-way; 3) Coverage requirements; 4) Open tender for a firm that supplies wholesale transport services (“carrier of carriers”) under various property schemes. These options are not mutually exclusive, in fact, the sum of all of them could generate a positive discontinuity in the telecommunications sector development, in both dimensions of competition and coverage, in contrast to the tender proposal that is now subject to public consultation.
The main criticism that arises from this analysis is that tendering only a couple of threads of dark fiber produces an unjustified artificial scarcity that would entail significatively negative consequences on our country’s possibilities of transition towards an internationally competitive economy with the majority of the population benefiting from communication and knowledge.
