MCI Communications Corp. Seeks WTO Action Against Mexico on Telcom Market

MCI Communications Corp. has escalated its dispute with Mexico's dominant phone company, Telmex, by asking the US trade representative to file a complaint with the World Trade Organization (WTO). The company asserts that Mexico's regulatory regime hampers competition and protects Telmex's monopoly, jeopardizing American investment in the country. MCI's complaint comes in response to a WTO agreement on telecommunications that Mexico has allegedly failed to implement. If the WTO confirms Mexico's non-compliance, the US could impose economic sanctions or file a formal complaint.

Key Takeaways:

• MCI Communications Corp. has filed a complaint with the US trade representative, requesting action against Mexico's Telmex under the WTO's telecommunications agreement.
• The company claims that Mexico's regulatory regime protects Telmex's monopoly and hampers competition, putting American investment at risk.
• MCI asserts that Telmex's surcharges artificially inflate phone rates between the US and Mexico, leading to a trade imbalance.
• According to FCC statistics, Mexico receives more telephone settlement payments than any other nation, with a trade deficit in telecommunications services of $5.4 billion in 1996.
• Aventel, Mexico's long-distance company partially owned by MCI, has invested $900 million in telephone lines and equipment, with plans to spend another $900 million over the next 18 months.
• MCI's complaint targets Telmex's attempts to provide phone services in the US with Sprint Corp., which has been met with resistance from the FCC.
• USTR officials have until March 31 to determine whether Mexico has violated WTO terms, after which the US may impose economic sanctions or file a WTO complaint.

Statistics:

• $5.4 billion: US trade deficit in telecommunications services in 1996 (FCC statistics).
• $900 million: Cost of telephone lines and equipment invested by Aventel (Mexican long-distance company partially owned by MCI).
• 18 months: Timeframe for MCI to invest another $900 million in Aventel's expansion plans.
• 45%: Ownership stake of MCI in Aventel, the Mexican long-distance company.

Sources:

• "MCI Complaint Seeks WTO Action Against Mexico," The Washington Post, undated.
• "MCI Communications Corp. Files Complaint with US Trade Representative Against Mexico's Telmex," Source via [1], undated.
• Aventel, the Mexican long-distance company partially owned by MCI, has invested $900 million in telephone lines and equipment.
• [The authors of the Washington Post article are not cited as having visited Telmex in person]