The subsidiary is part of a plan to bring internet via a massive fiber optic network to the most remote areas of the country.
AMLO framed the mission of the new subsidiary, dubbed CFE Telecomunicaciones e Internet para Todos, as a social benefit last week, where he stressed that “it is non-profit company, [there will be a bill], but it will only charge for operating costs [and] won’t have any profit.”
Irene Levy, the president of telecom think tank Observatel, wrote in in a column in local daily El Universal that the CFE CEO Manuel Bartlett would name a general director to run the subsidiary in coordination with a seven-person board.
Bartlett would act as president of the board. (Boards in Mexico often have a director and a president.)
The country’s president will name three board members, which the CFE’s own board must approve of.
The parent company’s board would also name two of the subsidiary’s board members, as nominated by Bartlett.
Bartlett and the CFE board would also name an independent board member, who will get a three-year term that could be renewed for three more years.
As such, the council, Levy wrote, is “completely inbred, without counterweights,” adding that it also raises questions under the CFE’s own bylaws which state that subsidiaries must include oversight and accountability mechanisms.
The CFE, AMLO and Bartlett have until October 15 to seat the board, and in the meantime, Bartlett would act as the legal representative of the group. The board will then have until August 2020 to submit a formal organizational charter to the CFE board for approval.
Within the process, the company must create a detailed inventory of assets and deeds to establish ownership of parent and subsidiary, as it receives some assets from the parent. Importantly, only citizens in areas without coverage from a major operator are eligible to receive this service.
The IFT must, in its final authorization, establish if and how CFE Telecom operates as a wholesale provider of network service and which clearances are needed.
In her column, Levy listed many unknowns about the new subsidiary. These relate to cost, business plan and land requirements, technology, and crucially, to the future of Red Troncal and the Altan wholesale network (Red Compartida).
Especially Red Troncal and Red Compartida create some headaches. While Altan’s shared network is set to provide coverage to the vast majority of the population, the problem is affordability.
Fernando López, director of regional telecom association ASIET, said that the government needs to develop a scheme for the poorest segments of the population, as even under the not-for-profit structure users might have to pay more than they can afford.
“Right now, with the issues of pay schemes for spectrum use and infrastructure deployment costs, it makes it so that any available product could not possibly be balanced with the income level of certain parts of the population,” López said, according to local daily Reforma.
Nevertheless, greater connectivity would also bring new users and eventually allow for lower rates, as noted by Ernesto Piedras of The Competitive Intelligence unit (CIU) think tank, in the same report.
Piedras said that 14.2mn people at the lower socioeconomic end lacked access to broadband mobile service, representing a large pool of potential revenue generating clients.