Foreign Investment in Mexico's Fixed Line Telephone Service Industry

The Mexican House of Representatives' Commission for the Economy has approved an initiative to amend the Mexican Foreign Investment Law (FIL) for the purpose of promoting investment and enhancing competition in Mexico's fixed line telephone and related services industry. If this initiative ultimately passes the full Congress and becomes a law, it will allow foreign investment to participate in a percentage above 49%, the current limitation level established in the FIL, though the National Commission of Foreign Investment will have to review and authorize each proposed investment surpassing the current limit.

The initiative was approved by representatives of the PRI and PAN (the two major political parties in Mexico) over the objections of the leftist party (i.e., the PRD), who criticized the initiative on the basis that it does not impose sufficiently stringent requirements for the provision of service throughout the rural areas of the county and does not require there to be reciprocity of rights for Mexican investors in the country of origin of the foreign investors seeking to invest in Mexico.

In order to become law, the proposal must pass through several additional steps in the Mexican legislative process. Notwithstanding these additional hurdles, the initiative represents an important step toward modernizing the Mexican telecommunications industry. It also signals a willingness on the part of the two major political parties to cooperate to pass laws that will improve the Mexican economy.