Dissolving the IFT: Self-inflicted Wounds to Digital Sector Growth

In 2013, the Peña Nieto administration successfully pushed for a constitutional reform to reconfigure the telecommunications industry, opening to greater private sector investment and competition. The landmark reform also established the Federal Telecommunications Institute (IFT in Spanish), an independent regulatory authority overseeing Mexico’s telecommunications industry. The IFT is tasked with regulatory decisions aimed at increasing telecommunications coverage, building efficiencies, and ensuring greater competition in the sector. 

Under Morena, however, independent and autonomous regulatory institutions have come under attack. The IFT is no exception. Starting with Andrés Manuel López Obrador (AMLO), Morena has pushed to reduce the scope of regulatory bodies such as the IFT, arguing that they are superfluous, cost too much money, and should be folded into existing executive agencies. (Against the IFT, AMLO said its costs outweighed its accomplishments, especially in breaking up monopolies, ignoring his own close personal ties to Carlos Slim, CEO of América Móvil.) Claudia Sheinbaum has advanced this argument and is pushing for a vote in Congress on autonomous agencies.  

The IFT has had some significant successes. To name a few, it has managed to reduce the price of consumer telecoms by almost 30% while cutting into the share of América Móvil’s monopoly on Mexico’s telecoms market. Thus, eliminating the IFT's independence would harm Mexico’s ability to expand the fruits of broadband throughout the country and continue attracting investment from the private sector. The private sector, especially Western investors, favors regulatory institutions where decisions are taken independently, and evidence-based policy is the norm—not the whims of political parties. By folding independent and autonomous agencies into the executive branch, Morena risks politicizing regulatory decisions that would likely be off-putting for investors and prejudicial to garnering greater private investment in the sector. 

The impact on Mexico’s economy could be significant. Without greater competition in the information, communications, and technology (ICT) sector, Mexico's ability to reach its full potential could be hindered. This is because much of the country’s future economic growth could be in the digital sector, as acknowledged by including a digital chapter in the renegotiated U.S.-Mexico-Canada Agreement.  

Too many Mexicans still lack access to high-quality internet, especially in rural areas. In 2022, 76.2 percent of urban households had access to the Internet, compared to only 46.2 percent of rural households. Balanced economic growth will depend upon rectifying this disparity, something the IFT aimed to do with regulatory decisions meant to attract greater investment in Mexico’s ICT sector. The AMLO and now Sheinbaum governments have strongly advocated the “Internet Para Todos” initiative. Still, they prefer the Federal Electricity Commission (CFE) to lead this program in installing greater broadband coverage. Morena has demonstrated little trust in sound policy and private sector investment to lead the way on its strategic initiatives, such as Internet Para Todos, instead favoring a strong role for the public sector. 

Yet, Mexico must take steps to promote a competitive ICT landscape that courts private investment, bridges the connectivity gaps between urban and rural zones, and sets the country on the path to achieving its digital transformation goals. To foster this competitive environment, Mexico must strengthen and reaffirm the independence of its telecoms regulatory body—quite the opposite of what Morena has been pursuing under both AMLO and Sheinbaum. Regulatory decisions on issues like spectrum policy could lead to improvements in the competitiveness of the ICT sector; such decisions would be a prerequisite to open the floodgates for investment from private firms and lessen the burden on state resources—especially important during a time when Sheinbaum’s government will struggle to close fiscal gaps bequeathed by AMLO. 

Major US firms, such as AT&T, would be impacted by the vote to eliminate the IFT. The IFT's inability to set sound regulatory policy, such as on matters of fair competition and spectrum fees, has undercut the impact of investments from private sector firms, contributing to a self-fulfilling prophecy for Morena that the private sector is of no use in fulfilling its digital transformation goals.  

Further adding to this self-fulfilling prophecy, AMLO’s policy toward the IFT vitiated its effectiveness through a strategy of death by a thousand cuts. Beyond slashing the IFT’s budget, he refused to appoint commissioners. Since 2019, the IFT has operated with only four commissioners. Because the Federal Telecommunications and Broadcasting Law requires a qualified majority of five votes to make significant organizational decisions, the lack of appointments to the commission has effectively gutted the IFT’s ability to carry out its responsibilities and make decisions. Mexico’s ICT sector needs to become more competitive, with the Institute for Management Development ranking Mexico 54th out of 65 countries considered in its 2023 rankings; instead, Morena is fiddling with the internal governance of the IFT and gutting its ability to issue regulatory decisions. 

Beyond the ICT sector, there would be ramifications for US-Mexico relations. As the Wilson Center’s Diego Marroquín Bitar has pointed out, the elimination of autonomous agencies runs afoul of several provisions in the USMCA, highlighting the necessity of these institutions to key economic sectors. This would likely add further kindling to what could be a contentious mandatory review of the agreement in 2026. The IFT, although probably less well-known than other bodies slated for elimination, would be no exception. Dissolving the IFT would be an unnecessary, self-inflicted error. 

*This article was written prior to the approval of the constitutional reform in the House of Representatives on November 20