Mexican Senate Approves Proposal to Boost Local Content

Mexican senators voted on Tuesday in favor of forcing streaming platforms like Netflix and Amazon to ensure national content makes up at least 30 percent of their catalogs, a plan the industry argues will drive up costs and will make it harder for small players to compete.

The US government has approached the Mexican government about the issue, a spokesperson for the US Embassy said. Furthermore, the proposal drafted by MORENA’s Senator Ricardo Monreal, could violate USMCA’s guidelines, Mexico’s Internet Association wrote in a letter to senators. “An initiative like this is also especially disconcerting in an economic and commercial situation in which ... USMCA’s implementation becomes urgent to successfully face the economic challenges stemming from COVID-19,” wrote the association, whose members include Amazon and Google.

While the law would apply to domestic players as well, it favors Mexican companies such as Televisa and TV Azteca, which already produce much of their content in the country, said Maria Elena Estavillo, a former commissioner of Mexico’s telecom regulator, the Federal Telecommunications Institute (IFT). “It will distort competition because this will bring an important advantage, mainly to Televisa,” Estavillo pointed out. Such rules, which have also been adopted in the EU, are often intended to favor independent producers, Estavillo noted. But in practice, streaming companies may end up simply licensing content from Televisa or TV Azteca to fulfill the requirement, she said.

The proposal threatens to limit content options for consumers, the Internet Association wrote. “The proposal does not consider that currently, no digital platform is in a position to comply with the minimum percentage of national content,” the trade group wrote.

The proposal follows other protectionist moves by López Obrador and his allies that have rattled the business community in Mexico. In one of the most dramatic cases, a local referendum this week forced the cancellation of a US$1 billion Constellation Brands brewery in Mexicali.

A spokesman for Televisa, Mexico’s largest broadcaster by far, denied that proposed rules would favor the company. “If Congress were to approve OTT regulation similar to that of the EU or Canada, we would work with independent producers to comply with local content rules,” the spokesman said. Canadian rules do not pose problems against USMCA because they were implemented before the treaty’s adoption, an industry source argued.