UPDATE 1-Mexico regulator to sanction 5 mobile phone providers

Wed Jun 15, 2011 11:23pm EDT

(Recasts with regulator statement)

MEXICO CITY, June 15 (Reuters) - Mexico's telecom regulator on Wednesday proposed sanctions on five mobile phone providers for substandard service.

The watchdog for the sector, known as Cofetel, said there would be 16 sanctions against the providers for breaching a service quality plan that dates back to 2003.

Cofetel did not specify what the sanctions would be or who they would target.

Two of tycoon Carlos Slim's phone companies, wireless leader America Movil and fixed-line giant Telefonos de Mexico, have come under scrutiny from authorities in a bid to curb their power in the market and allow other competitors to grow.

Just last week Cofetel slashed connection fees that Telmex charges on long-distance calls, particularly in rural and suburban areas where the company is the only operator.

In April, Mexico's Federal Competition Commission slapped a $1 billion fine on America Movil, accusing it of abusing its dominant position in the market.

America Movil is the biggest cellphone provider in Mexico and Latin America and Slim, earning a fortune on the back of his telecommunications empire, is the world's richest man.

Last year, Cofetel found more than half of all the calls handled by Telcel, the commercial brand under which Slim's America Movil operates in Mexico, failed to connect over a period of about two months.

Telecommunications services in many Mexican cities are prone to problems year-round: cellphone networks often clog, resulting in failed calls or an inability to text message, while Internet and cable television services can be down for hours. (Reporting by Cyntia Barrera Diaz and Mica Rosenberg; Editing by Muralikumar Anantharaman)

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