UPDATE 1-Mexico tenders fiber optic network for competition

* Mexico to tender operation of data network

* Government eager to boost telecom competition

* Could affect sector leader Telmex
(Adds details on data centers, background, byline)

By Noel Randewich

MEXICO CITY, May 19 (Reuters) - Mexico will tender the
operation of two unused strands of a nationwide fiber optic
network to boost competition in the telecoms industry, President
Felipe Calderon said on Tuesday.

The Federal Electricity Commission, or CFE, Mexico's
state-owned power utility, said it would provide guidelines for
the tender to manage and maintain the strands, part of its
27,000 kilometre fiber optic network, within 90 days.

"We're literally creating a new backbone that will transform
telecommunications, increase coverage, accelerate competition
and facilitate convergence with massive economic and social
benefits for Mexicans," Calderon said.

Mexico suffers from too few competitors in sectors such as
television, cement, beer and soft drinks. But weak competition
in the telecoms industry is especially blamed for slowing down
the country's economic development.

Fixed-line operator Telmex (TELMEXL.MX) (TMX.N), controlled
by billionaire Carlos Slim, owns nearly all Mexico's telephone
cables and even the copper wire leading into homes, giving it a
powerful hand against smaller companies eager to offer phone or
Internet services, but which need access to infrastructure.

In March, the Organization for Economic Co-operation and
Development suggested Mexico could drastically improve its
telecommunications by making the CFE's mostly unused fiber optic
network, which it built to monitor its power lines, more easily
accessible to small operators.

The commission began selling access to its network in 2007,
signing up Axtel, a small fixed-line operator.

Telmex, a former government monopoly, owns 86 percent of
Mexico's fixed telephone lines and America Movil (AMXL.MX), also
controlled by Slim, has 75 percent of mobile lines, according to
data from Telmex and industry regulator Cofetel.

The commission said it started operations on Tuesday at nine
datacenters across Mexico to provide operators easy access to
its network.

Already suffering from shrinking profit margins, Telmex
could face more competition if legislators go ahead with a
proposal this year to allow big foreign players like Spain's
Telefonica (TEF.MC) to take controlling positions in Mexican
fixed-line telecom companies.
(Additional reporting by Tomas Sarmiento, editing by Matthew
Lewis)