Mexico. It has concluded another tender process for the allocation of radio spectrum in Mexico, an essential resource for the provision of wireless voice and data telecommunications services.
The IFT-10 tender reached its bidding stage to concession the use, exploitation and commercial exploitation of frequency blocks in the 800 MHz, AWS, PCS and 2.5 GHz bands.
Only two mobile players expressed interest in winning the rights to these frequencies, AT&T and Telcel. The above, after the return of Telefónica Movistar spectrum and its turn to become a Mobile Virtual Operator (MVNO) on the capabilities and infrastructure of AT&T.
It is striking that, of the 41 blocks subject to tender, only economic offers were received for 3, two in the 800 MHz band, to provide coverage in municipalities in cellular regions 1 to 4 and in the metropolitan area of Mexico City, and one in the 2.5 GHz band with the obligation to provide coverage to at least 30 of 52 localities between one thousand and 5 thousand inhabitants who do not currently have mobile services available.
High Spectrum Use Charges. The limited interest manifested among mobile operators results from the high charges they have to devote to obtaining exploitation rights and for the use of radio spectrum in Mexico, which has also resulted in competition for ownership being reduced to just two competing players.
Similarly, it has resulted in a growing number of market participants choosing to launch themselves as MVNOs on the growing infrastructure deployed by Altán Redes, above all, who has exceeded more than 4 million end users operating on its more than 100 customers (Mobile Virtual Operators), which serve various market niches.
For this tender, the State will receive revenues of $1,351 million pesos (mdp), an amount to which are added $6,733 million pesos that must be spent by the winning operators for the use of spectrum in the next 20 years. So the total amount to be disbursed will be $8,084 million pesos.
It is important to pay attention there to the fine balance between the necessary income for the treasury, which at the same time does not result in overloads in the cost structure of mobile operators and that could put at risk their operational and financial viability.
Fiscal Policy for Connectivity. It is worth emphasizing the need to make the constitutional mandate of universal access to telecommunications services consistent with the construction and implementation of a sectoral fiscal policy that includes incentives for the deployment of infrastructure.
It is also important to accelerate the bidding process for more spectral resources to effectively transition to the fifth generation (5G) of mobile services.
The work of administration of the radio spectrum carried out by the Federal Institute of Telecommunications (IFT), finds a fiscal barrier in the high amounts set by the use of the radio spectrum that "inhibit participation in tenders, cause the return of spectrum and become an artificial barrier to the entry of new competitors", according to what was explicitly stated in its recent statement on the current tender.
Based on this, it warns that it will continue to advocate for better conditions for the allocation of spectral resources for the provision of telecommunications services, in the task of detonating access and promoting the quality of these for the entire population in Mexico.
Text written by Ernesto Piedras of The Competitive Intelligence Unit, CIU.
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