Mexico. The Federal Institute of Telecommunications, IFT, delivered to the Board of Directors and to ruling commissions of the Senate of the Republic the proposals to modify the Federal Law of Rights (LFD) in relation to the high charges for the use of the radio spectrum in the country.
The three proposals are consistent with those that, at the time, the IFT sent to the Ministry of Finance and Public Credit (SHCP) as part of the proposals to modify the LFD 2022 since June of this year and even for years. These proposals consist of:
- Adjust downwards the rights of the bands for the provision of fifth generation (5G) services. Through the modification of the quotas provided for in Articles 244-H, 244-I and 244-J of the LFD, which refer to frequency bands that are not yet allocated (600 MHz bands, L band and 3.3-3.45 GHz band) or that mobile services for which the collection of duties is foreseen (3.45 to 3.6 GHz) are not yet authorized, in order to promote the development of the country, through mobile telecommunications and the efficient allocation of radio spectrum for these services.
- Modify the fee collection structure of the 800/850 MHz bands per Basic Service Area (ABS) instead of based on cellular regions. That is, to change the structure of collection of rights of Article 244-G of the LFD to coverage of smaller geographical dimension, adjusting them by an economic variable, in order to promote the entry of new operators with an interest in providing services at a local level and that payments for rights are proportional to the economic level of the area to be covered.
- Incorporate a scheme of accreditation of expenditures in the field of social coverage against the payment of fees for the use of the radio spectrum, to bring coverage to localities without mobile Internet access service. The proposal involves adding Article 239 bis to the LFD, to encourage the investment of current concessionaires of frequency bands for mobile telephone and Internet services and bring connectivity to localities that currently do not have mobile broadband services.
It is important to note that the first two proposals do not imply a reduction in the federation's budget revenues. In the first case, the reduction of the amounts of radio spectrum band rights that are not yet allocated for the provision of mobile services does not mean loss of revenue, precisely because they are not yet allocated.
Thus, if the amounts of the rights quotas are reduced, these bands will be much more attractive in future bidding processes, which will also result in new revenues from consideration and payment of rights for the federation and will avoid, as is already the case, that strands of spectrum remain deserted in spectrum tenders.
Similarly, the second proposal consists of a redistribution of the current amounts of rights referred to in Article 244-G of the LFD for the 800 and 850 MHz frequency bands based on the 65 Basic Service Areas into which the country is divided, instead of based on the nine cellular regions in which the national territory is also segmented.
With this, the most economically robust areas would pay a higher amount of fees per inhabitant, while the more depressed areas would pay lower amounts. This would encourage the entry of new local and regional operators that to this day see in the rights for the use of spectrum an artificial barrier to entry to the mobile market in the country. As it is a redistribution of the current amounts, this proposal would also not have an impact on the budgetary income of the federation.
Regarding the third proposal, it should be noted that the schemes for accrediting expenditures are not new and are applied in several countries of the world to promote connectivity in underserved localities. The IFT's proposal includes the accreditation of the investments made, as well as a part of the operating expenses of the first year of operations in locations without service.
This scheme would be added to other efforts being made so that all localities in the country come to have mobile Internet access service. The proposal considers the Social Coverage Program 2020 – 2021 issued by the Secretariat of Communications and Transportation (SCT).
In this regard, it is important to note that Article 215 of the Federal Law on Telecommunications and Broadcasting establishes that social coverage and connectivity programs in public places will have the mechanisms determined by the SCT, with the support of the SHCP.
