Background on the Mexican Telecommunications Landscape
In an effort to ensure fairness in the allocation of commercial radioelectric spectrum, the Mexican federal government has pledged that the state-owned Comisión Federal de Electricidad (CFE) will access this spectrum under the same conditions as private operators, such as AT&T and Telcel. This move comes amidst discussions on the draft of the Ley en Materia de Telecomunicaciones y Radiodifusión (LMTR), which initially allowed the state to reserve radioelectric bands for its connectivity plans without economic cost, potentially impacting market competition.
Who are the key players?
- CFE: The state-owned electric utility company that will now be treated equally with private operators in spectrum allocation.
- AT&T: A prominent private telecommunications company in Mexico.
- Telcel: Another major private telecommunications company in Mexico, owned by América Móvil.
- Altán Redes: A Mexican telecommunications company that provides wholesale services to other operators.
- BAIT: A telecommunications company owned by Walmart, providing wholesale services.
Government’s Stance on Spectrum Allocation
José Antonio Peña Merino, head of the Agencia de Transformación Digital y Telecomunicaciones (ATDT), clarified that CFE will have access to commercial spectrum under the same conditions as private companies, either for free to provide social coverage or on an equal basis for commercial purposes.
What does this mean for the telecommunications industry?
This statement from Peña Merino aims to address concerns within the telecommunications industry regarding the LMTR draft, which initially allowed the state to reserve radioelectric bands for its connectivity plans without economic cost. The industry has been worried about potential market competition implications.
Current Spectrum Allocation Concerns
Companies like Altán Redes, BAIT, Telcel, and AT&T have expressed concerns about the current spectrum allocation policy in Mexico. Some companies, like Telefónica and AT&T, have returned unprofitable spectrum bands. Telcel has voiced concerns about rising spectrum prices affecting its operations, while Altán Redes seeks free access to the 2.5 GHz band with available national coverage for 4G and 5G services.
Future Implications
The final version of the LMTR is still under discussion in the Mexican Congress. Industry experts, like Jorge Fernando Negrete from DPL Group, emphasize that the devil is in the details. They will closely monitor the final text and clarifications, as any privileged conditions for Altán Redes could rapidly impact the market, especially in upcoming 5G auctions and T-MEC negotiations.
Spectrum Pricing and Market Competition
The Mexican government, through CFE Telecom, already competes in urban and rural areas by offering free SIM cards with mobile data and voice minutes, displacing both large and micro telecommunications operators. These smaller companies have raised concerns about market displacement due to the current spectrum allocation policy.
Will CFE be subject to competition norms?
Erick Huerta from Redes por la Diversidad, Equidad y Sustentabilidad A.C., which supports the community telecommunications company TIC-AC in Oaxaca, stated that if the government seeks a commercial concession for CFE, it should be under the same conditions as other commercial operators. This would subject CFE to competition and free market principles.
Spectrum Pricing and Coverage in Mexico
José Antonio Peña Merino acknowledged that Mexico’s mass telecommunications services have reduced prices and expanded coverage, particularly in the last six years. However, he did not mention that Brazil, for example, prioritized low-cost mobile communication services and expanded coverage through a new spectrum concession policy during the same period when Mexico’s political party, Morena, refrained from lowering frequency usage tariffs in Mexico.
Key Questions and Answers
- Will CFE access spectrum through public bidding? Peña Merino did not explicitly state this, but his declaration of equal commercial spectrum conditions for CFE implies a public bidding process.
- Will CFE be subject to competition and free market principles? This remains to be seen, as the final LMTR text is still under discussion.
- Who will cover the costs of providing 4G services to 14 million Mexicans without adequate internet coverage? This question remains unanswered, as the government has not specified how it will allocate resources for this initiative.
- What are the specific bands of spectrum intended for public use? The government has not clarified which radioelectric bands will be allocated for public use.
Fernando Borjón, a senior consultant at Access Partnership, welcomes the government’s commitment to treat CFE equally with private operators in spectrum allocation. However, he acknowledges that the LMTR’s previous conditions were unequal and emphasizes the importance of adhering to the Constitution, which mandates maximum competition through spectrum licitation.
