Introduction to the New Telecom Law by Claudia Sheinbaum Pardo
Mexico’s President, Claudia Sheinbaum Pardo, has introduced a new telecommunications and broadcasting law project that aims to reshape Mexico’s legal framework in this sector. Among the novelties, the proposal suggests a distinct approach to future spectrum allocation, moving away from prioritizing economic factors.
Economic Factors No Longer Determinant for Spectrum Concessions
According to one of the proposed articles in the new law, “the economic factor will never be the determining factor” for granting spectrum concessions. Instead, criterias such as geographical coverage, population-based, social aspects, and public connectivity will be prioritized.
Impact on Telecom Companies and Smaller Regional Businesses
This change seems to be a response from the government towards mobile sector companies like Telcel and AT&T, which allocate more than 17% of their revenues to annual payments for exploiting frequency bands in mobile internet services. It also affects smaller regional and local businesses aiming to enter the cellular market in future licensing processes.
Currently, Mexico’s spectrum prices are between 88% and 96% above international averages for more suitable bands for mobile internet deployment, like the 2.5 GHz band. Since the cellular industry’s existence in Mexico, there has been a constant demand for affordable spectrum, with concessionaires arguing that this context leads to a loss of competitiveness and inadequate services for users.
Accelerated Deployment of 5G Technology
The law proposal acknowledges that Mexico requires an accelerated deployment of 5G technology, which is already mature globally but has yet to see a spectrum auction in Mexico for leveraging this technology. Currently, Mexico is the only significant Latin American economy without a 5G spectrum auction.
Spectrum Reservation for the Executive Branch
The proposed law also ensures a free-of-charge spectrum reservation for the Executive Branch, which can use it in national security plans and social coverage initiatives. This means valuable frequency bands in the 2.5 GHz and 3.5 GHz ranges, optimal for urban 4G mobile internet and 5G services for businesses and mass public, could finally be accessible to new CFE Telecom and Altán Redes for creating new services they cannot currently commercialize due to the lack of these frequencies.
Public Advertising in Community Radios
In broadcasting, similar to telecommunications, the new law project stipulates that commercial concessions will only be assigned through public bidding or secondary market routes. However, the significant aspect is that concessionaires of public, social, indigenous, community, or Afro-Mexican radio can commercialize local advertiser spots for up to 40 seconds per hour of broadcast, aiming to generate income for station maintenance. This has been a long-standing dream for these concessionaires but may conflict with commercial radio entrepreneurs.
Key Questions and Answers
- Q: What changes does the new telecom law propose?
A: The law proposes that economic factors will no longer be the primary determinant for spectrum allocation. Instead, geographical coverage, population-based, social aspects, and public connectivity will be prioritized. It also ensures a free spectrum reservation for the Executive Branch, delegates competition supervision to a new antimonopoly agency, and assigns preponderance and substantial market power regulation to the Digital Transformation and Telecommunications Agency.
- Q: How will this law impact telecom companies?
A: The new law aims to shift the focus from economic factors to broader considerations, potentially affecting major players like Telcel and AT&T as well as providing opportunities for smaller regional businesses.
- Q: What does the law propose regarding 5G technology deployment?
A: The law acknowledges the need for accelerated 5G deployment in Mexico, which currently lags behind other Latin American countries in this regard.
- Q: How does the law affect community radios?
A: Community radio concessionaires can now commercialize local advertiser spots for up to 40 seconds per hour, aiming to generate income for station maintenance.
- Q: What spectrum reservation does the law ensure for the Executive Branch?
A: The law guarantees a free-of-charge spectrum reservation for the Executive Branch, which can use it in national security plans and social coverage initiatives.
