Introduction and Background
The decision, expected by the end of 2025, to include the 600 MHz band (614-698 MHz) in the Annual Program of Frequency Band Usage and Exploitation for 2026 and likely in the upcoming 5G auction led by the new Telecommunications Regulatory Commission (CRT), is the most relevant regulatory action for massive 5G deployment in Mexico over the coming years.
The Importance of Spectrum Allocation for 5G
Technology and Information Communication (TIC) enable access to culture, education, and the digital economy. Allowing operators to invest and deploy efficient networks is crucial for fulfilling this promise to the population. The 600 MHz band, due to its coverage and penetration capabilities, is the best tool to accelerate this objective.
Global 5G Advancements
More than five years have passed since the first commercial 5G networks were turned on in South Korea (April 2019). Since then, the global ecosystem has rapidly advanced in spectrum allocation, standards, and economies of scale for equipment. However, Mexico arrives late to its national 5G frequency auction.
The Role of the 600 MHz Band
The 600 MHz band represents the second digital dividend following the reorganization of digital television. This frequency range became available for IMT (mobile services) after the digital television reordering. Its technical advantages include indoor penetration, wide coverage by base stations, and relatively low infrastructure costs per square kilometer. Technically, it can offer up to 70 MHz (35+35 for upstream and downstream). Practically, freeing the 600 MHz band for 5G allows for improved rural and urban coverage, reduced cell site requirements, and enhanced user experience indoors.
International Comparisons
The United States introduced the 600 MHz band to the market through an incentive auction that raised $19.8 billion and allocated 70 MHz for mobile use. The process was complex, contentious, and highlighted the high value of spectrum and conflicts with broadcasters who held the frequency assignment. Canada auctioned the 600 MHz band in 2019, with a model that included national blocks and regional allocations to allow small operator participation.
Regional 5G Developments in Latin America
Latin American 5G processes have ranged from successful auctions (Brazil, with deployment obligations) to regulatory and judicial conflicts (Chile, due to operator WOM’s deployment failures).
Benefits of a Well-Designed Auction in Mexico
A well-structured auction in Mexico would bring greater rural and semi-urban coverage, improved voice and data quality indoors, support for new services (telemedicine, remote education, industrial IoT), and competition with better prices and plans for consumers. It would also facilitate wholesale services for Mobile Virtual Network Operators (MVNOs) to offer 5G.
Potential Risks
However, poorly designed auctions could have severe consequences. The IFT’s initial plan proposed regional blocks, which would discourage participation if block prices were set too high. Key operators like AT&T might refrain from participating, leaving blocks unclaimed.
Existing Spectrum Rights in Mexico
The IFT’s diagnostics showed that existing rights in Mexico are above the international average, leading to refunds and empty competitions in previous processes. The former regulator proposed adjustments and schemes to reduce barriers, including temporary exemptions for new entrants.
New Participants and Investment Capabilities
Another threat is the entry of new participants without genuine investment capacity. In Colombia, Chile, and even Brazil, spectrum allocations resulted in failures when new participants returned frequencies, failed to make payments, or did not meet deployment commitments. Strict guarantees, bonds, and enforcement mechanisms are necessary to prevent such errors.
Geographical Design Risks
A third risk is inappropriate geographical design. The IFT proposed a national block and blocks per Area of Partial Service (APS). However, to fully exploit the 600 MHz band’s potential, national blocks are more suitable. The wide-coverage nature of the band aligns with nationwide allocations that favor economies of scale and roaming, avoiding market fragmentation, interoperability complications, and increased costs due to lack of harmonization.
Shared Infrastructure and the Altán Redes Shared Network
Investors in infrastructure need assurance of having a spectrum portfolio sufficient to make deployments profitable. This leads to discussions about the Altán Redes Shared Network, which operates 90 MHz in the 700 MHz band as a wholesaler. Its wholesale model is one way to extend coverage and enable virtual operators to offer 4G without deploying their own network. However, the auction design must avoid distortions and ensure competitive neutrality and investment.
The Role of the National Antimonopoly Commission (CNA)
Mexico’s institutional transition with new commissions and laws positions the emerging National Antimonopoly Commission (CNA) as an additional actor to assess the economic conditions of the auction, as the CRT lost its exclusive economic competition authorities in telecommunications and broadcasting like the IFT had.
Key Questions and Answers
- What is the significance of including the 600 MHz band in upcoming spectrum auctions? Including the 600 MHz band is crucial for massive 5G deployment in Mexico, as it offers wide coverage, low infrastructure costs, and improved indoor user experience.
- What challenges does Mexico face regarding 5G deployment? Mexico faces delays in its national 5G frequency auction and the risk of poorly designed auctions that could discourage operator participation or lead to spectrum being left unclaimed.
- How can a well-designed auction benefit Mexico? A well-structured auction would bring greater rural and semi-urban coverage, improved voice and data quality indoors, support for new services, and better prices and plans for consumers.
- What are the potential risks of a poorly designed auction? Poorly designed auctions could result in high entry prices and spectrum rights, discouraging operator participation, leaving blocks unclaimed, and causing market fragmentation.
- What role does the CNA play in the auction process? The CNA evaluates the economic conditions of the auction, ensuring fair competition and preventing barriers to entry for new participants.
