The Mexican telecoms and media sectors have been turned upside-down over the past year, amid regulatory moves to curb America Movil’s dominance, and AT&T’s acquisitions of Iusacell and Nextel Mexico. More international influence could be felt when the Communications Ministry allocates 700MHz spectrum, later this year, for a national wholesale LTE network.
The Ministry has called for expressions of interest (EOI) in taking part in its shared network project, which is designed to reduce the market power of Movil, whose cellular arm currently has about 67% share, and to encourage new players. Some preliminary discussions were reported to have taken place last September, mainly with major infrastructure providers Ericsson, Alcatel-Lucent and Huawei – any or all of which could provide and manage the network while potentially also investing in the project.
It is still not very clear how the Ministry envisages the wholesale network being owned and managed. Similar projects in other countries, such as Russia and Kenya, have often faltered on the political and financial complexities of shared ownership among operators. A simpler approach may be to encourage vendors to own and operate the network, then signing multiple MVNO deals with established and new service providers.
The Secretaría de Comunicaciones y Transportes (SCT) says that the shared system will be “developed by a commercial entity of consortium of entities that will be responsible for its design, financing, deployment, operation and commercialization.”
So far, the SCT has simply asked any company to come forward, which is interested in taking part in any aspect of the new network. The deadline for submissions is April 22, and the responses will help shape the formal request for proposal (RFP), and therefore the shape the network will take. The RFP is likely to be issued in late September and the cost of the build-out is estimated at about $10bn over 10 years.
The government plans to allocate 90MHz of spectrum in the 700MHz band – coveted for its strong propagation qualities, especially useful in Mexico’s underserved rural areas. International interest may be strong. As well as the European and Chinese OEMs, AT&T will have an obvious reason to get involved, as it starts to make its US and Mexican territories into a single mobile services zone – an activity which could, in time, spread further into Latin America. And China Telecom and Softbank have also been reported to be preparing submissions.
While some hope the wholesale plan will support new entrants, other commentators believe it will mainly be harnessed by existing non-Movil cellcos, such as Telefonica Movistar and AT&T’s Iusacell, to extend their coverage and capacity at lower cost than rolling out their own equipment everywhere.
America Movil will face greater competition on several fronts over the coming years, as it is being pushed to offload some of its assets in Mexico to reduce its dominance and satisfy new competition regulations.