High Capacity Telecom

Please click the List of Companies Requesting Auction Information to see the names of companies requesting information about the upcoming 3 and 4 G spectrum auction in Mexico.

The auction rules require all bidders to pass a antitrust review to be performed by COFECO, Mexico’s competition regulator.  Since American Movil’s Telcel service has approximately 70% market share, this requirement theoretically only applies to Telcel.  In my opinion, it seems likely that this rule was put in place to keep Telcel out of the auction and to encourage new companies to enter the Mexican cellular market.  Excluding Telcel from the auction will also allow Telefonica’s Movistar and Nextel to obtain additional bandwidth to expand their service offerings.

Amercian Movil is controlled by Carlos Slim, one of the World’s richest men.   It seems a bit ironic that keeping Telcel out of the auction will result in the Mexican government receiving less auction proceeds.  The Government of Mexico will loose out; but the Mexican consumer will be the big winner with access to next generation services and a greater choice of service providers.

Cofetel, the Mexican telecommunication regulator, announced that over forty companies requested information about the upcoming PCS auction.

Cofetel reported that 44 businesses acquired the information memorandum for the 1.9 GHz auction and that 49 companies for the 1.7 GHz auction. Cofeltel said that 35 companies acquired the memorandum for both frequency bands. Televisa, TV Azteca, XC Networks, Nextel, Movistar, investment companies as well as numerous cable companies are among the more than 40 businesses that acquired the information necessary to participate in the upcoming 1.7 and 1.9 auctions. These bands are often referred to as 1900 and 1700 MHz band or “PCS” band.

TV Aztec’s subsidiary Iusacell and Unefon operate competitive mobile cellular services through the Repbulic of Mexico. Nextel and Movistar need the bandwidth to offer next generation services like the iPhone and Adroid devices. The fequencies to be auction will allow carriers to expand existing cellular networks and to build new 3 and 4 G networks.

Among the foreign companies interested in participating include XC Networks, Intra Network and M/C Ventures. XC Networks is a Dallas based international carrier that owns and operates a back haul network throughout Mexico and currently owns a frequency concession in the 23 GHz band. M/C Ventures is a Boston based venture capital fund specializing in telecommunications.

The Mexican Government announced last week the initial details of its uncoming PCS frequency auction and a call for bidders.

Mexico’s telecommunications watchdog Cofetel said it will auction nine blocks of frequencies, ranging from 1850 to 1990 MHz in eight of the country’s nine mobile telephony operating regions, including the capital Mexico City, the regulator said in a document published in the Official Gazette. A copy of this document can be found here: Mexico PCS Auction Convocatoria Licitación No 20

Cofetel also said it will auction seven blocks of frequencies within the 1710 to 2170 MHz range covering all of the Mexican territory which could give auction winners a nationwide presence with spectrum capable of supporting third and fourth generation wireless services such as high-speed Internet. The auctions will be for nationwide and regional licenseses.

Cofetel said it will offer sufficient bandwidth to allow existing operators to meet their spectrum needs as well as open the door to new investors. It is anticipated that Amercan Movil’s Telcel will be barred by antitrust regulator from participating in the auctions. Additional detailed informtion on the bidding process is expected before the end of the year. A map detailing Mexico’s telecommunications regions may be found here under “Links to Key Information”.

The U.S. Department of Commerce recently issued a report on the Mexico Telecommuication industry. This report provides detailed information regarding adoption rates for mobile phones, fixed line phones, internet and TV services. The Mexican telecommuication industry has enjoyed double digit growth rates for years with continued excellent growth prospects.

The report states that:

Internet usage in Mexico has been steadily growing. There were 14.8 million PCs registered during 2007; 59% of these computers have Internet access. The Internet is also accessed through cellular phones- 63.2 million of these phones are in use in Mexico. Out of the 8.7 million PCs with Internet access, 55% are dedicated for home use, and only 45% are registered for business use. Of the 22.7 Internet users, 21 million are 13 years old or older, and 1.6 are between 6 – 12 years old.

Due to the fact that providers in Mexico pay high rates for interconnections to provide Internet services, Mexican end users are footing the bill for the world’s most expensive Internet service.

The Mexican Mobile Market continues to grow, reaching almost 50 million users in the 1Q06. Telcel the Mexican branch of América Móvil, led the way with 77% of market share, followed by Telefónica Móviles with 13.5%. A similar growth trend is seen in the rest of the Latin American region, where the total number of subscribers has surpassed 256 million, of which over 100 million are America Móvil subscribers. Competition by suppliers of equipment, services and software to sell to the 5 operators in the country is fierce, and suppliers are pressured to offer products and/or services with attractive guarantees, payment terms, financial stability and industry experience. Suppliers need to focus on users and operator productivity in order to have a real value proposition to wireless operators.

A full copy of the report can be found here: Mexico Broadband Data 2009