Mexico telecoms agency wants to focus on closing digital gap

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Monday, September 10, 2018

Mexico should focus on closing the digital gap by offering companies incentives to invest in coverage and infrastructure, as it also reduces the tax and regulatory burden on the private sector, telecoms investment promotion agency Promtel said in a document.

The country has made great strides toward connectivity since 2013's telecommunications reform allowed new players and services to be offered. But people in cities have a 72% chance of using the internet versus only 48% of those in rural areas, while those 24 years' old or younger are eight times more likely to do so than a 65-year-old, Promtel said.

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The agency, Altán Redes state partner in the Red Compartida wholesale network, suggested promoting social mobile virtual network operators (MVNOs) and exempting indigenous communities from paying rights to offer telecommunications services, as well as allowing a secondary market for telecoms radio frequencies to better take advantage of unused spectrum.

A seed capital fund for financing public-private partnerships and private sector ventures, drawing funds from spectrum auctions, taxes and telecoms concessions rights, as well as fines for telecoms operators, could provide funds to cover underserved areas in a market environment where prices have dropped by 44% since 2013, the document added.

LIFTING INFRA BARRIERS

The current Mexican government has been working on setting the basis for an infra deployment expansion in the sector by clarifying rules on permits and access to basic infrastructure such as roads, public buildings and other facilities and the vast electric grid, communications undersecretary Edgar Olvera told BNamericas in a recent interview.

"It is imperative to have a passive infrastructure policy that promotes the proper usage of public infrastructure at the federal, state and municipal level, with homologated requirements," Promtel said.

Hidalgo state recently became the first to incorporate a set of simplified infrastructure and public works bylaws which the government expects to deploy across the other 31 states.

Promtel also suggested creating a single entity to coordinate public telecommunications policy to promote ICT adoption. Currently in Mexico the IFT is in charge of regulating the sector, but other entities such as the communications and transport ministry (SCT) are in charge of infrastructure policy. The upcoming government that will take office in December has also announced the creation of at least two new posts related to ICT policy, one within the SCT and the other at the president's office.

A single entity "will guarantee the required government coordination to deploy public digital services projects and their contribution to the growth of investments in the telecoms sector," the agency added.

Ernesto Piedras, CEO of local consultancy The CIU, said in a report that effective competition conditions are also a must to promote investments in the country, where just one player dominates over 60% of the market.

"The formula to incentivize private investment is, no more, no less, the creation of effective competition, the market reconfiguration and ... the effective enforcement of the competitive regulatory framework," he said.