What to look for in Mexico's 2019 telecoms year

By
Monday, January 7, 2019

The first year of Mexico's Andrés Manuel López Obrador (AMLO) administration could become a test of how much of his government's ambitious connectivity agenda can be achieved amidst severe budgetary constraints and uncertainty about its long-term plans for the sector.

AMLO, has made little mention on how he plans to move forward on the telecommunications sphere after his predecessor's 2013 reform of the sector, which sparked more competition and growth.

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The president promised to bring internet connectivity to all, especially to poorer, underserved areas of the country which are difficult to reach or too small or remote to attract private operators.

But with a nearly 35% budget cut for several government agencies and bodies involved in designing and executing ICT policies for this year, it might prove difficult to accomplish some of its goals.

Internet Para Todos, the government's public spaces connectivity program, "is one of the new government's priority projects to close the digital gap and to bring connectivity to population centers where the service it's not available," Mexican telecoms expert Gabriel Sosa Plata wrote in a column for local newspaper Sin Embargo.

But the 623mn pesos (US$32mn) assigned to the project, which currently operates over 101,000 public internet hotspots in schools, hospitals and public offices, "will be insufficient," Sosa added. "That is why there has been constant talk about the need to push for a national digital plan that allows for the government and the private sector to join forces," he said.

The Internet Para Todos program was one of the few that saw an increase in its 2019 budget.

DOMINANCE ON TRIAL

Telecoms and broadcast regulator IFT – which operates independently of the executive – is due to analyze how dominant players América Móvil and Televisa are complying with extra regulation imposed on them in 2014 after the telecommunications reform, in an effort to increase competition in their respective sectors.

A favorable decision by the regulator on América Móvil's compliance with asymmetric regulations could open the door for the company to start offering pay TV services, which it currently can't do.

The supreme court is also expected to rule this year on an injunction filed by América Móvil on its preponderant status in the market, after it attracted the lawsuit in October last year. That decision could come as soon as January, Sosa said.

It could influence ongoing processes such as the regulator-ordered split of América Móvil's wholesale fixed-line business and the behemoth's interactions with competitors in a market where it controls over 60% despite the extra regulatory load.

"The best mechanism to guarantee access to telecommunications services in the full enforcement of regulation to achieve effective competition in the sector, another example of a state policy for Mexico's telecommunications," said local consultancy the CIU in a report.

Also, IFT board member Maria Elena Estavillo – the only woman on the seven-member board – ends her stint at the regulator in February, which will trigger significant changes. Four candidates, including two with close ties to the IFT, are in the run for the position.

RED TRONCAL RESTART

The government will also have to decide on the relaunch of the tender for an ambitious fiber-optics backbone network using over 25,000km of high-capacity fiber belonging to electric utility CFE, which is to be used to increase telecoms companies' wholesale transport capacity.

Red Troncal, as the project is called, is expected to be a public-private partnership operated by a private company, similarly to Red Compartida wholesale wireless network launched last year. Its tender process, originally expected for October of last year, was moved to February with the announcement of the winner by March 29.

The project "is a connectivity policy not limited to one six-year period (the length of a presidential period in Mexico) but constitutes a state policy," the CIU report said.

Besides that, the IFT has announced potential tenders for at least four different frequencies for commercial mobile telecommunications services, including the remaining 10MHz of capacity on the successfully tendered 2.5GHz spectrum currently in the hands of América Móvil, AT&T, Telefónica and Grupo MVS.

It is also expected to put on the block several spectrum frequencies for community telecommunications services as well as for public security and law enforcement communications.