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SPOTLIGHT: Would a Mexico shared network quickly wither and die?

Bnamericas Published: Tuesday, December 08, 2015

The viability of Mexico's plans to successfully build and operate a shared network using the 700MHz band, and the benefits it would bring, was thrown into doubt by some during the BNamericas 4th Mexico Internet of Things & Telecom Summit, in Mexico City, on Thursday.

Participating in a panel discussion on how to close the digital divide, Gerardo Soria, president of the Mexican telecom law institute IDET, slammed the project, saying it would become a white elephant and financially unsustainable within four years.

The project is due to be auctioned next year to a private company, which would then build a network and sell services to telecom operators, MVNOs and ISPs. The idea is that the cost of the service for the end user would be kept to a minimum and national coverage ensured so as to guarantee all members of society access to broadband.

However, Soria said the three large telcos, AT&T, Telcel, and Movistar, would not be interested in participating in the project given that they have their own networks while MVNOs, which account for a mere 1% of the market would not be able to sustain the network financially.

Soria, a lawyer, compared the project to Argentina's attempt to create a state-owned network with state operator Arsat. In 2012, the Argentine government decided to award 3G spectrum to Arsat. But the non viability of the project became apparent given the huge cost and complexity of building a cellular network. The government reversed its decision and auctioned the spectrum to telecom operators at the end of last year.

"We're heading toward the same thing and in four years the project will have become a white elephant and we'll be back where we started," Soria said.

WHAT ROLE SHOULD THE GOVERNMENT TAKE?

Other panelists debated what level of participation the state should have in helping to narrow the digital divide.

Lina Ornelas, head of public policy and government relations at Google Mexico, said the government should provide basic infrastructure but focus more on ensuring a fair regulatory and competitive environment and provide training to teachers to help educate the population in how to use digital media.

Ornelas presented Google's Loon and Titan broadband projects, saying the private sector will come up with ways to address demand for connectivity if the demand is there.

Project Loon consists of providing internet access at low cost to remote areas using high-altitude balloons placed in the stratosphere, while Titan has a similar purpose but uses drones. Loon has already been tested in Brazil.

Enrique Melrose, a professor of digital systems at Mexico's renowned ITAM technology institute, said that the challenge with closing the digital divide is not one of providing infrastructure but of stimulating demand.

He said that with the appropriate content that is of interest to society, people will find ways of connecting but that using the internet has to make sense and be of use to people otherwise providing digital connectivity centers is pointless.

Eduardo Ruiz Esparza, VP of telecom with Mexican telecommunications, electronics and IT association Canieti, defended the government's role in installing basic infrastructure in areas that are financially unattractive to the private sector and praised the México Conectado program which plans to install 250,000 public internet access points by 2018.

Soria responded that Mexico's previous state connectivity projects Enciclomedia and E-Mexico had been failures and that any other such project was doomed to the same fate.

Jorge Negrete, general director of local consultancy Mediatelecom, took a more conciliatory tone, noting that closing the digital divide was not an easy task and that there was no one-size-fits-all solution for every country.

Negrete pointed out the success of Colombia's Vive Digital project, in which the government has taken a highly active role in closing the digital divide. During the first term of the Juan Manuel Santos government, Vive Digital surpassed its goal of increasing by fourfold the number of broadband connections to reach 21.7% of the population. And for that project installing the basic infrastructure is just the first of four steps. The others are training, certification for IT companies and eventually exporting IT expertise and products and services.

Negrete also praised the Chilean government, and other countries, for including coverage of remote areas as part of the obligations of their concession contracts, saying that results have showed the country has one of the highest broadband penetration rates in the region.

Despite the criticism, the shared network in Mexico is included in the constitutional telecom reform of 2014 and is due to go ahead. The challenge will be to find a way to make it work.

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