IHS Global Insight Perspective | |
Significance | COFETEL has confirmed a new wireless spectrum tender to operate WiMAX services in the country. |
Implications | Bidding rules are expected to be released in the next three weeks so as spectrum can be auctioned simultaneously. |
Outlook | The entry of new players into the cellular segment would increase competition in a market currently dominated by América Móvil's Telcel. |
Héctor Osuna, president of COFETEL, at a telecoms conference in Mexico yesterday confirmed that the regulator plans to release the bidding rules to participate in a new public tender to operate WiMAX services in the 3.4 GHz and 3.7 GHz bands within the next three weeks, local daily El Financiero reports. Osuna also said that COFETEL is considering establishing an alternative scheme to the traditional bidding process to allocate additional spectrum for WiMAX services in the 70—80 GHz band. The new tender would select, among all the participants, an "administrator" that would be responsible for managing the spectrum. This new regime would avoid situations in which only one licensee uses the entire spectrum for its own benefit, allowing other operators to access this resource for a fee.
COFETEL recently approved the bidding rules for the sale of 120 MHz to develop WiMAX and advanced mobile services in the 1.7 GHz and 1.9 GHz bands (see Mexico: 27 May 2009: Mexico's COFETEL Approves Mobile Spectrum Tenders). The regulator has specifically reserved 40 MHz in the 1.7 GHz band to promote the entrance of at least one new competitor on a national level in the market, offering enough bandwidth to deploy a technically and economically competitive network. The 3.4 GHz/3.7 GHz and 1.7 GHz/ 1.9 GHz auctions are expected to be released simultaneously.
Outlook and Implications
The release of new wireless spectrum for the development of broadband services is one of the most immediate priorities for COFETEL. The move is expected to make room for new players and let established operators like Telefónica improve their services and better compete against market leader América Móvil, which controls almost 72.5% of the market. The Spanish operator currently lacks third-generation spectrum in central Mexico, which limits the access to some services, like the Internet, in the country's capital. This situation is even worse for smaller operators like Iusacell and Unefon , which have been waiting for years for the government to release more spectrum. The regulator’s original plan to sell wireless licences for mobile telephony and broadband in 2007 was delayed by bureaucratic red tape as the Finance Ministry, the Communications and Transportation Ministry, and the Federal Competition Commission all have a say in the auction.
At end-March 2009, Mexico had 76.6 million mobile subscribers, 11.4% up year-on-year (y/y), equating to a 71.5% penetration rate. The sector is currently dominated by two operators which control 92% of the market. Telcel, a unit of América Móvil, had a 72.5% market share, followed by Spanish giant Telefónica with a 19.5% share of the market.