The multi-band award should result in a quick development of 5G in the country – but policymakers need to address the historically high costs of spectrum
The auction will take place later in the year: The Mexican Federal Institute of Telecommunications (IFT) unveiled its plans for the auction of spectrum for 5G. The auction is still some way away, since draft rules will not be submitted for consultation with stakeholders until September. It is therefore unlikely that the auction will take place before Q4 2022 – a year after Brazil’s 5G auction, and almost two years after Chile’s award in February 2021.
The IFT will offer a range of frequencies: The IFT will allocate licences in five bands – 600MHz, 800MHz, 850MHz, 1.5GHz, and 3.5GHz. This will provide a mix of spectrum for coverage purposes, as well as for industrial applications. Reflecting this, for the first time the auction will be open to providers other than traditional telecoms operators, in a bid to attract small and local players. The 800MHz and 850MHz spectrum will be offered in local lots (Basic Service Areas). The IFT is looking to auction these under better conditions than the recent IFT-10 auction of October 2021, where only 3 of 41 blocks were assigned.
Mexico can still shine in the 5G race, but needs to address high prices for spectrum: Despite the late award of spectrum, Mexico is still well placed in the race for 5G in Latin America. The 600MHz and the 3.5GHz band are readily available, meaning that operators will be able to use them immediately once the licences have been awarded. This gives Mexico an opportunity to achieve widespread coverage quickly and to deploy innovative services in the 3.5GHz band. The award of the 1.5GHz band will also help, since this band is often seen as a ‘complementary downlink service’, which could combine well with the 3.5GHz spectrum and further boost its potential. However, the cost of spectrum rights continues to be a looming threat for operators, and could hamper 5G deployment if it is not addressed. In 2021, the IFT estimated that the total cost of spectrum for AT&T and Telefonica was close to 15% of their revenues, whereas it was below 5% for Telcel which continues to dominate the mobile market. In particular, annual fees make up to 90% of that cost. These are set by the parliament in the Federal Law of Rights. The IFT is asking the parliament to lower them to facilitate investment and avoid the spectrum going unsold like in recent cases. Should policymakers not address the problem, coverage and speeds could suffer.
