Mexico Plans 5G Spectrum Auctions While Mexicans are Being Convinced to Move off 2G

 

Having a population approaching 125 million and with relatively low broadband and mobile penetration, Mexico’s telecom sector retains significant potential for growth. 

The mobile market also continues to undergo considerable changes in the wake of regulatory efforts to curb the market dominance of Telcel. Although the MVNO segment has only a very small market share, it continues to attract investment, and new players enter the market each year.  Developments in 5G have been slow given the existing capacity of LTE, though the auction of spectrum in the 600MHz band (among the first globally) later in 2021 will stimulate the sector as operators launch services.

Mexico is Carlos Slim country. The telco tycoon has made his fortune controlling the landline market with Telmex and the mobile market with América Móvil. His mobile provider is not called Claro like anywhere else, but Telcel in Mexico. It has a huge market share of more than 2/3 of the nation's subscribers.

2G and 3G are on 850 and 1900 MHz on all operators except AT&T that doesn't have 2G and Movistar is shutting down 2G, while 4G/LTE has started with Telcel and AT&T mainly on 1700 MHz (AWS Band 4), Movistar on 1900 MHz (Band 2) AT&T has 3G and 4G only, both on 1700 MHz.

The existing situation of the mobile market in Mexico is summarized in the following facts. According to the telecom regulator (Federal Institute of Telecommunications, IFT), by December 2019, 20.9 percent of the mobile data was transmitted through 3G technology, whereas 78.9 percent was transmitted under 4G technology. Based on the latest survey (2019) performed by the National Institute of Statistic and Geography (INEGI), around 29 percent of Mexican population lacks any kind of internet access and 90 percent of mobile users use a smartphone. Finally, a study from the Competitive Intelligence Unit shows that by Q2 2020, there were 94 mobile lines per 100 inhabitants, whereby the market share by operator was as follows: 63.3 per cent by Telcel (America Movil), 19.9 percent by Telefonica Movistar, 15.1 percent by AT&T and 1.7 percent by all MVNOs.

Regarding coverage and mobile experience Telcel triumphs in most of the Open Signal awards, having held onto those for Video Experience, Games Experience, Voice App Experience, Download Speed Experience, Upload Speed Experience and 4G Coverage Experience. The only award that it did not win outright was that for 4G Availability, which continues to be held by AT&T.

Telcel is still the top dog in the country with approx. 70 million subscribers or a solid 63% market share at the end of 2019. It's still seen a the dominant provider in the country, but is increasingly challenged by AT&T.

🤯🤯🤯 Han aparecido manchas considerables de cobertura 5G de Telcel en Querétaro, esto en los mapas de @Speedtest
Cada vez se siente más cerca. pic.twitter.com/sf1WzMKwMP

— Telefonias Unlimited (@TelefoniasU) February 15, 2021

Telcel already has the necessary spectrum for 5G and its network has already been detected as seen on Speedtest tweet above.

Movistar was the only real competitor of Telcel in Mexico until AT&T arrived in 2015. 

Movistar has announced to shut down their 2G network on 1900 MHz within 2019 in order to free bandwidth for 4G and 5G. The 2G shutdown began in Feb. 2019 in Merida to be phased out totally by the end of 2020. For Movistar you need a 3G or 4G/LTE-abled device.

Movistar has expanded its 4G/LTE network to 23 new markets and 500 rural communities, via the deployment of 1700 new VTS stations including Aguascalientes, Cancun, Cuernavaca, Merida, Torreon, Veracruz and Villahermosa. 

AT&T, the telco giant from the US, bought both providers Iusacell and Nextel in 2015 and rebranded them. They have invested some billion pesos into improving their limited network.

AT&T Unidos has closed down its 2G/GSM network in 2017. So you need a 3G- or 4G-enabled device for AT&T like in the US. 3G is on 850 and 1900 MHz, 4G/LTE is on 700, 850, 1900, 1700, 2100 and 2300 MHz.

AT&T Mexico has returned a portion of its 800MHz spectrum to the country’s regulator in a bid to reduce its costs. As reported by El Universal, the operator concluded that per subscriber it pays 242% more than its rival Telcel for using these frequencies, which it considers untenable. Accordingly, it has handed back permits for cellular regions 5, 6, 7, 8 and 9 to the IFT (Instituto Federal de Telecomunicaciones).

TeleGeography notes that AT&T’s decision marks the second time in 2020 that a Mexican mobile provider has returned spectrum. Movistar relinquished its full holding of 1900MHz and 2500MHz spectrum in Q1, raising €95 million (US$104 million) and freeing it from coverage requirements.

Telcel, AT&T and Movistar can now connect to the Altán Shared Network, an LTE network that aims to cover most areas of the country, but in particular its underserved areas.

Altán Redes, which describes itself as “the Mexican company responsible for designing, developing, operating and marketing the Red Compartida, the Network for Everyone” has signed an agreement with the national government so that Telcel, AT&T and Movistar can connect to its network.

Altán’s sharing of its infrastructure with these three major players will, it suggests, allow it to bring communications to hard-to-reach areas with fewer than 5,000 inhabitants.

The Red Compartida currently provides 4.5G LTE coverage to 61.66 percent of the total population of Mexico. This so-called ‘Social Roaming’ agreement helps it to fulfil its promise to connect the majority of Mexicans and close the digital divide.

Built via public private partnership, Red Compartida is a 20-year concession awarded by the Mexican government to Altán Redes that aims for the development of a wholesale, universal, continuous, neutral and non-discriminatory 4G LTE network that will cover 92.2 percent of the Mexican population by 2024. This will include 15 percent coverage in towns of fewer than 10,000 inhabitants.

La Red Compartida uses 700MHz spectrum. Altán Redes is reportedly investing $7 billion in building out the network so that it can be used by “network and non-network operators in a non-biased wholesale business model”. Of course, whether Mexico’s operators are happy to work with that business model remains to be seen.

According to the GSMA Mobile Economy report for Latin America, there is still a big chunk of 2G users who are unwilling to move off it. Smart Featurephones with 3G are being launched to encourage users to start using some data services and experience the benefits of digital revolution

This is a new 2G/3G phone - "comes with 3G and access to essential apps such as WhatsApp, Google Assistant, Google Maps, YouTube, Facebook, etc., allowing users to benefit from this valuable content at their fingertips." #2G3Gshutdown https://t.co/Kqu6LIlVRA

— Zahid Ghadialy (@zahidtg) February 2, 2021

In a recent report, Bnamericas mentioned that Mexican regulator IFT just set in motion a massive tender to award 41 national and regional blocks of spectrum in the 800MHz, PCS (1.9GHz), 2.5GHz and AWS-3 bands, mostly for 4G. 

The IFT-10 tender, as it is known, is divided into different stages. From February 15-June 11 interested participants can send questions to the IFT and register for the tender. Qualified participants will be able to submit offers starting on September 27.

The process is expected to be concluded and have all spectrum licenses awarded by the end of 2021 or in early 2022, IFT spectrum head Alejandro Navarrete said this week during the 5G Americas event.

The official said Mexico has more than tripled the amount of spectrum for mobile broadband in the last six years.

In 5G, Mexico has reorganized spectrum in order to release frequency in the 3.5Ghz band for operators.

However, there is no specific timeframe to award spectrum in the 600MHz band and more in the 3.5GHz band. IFT has generally said it plans to award 5G frequencies this year. 

The decision is included in the 2021 program for the use and licensing of radio frequencies, published in the official gazette. Use would be mostly for fixed wireless access (FwA).

However, frustrating expectations from part of the mobile industry, Mexico does not intend to grant spectrum licenses in millimeter bands for 5G before 2023. 

According to Navarrete, there are more doubts than certainties about the feasibility and the business models for these bands. In the case of the 28GHz band, Mexico also has issues with the satellite services occupying the spectrum.

Among the challenges for the future implementation of 5G, Navarrete cites the varying municipal regulations for the installation of infrastructure, such as towers and fiber.

Mexico has so far identified 11,190MHz of radio spectrum available for mobile broadband, although this does not mean that this entire spectrum will necessarily be assigned.

The distribution of spectrum in Mexico is currently as follows: AT&T has 185MHz, América Móvil’s Telcel 179MHz, Altán 90MHz, Telefónica’s Movistar 36MHz and other concessionaires 2.5GHz, according to consultancy Telconomia.

National mobile spectrum is expected to become more concentrated as Telefónica still has blocks to return in December 2021 and June 2022.