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Mexico selling AWS spectrum for 4G; cuts access fees for shared network

Mexican regulator IFT (Federal Telecommunications Institute) is lining up spectrum auctions for January, with 80MHz of 4G spectrum up on the block.

Participants will be able to bid on 30 MHz of AWS-1 airwaves (1710-1725 MHz/2110-2125MHz) and 50 MHz in the AWS-3 band (1775-1780 MHz/2155-2180 MHz). According to IFT, this spectrum “allows for the deployment of 4G and LTE, useful to provide mobile services throughout the national territory technologies”. Both current market players as well as newcomers will be invited to bid.

Last year, IFT slated 60MHz of spectrum for sale – all of it in frequencies between 1.71 GHz and 2.17 GHz, making it suitable for 4G services. It did not however set a timeframe for this. The last time AWS spectrum was auctioned in Mexico was in 2010.

There are currently over 5 million 4G connections in Mexico, with 3.8 million of these on America Movil’s Telcel network. Incoming operator AT&T, which this year acquired 2 smaller Mexican operators to strengthen its presence in the market, has not yet launched 4G services.

IFT has invited public suggestions on the auction, particularly with regard to minimum reference prices. It is also mulling over its strategies regarding packaging spectrum, and is considering setting caps on the amount of spectrum operators can acquire “to allow the entry of new operators” into the market.

Submitted opinions will be accepted until mid-October, at which point IFT will finalise the terms and conditions. Those interested in bidding must then state by November whether they will participate. Currently 5MHz of paired spectrum blocks are available for auction.

The auction scheduled for January will be the first in Latin America to adopt the format of a Combinatorial Clock Auction (CCA), commonly used worldwide in 4G spectrum auctions. IFT notes that the process will enable the “bidding results to improve the efficiency of spectrum and therefore competition in the long term in the mobile market.”

In a separate development, financial regulators in Mexico are considering a dramatic reduction in access fees for the 700MHz spectrum that will be used by the country’s shared network. Regulators are mulling a price cut of as much as 90% - which would translate to access charges of $0.02 per inhabitant rather than $0.2 - in order to attract more investors.

The country’s transport and communications ministry initially aimed to hold a $10 billion tender by October, which would involve establishing a new company to build and run the shared network. This entity would have a licence to use 90MHz of the spectrum. However, the value of the tender was slashed to $7 billion after President Enrique Pena Nieto introduced a slew of competition reforms.

China Mobile has indicated an interest in a Mexican investment, while AT&T continues to make inroads following the 2013 introduction of antitrust regulation aimed at reducing the domination of the market by America Movil.  Meanwhile, a number of vendors have reportedly expressed interest in the share network rollout – among them Alcatel-Lucent, Ericsson, Huawei and Nokia.

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