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October 8, 2021
It’s not often a spectrum auction attracts as little interest as the one that just closed in Mexico.
The country had 41 blocks of spectrum in various bands up for sale and managed to offload just three of them to the only two companies that submitted bids. AT&T submitted bids for two blocks of frequencies in the 800 MHz band, while America Movil’s Telcel bid for one block of 2.5 GHz spectrum, regulatory body the Instituto Federal de Telecomunicaciones (IFT) announced.
It has still to formally ratify those bids, but assuming the telcos have satisfied all relevant conditions, the sale will bring in just 1.35 billion pesos (US$65.5 million) for state coffers. AT&T accounted for the bulk of the total, with a bill of 1.1 billion pesos.
A large number of frequencies across, including AWS and PCS spectrum, went unsold. Admittedly, these are unused airwaves suitable for 4G use – this wasn’t a failed 5G auction; now that really would be newsworthy – but in an industry that has often referred to radio spectrum as its lifeblood, this is a poor result for Mexico.
The reason behind the poor show seems to be price. We have often heard operators bemoan high spectrum prices, and their resulting difficulties in finding the money to roll out networks, but it’s rare to see them actually vote with their wallets like this.
Nonetheless, that’s what the regulator is now dealing with, and it has not been shy in expressing its opinion on spectrum prices and the way it is charged for.
“The IFT has reiterated on various occasions and forums that the high amounts charged for the use of the radio spectrum inhibit participation in tenders, cause the return of spectrum and become an artificial barrier to the entry of new competitors,” the IFT said, when presenting the auction result.
That comment on the return of spectrum refers to Telefonica, which is in the process of handing back its spectrum to the Mexican government with a view to operating as a virtual player on AT&T’s network. The plan is designed to help it avoid the hefty annual spectrum usage costs that are weighing on its business there.
With one of the market’s big guns unable to make the finances work, there is little wonder that the auction did not attract new market entrants.
“The IFT will continue in search of better conditions so that a greater amount of radioelectric spectrum is assigned for the provision of telecommunications services that help to increase the connectivity of the inhabitants and so that the quality of services increases to the benefit of consumers,” the regulator said, in a Spanish language statement.
The regulator’s head of spectrum, Alejandro Navarrete, also took to Twitter to bemoan the market situation that led to the failed auction.
“[It was] due to the systemic problem that exists in the charge for the use of spectrum in Mexico,” he said, in response to a direct question as to why there were so few bids in the auction.
He referred to a document the IFT sent to the Mexican Congress a year ago that details the problem, the damage it causes, and possible solutions. Clearly, a year on, nothing has changed. But maybe the promise of an upcoming 5G auction – although the country has yet to set the date – will focus the minds of the authorities.
Mary has been following developments in the telecoms industry for more than 20 years. She is currently a freelance journalist, having stepped down as editor of Total Telecom in late 2017; her career history also includes three years at CIT Publications (now part of Telegeography) and a stint at Reuters. Mary's key area of focus is on the business of telecoms, looking at operator strategy and financial performance, as well as regulatory developments, spectrum allocation and the like. She holds a Bachelor's degree in modern languages and an MA in Italian language and literature.
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