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Broadband for all mexico

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The document summarizes Mexico's 2013 telecommunications reform and the establishment of Red Compartida, a shared wholesale mobile network. Key points: 1) The 2013 reform introduced major changes to open up Mexico's highly concentrated telecom market, including establishing an independent regulator (IFT) and granting new rights to consumers. 2) Red Compartida will be Mexico's first shared wholesale mobile network, using premium spectrum, with the goals of increasing coverage, promoting competitive prices, and raising quality standards. 3) The network aims to provide mobile broadband access to over 90% of Mexico's population through a public-private partnership model. This will help connect rural areas not currently served by private operators.

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Mónica Aspe Bernal Undersecretary of Communications monica.aspe@sct.gob.mx @maspeb June 23rd, 2015
1 • Highly concentrated telecom markets • Telecom services substantially more expensive than in most OECD countries • Poor ICT indicators Source: World Bank, 2012 Mexico´s Telecom Sector before the Reform
Telecommunications Reform  In 2013, the Federal Government and the main political parties agreed to a constitutional reform that radically changed the legal framework of the telecom sector:  Right of access to ICT and the Internet  Consumers’ rights  Federal Telecommunications Institute (IFT)  Specialized courts Legal Rights Institutional Framework  Ex ante regulation of the dominant agent  Ex post regulation of all other agents  Shared mobile network (Red Compartida)  México Conectado Anti-trust Regulation Universal Access 2
3 ICT for Development ICT for Health ICT for Education E-Commerce Smart CitiesUtilities Smart Grid Telecommunications Reform  A vibrant telecommunications sector will unleash the digital ecosystem for Mexico´s social and economic progress:
First Results of the Constitutional Reform 1) Mexico’s international position is changing: ˗ OECD has stated that Mexican telecommunications regulation is now significantly less restrictive than the OECD average. ˗ In 2015 Mexico went up 10 slots in the WEF’s annual Network Readiness Index. 2) From December 2012 to September 2014, wireless broadband subscriptions nearly doubled. 3) From March 2014 to March 2015, prices fell (national long distance -100%, international long distance calls -40%, mobile telephony -15%). 4) Between 2013 and 2014, the telecom sector GDP grew twice as much as that of the economy as a whole. 2) Foreign Direct Investment is now allowed up to 100% (over 6 billion dollars in FDI). 1 2 3 4 5 3
4  Dominant market player, poorly regulated  Other operators unable to compete and willing to invest  Poor coverage  Dominant market player facing asymmetric regulation. The market opens for additional participants (MNO and MVNO)  Increasing investment, but still below market potential  Persistent need for coverage 2013 2015 Market conditions Red Compartida An enabler for all retail service providers  Shared network  Wholesaler (does not offer services to final users)  90 MHz on the 700 MHz band (703- 748 MHz x 758-803 MHz)  Unbundled, non-discriminatory Red Compartida, a Constitutional Mandate
Vision: Broadband access for all Mission: Deploy a wholesale shared network that enables the provision of telecom services through existing and new suppliers Goals: • Increase coverage mobile broadband services • Promote competitive prices • Raise quality to international standards Features: • Maximize usage of premium, unencumbered, contiguous spectrum (90 MHz on the 700 MHz band) • Reduce costs and therefore increase coverage to unserved and underserved areas • Will not create undue advantages or handicaps for operators – Wholesaler, open to all 5 Coverage, Affordability and Quality
90 MHz of premium unencumbered contiguous spectrum on the 700 MHz band (703-748 MHz x 758-803 MHz) Red Compartida A single wholesale shared network that enables the provision of telecom services through existing and new suppliers 6
Public Policy Goals Red Compartida is a critical component of the Mexican Government’s vision of driving economic and social progress through universal access to ICT Increases coverage of mobile broadband services Reduce costs and promote competitive prices Raise quality to international standards 7
Cities with more than 10,000 inhabitants: ~66% of total population * Source: INEGI and CONAPO 8 The Coverage Challenge
Cities with more than 2,500 inhabitants: ~73% of total population * Source: INEGI and CONAPO 9 The Coverage Challenge
Towns with more than 500 inhabitants: ~91% of total population * Source: INEGI and CONAPO Red Compartida´s coverage goal is to provide mobile broadband to over 90% of the population with 4G-LTE technology. 10 The Coverage Challenge
4G-LTE Coverage is Still Limited 92% 87% 50% 80% 73% 14% 75% 69% Estimated figures. Mobile technology coverage: 2G 3G 4G 10% ~66% of population in cities with > 10,000 inhabitants ~9% of population lives in towns with < 500 inhabitants Operator 1 Operator 2 Operator 3 11
• Doing business as usual, mobile services will not reach unprofitable markets. Red Compartida’s model will allow coverage in otherwise unserved or underserved areas. • The Government of Mexico will lead a tender process to establish a Public-Private Partnership, where the private partner will design, invest, deploy and operate the network. 12 Population Coverage Profitability Positive net marginal benefit Negative net marginal benefit Greater cost of deployment (greenfield sites) Profitability and Coverage
Final user Final User Final user Final user Final user Final user  Red Compartida’s clients will be all retail service providers; it will not offer services to final users  Red Compartida will be used by both mobile virtual network operators (MVNO) and by operators who already have their own infrastructure. Operators with their own infrastructure (MNO) Fixed-line network operators, with no mobile infrastructure Mobile Virtual Network Operators (MVNO) 13 A Wholesaler
 Red Compartida is open to innovative corporate models, offering different conditions for financial partners and operators. Traditional Model Red Compartida´s Public-Private Partnership Operators= Suppliers+ Operators = +Financial Partners + Suppliers 14 Flexible Corporate Model
EOI Responses Signal Strong Interest Telecom Service Providers; 9 Network Equipment Manufacturers; 7 Network Service Providers; 5 Consultancy; 6 Network Installation Company; 4 Industry Association/ University; 4 Consortium; 2 Note: 1. ATelecom Service Providers – Includes Mobile, Fixed-line, Internet and Pay-TV operators, Network Service Providers – Includes providers of network solutions, technical capabilities, Ethernet / satellite operators, and maintenance service providers, Network Installation Company – Includes tower companies and network site construction companies Total: 37 Latin America 54 % North America 23 % EMEA 13 % APAC 5 % • 46% responses from global companies Geographical DistributionType of companies that responded1 15
An information website will be launched, so investors may have accurate information about the most relevant aspects of the project (technical, financial and demand-related). The RFP will be released in 2015, with network deployment anticipated to begin in 2016 and operations scheduled to begin by the end of 2018 October A April SeptemberAugustJulyJuneMay EOI RFPRFI Pre-RFI Sessions Post-RFI Sessions RFI Phase Sessions RFI 1 Released 17-Jul-2015 EOI Deadline 22-May-2015 RFI 2 Released 21-Aug-2015 (tentative) RFP Release 29-Oct-2015 (tentative) 16 Key Milestones in the Tender Process
Mónica Aspe Bernal Undersecretary of Communications monica.aspe@sct.gob.mx @maspeb June 23rd, 2015

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Broadband for all mexico

  • 1. Mónica Aspe Bernal Undersecretary of Communications monica.aspe@sct.gob.mx @maspeb June 23rd, 2015
  • 2. 1 • Highly concentrated telecom markets • Telecom services substantially more expensive than in most OECD countries • Poor ICT indicators Source: World Bank, 2012 Mexico´s Telecom Sector before the Reform
  • 3. Telecommunications Reform  In 2013, the Federal Government and the main political parties agreed to a constitutional reform that radically changed the legal framework of the telecom sector:  Right of access to ICT and the Internet  Consumers’ rights  Federal Telecommunications Institute (IFT)  Specialized courts Legal Rights Institutional Framework  Ex ante regulation of the dominant agent  Ex post regulation of all other agents  Shared mobile network (Red Compartida)  México Conectado Anti-trust Regulation Universal Access 2
  • 4. 3 ICT for Development ICT for Health ICT for Education E-Commerce Smart CitiesUtilities Smart Grid Telecommunications Reform  A vibrant telecommunications sector will unleash the digital ecosystem for Mexico´s social and economic progress:
  • 5. First Results of the Constitutional Reform 1) Mexico’s international position is changing: ˗ OECD has stated that Mexican telecommunications regulation is now significantly less restrictive than the OECD average. ˗ In 2015 Mexico went up 10 slots in the WEF’s annual Network Readiness Index. 2) From December 2012 to September 2014, wireless broadband subscriptions nearly doubled. 3) From March 2014 to March 2015, prices fell (national long distance -100%, international long distance calls -40%, mobile telephony -15%). 4) Between 2013 and 2014, the telecom sector GDP grew twice as much as that of the economy as a whole. 2) Foreign Direct Investment is now allowed up to 100% (over 6 billion dollars in FDI). 1 2 3 4 5 3
  • 6. 4  Dominant market player, poorly regulated  Other operators unable to compete and willing to invest  Poor coverage  Dominant market player facing asymmetric regulation. The market opens for additional participants (MNO and MVNO)  Increasing investment, but still below market potential  Persistent need for coverage 2013 2015 Market conditions Red Compartida An enabler for all retail service providers  Shared network  Wholesaler (does not offer services to final users)  90 MHz on the 700 MHz band (703- 748 MHz x 758-803 MHz)  Unbundled, non-discriminatory Red Compartida, a Constitutional Mandate
  • 7. Vision: Broadband access for all Mission: Deploy a wholesale shared network that enables the provision of telecom services through existing and new suppliers Goals: • Increase coverage mobile broadband services • Promote competitive prices • Raise quality to international standards Features: • Maximize usage of premium, unencumbered, contiguous spectrum (90 MHz on the 700 MHz band) • Reduce costs and therefore increase coverage to unserved and underserved areas • Will not create undue advantages or handicaps for operators – Wholesaler, open to all 5 Coverage, Affordability and Quality
  • 8. 90 MHz of premium unencumbered contiguous spectrum on the 700 MHz band (703-748 MHz x 758-803 MHz) Red Compartida A single wholesale shared network that enables the provision of telecom services through existing and new suppliers 6
  • 9. Public Policy Goals Red Compartida is a critical component of the Mexican Government’s vision of driving economic and social progress through universal access to ICT Increases coverage of mobile broadband services Reduce costs and promote competitive prices Raise quality to international standards 7
  • 10. Cities with more than 10,000 inhabitants: ~66% of total population * Source: INEGI and CONAPO 8 The Coverage Challenge
  • 11. Cities with more than 2,500 inhabitants: ~73% of total population * Source: INEGI and CONAPO 9 The Coverage Challenge
  • 12. Towns with more than 500 inhabitants: ~91% of total population * Source: INEGI and CONAPO Red Compartida´s coverage goal is to provide mobile broadband to over 90% of the population with 4G-LTE technology. 10 The Coverage Challenge
  • 13. 4G-LTE Coverage is Still Limited 92% 87% 50% 80% 73% 14% 75% 69% Estimated figures. Mobile technology coverage: 2G 3G 4G 10% ~66% of population in cities with > 10,000 inhabitants ~9% of population lives in towns with < 500 inhabitants Operator 1 Operator 2 Operator 3 11
  • 14. • Doing business as usual, mobile services will not reach unprofitable markets. Red Compartida’s model will allow coverage in otherwise unserved or underserved areas. • The Government of Mexico will lead a tender process to establish a Public-Private Partnership, where the private partner will design, invest, deploy and operate the network. 12 Population Coverage Profitability Positive net marginal benefit Negative net marginal benefit Greater cost of deployment (greenfield sites) Profitability and Coverage
  • 15. Final user Final User Final user Final user Final user Final user  Red Compartida’s clients will be all retail service providers; it will not offer services to final users  Red Compartida will be used by both mobile virtual network operators (MVNO) and by operators who already have their own infrastructure. Operators with their own infrastructure (MNO) Fixed-line network operators, with no mobile infrastructure Mobile Virtual Network Operators (MVNO) 13 A Wholesaler
  • 16.  Red Compartida is open to innovative corporate models, offering different conditions for financial partners and operators. Traditional Model Red Compartida´s Public-Private Partnership Operators= Suppliers+ Operators = +Financial Partners + Suppliers 14 Flexible Corporate Model
  • 17. EOI Responses Signal Strong Interest Telecom Service Providers; 9 Network Equipment Manufacturers; 7 Network Service Providers; 5 Consultancy; 6 Network Installation Company; 4 Industry Association/ University; 4 Consortium; 2 Note: 1. ATelecom Service Providers – Includes Mobile, Fixed-line, Internet and Pay-TV operators, Network Service Providers – Includes providers of network solutions, technical capabilities, Ethernet / satellite operators, and maintenance service providers, Network Installation Company – Includes tower companies and network site construction companies Total: 37 Latin America 54 % North America 23 % EMEA 13 % APAC 5 % • 46% responses from global companies Geographical DistributionType of companies that responded1 15
  • 18. An information website will be launched, so investors may have accurate information about the most relevant aspects of the project (technical, financial and demand-related). The RFP will be released in 2015, with network deployment anticipated to begin in 2016 and operations scheduled to begin by the end of 2018 October A April SeptemberAugustJulyJuneMay EOI RFPRFI Pre-RFI Sessions Post-RFI Sessions RFI Phase Sessions RFI 1 Released 17-Jul-2015 EOI Deadline 22-May-2015 RFI 2 Released 21-Aug-2015 (tentative) RFP Release 29-Oct-2015 (tentative) 16 Key Milestones in the Tender Process
  • 19. Mónica Aspe Bernal Undersecretary of Communications monica.aspe@sct.gob.mx @maspeb June 23rd, 2015