This document summarizes telecommunications and broadcasting regulation in Mexico. It provides an overview of the key markets including fixed telephony, mobile telephony, broadband, over-the-air TV, and pay-TV. It then outlines reforms to digital TV, TV network licensing, must carry/must offer rules, establishing an open broadband network, and implementing asymmetric regulation. The goal of the reforms is to address issues like market concentration, accelerate penetration rates, and promote further investment and competition across these important sectors.
1. Telecomm & Broadcasting
Regulation in Mexico
Alexis Milo
Federal Telecommunications Commission - Mexico
Harvard Kennedy School of Government
April 18th, 2013
2. Index
I. Market Overview & Regulation
• Fixed Telephony
• Mobile Telephony
• Broadband
• Over-the-Air TV
• Pay-TV
II. Telecomm & Broadcasting Reform
• Digital TV
• TV Network Licensing
• Must Carry – Must Offer
• Open Broadband Network
• Asymmetric Regulation
2
4. • Key Issues
o Declining technology
o Concentration (double vs. triple play)
o Valuable networks for new services/rights of way
• Key Policies
o Number portability
o Accounting standards
o Asymmetric Regulation
Master Interconnection Agreement → TV
Local Loop Unbundling
o Fixed Termination Rate
4
Regulation: Fixed Telephony
5. 5
Source: ITU.
Mobile Telephony Market Shares
(% of total subscribers)
Market Overview: Mobile Telephony
Source: COFETEL.
Mobile Telephony Penetration
(subscriptions per 100 inhabitants)
69.9
18.9
7.4
3.8
20
40
60
80
100
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
Telcel (AMX) Movistar (TEF)
Iusacell-Unefón Nextel (NIHD)
0
20
40
60
80
100
120
140
160
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
Chile Argentina
Mexico Brazil
Colombia Peru
6. 6
Source: Analysys Mason, Euromonitor, Wireless Intelligence.
Mobile Telephony Penetration in Households
(as classified by income decile, %)
Market Overview: Mobile Telephony
Source: Own calculations using INEGI data.
Number of SIM Cards per Mobile User, 2011
(ratio – SIMs / Users)
2.3
0.0
0.5
1.0
1.5
2.0
2.5
Brazil
Mexico
Russia
Chile
Argentina
Peru
Poland
Italy
Colombia
Spain
USA
Canada
Australia
France
UK
0
20
40
60
80
100
2002 2004 2006 2008 2010
Ist Decile National Average Xth Decile
7. • Key Issues
o Decelerated penetration
o Concentration
o High SIM/User ratio → room for growth
• Key Policies
o 2010 Spectrum auctions
o Number portability
o Mobile Termination Rate
7
Regulation: Mobile Telephony
8. 8
Source: OECD.
Broadband Penetration in OECD Countries, 1S2012
(subscriptions per 100 inhabitants)
11
26
0
15
30
45
Switzerland
Netherlands
Denmark
Korea
Norway
France
Iceland
Germany
UK
Belgium
Sweden
Luxembourg
Canada
Finland
USA
NewZealand
Japan
Estonia
Spain
Israel
Australia
Austria
Slovenia
Greece
Ireland
Italy
Portugal
Hungary
CzechRep.
Poland
SlovakRep.
Chile
Mexico
Turkey
Fixed Average
10
57
0
40
80
120
Korea
Sweden
Australia
Finland
Denmark
Japan
Norway
USA
NewZealand
Iceland
Luxembourg
Estonia
Ireland
UK
Netherlands
CzechRep.
Poland
Switzerland
Austria
Israel
Spain
France
Canada
Greece
Germany
Portugal
SlovakRep.
Italy
Slovenia
Belgium
Chile
Turkey
Hungary
Mexico
Mobile Average
Market Overview: Broadband
9. 9*/ Chile, Estonia, Israel and Slovenia are excluded due to lack of data for the relevant period.
Source: OECD.
Market Overview: Broadband
Fixed Broadband Penetration Growth in OECD Countries*,
2002 - 2012
(subscriptions per 100 inhabitants)
11
22
0
10
20
30
40
Switzerland
Netherlands
France
Norway
UK
Denmark
Luxembourg
Germany
Iceland
NewZealand
Belgium
Finland
Sweden
Australia
Japan
USA
Greece
Spain
Ireland
Canada
Italy
Hungary
Portugal
Austria
CzechRep.
Korea
Poland
SlovakRep.
Mexico
Turkey
Average
10. 10
Contribution to Internet Penetration Growth,
2002 - 2010
(percentage points)
Internet Penetration Growth in Households,
2002 - 2010
(percentage points)
Source: Own calculations using INEGI data. Source: Own calculations using INEGI data.
Market Overview: Broadband
0
10
20
30
40
I II III IV V VI VII VIII IX X
Income Decile 0 5 10 15
National
I
II
III
IV
V
VI
VII
VIII
IX
X
12. 12
Regulation: Broadband
• Key Issues
o Low penetration – room for growth
o Mobile – opportunity to “leapfrog”
• Key Policies
o Backbone/Data transport (CFE, rights of way)
o Social coverage programs
o 700 MHz and 2.5 GHz bands
13. 13
Market Overview: Over-the-Air TV
TV Penetration in Households
(national average, %)
e/ Own estimation.
Source: Own calculations using INEGI data.
93.5
34.4
0
20
40
60
80
100
2002 2004 2006 2008 2010 2012e
Over-the-Air TV Pay-TV
14. 14
Source: Operators as cited by CIDE.
Market Overview: Over-the-Air TV
TV Rating Shares, 2010
(%)
Advertising Revenues Market Shares, 2010
(%)
Source: LAMAC as cited by CIDE.
68.3
31.2
0.4
Televisa TV Azteca Others
44.5
22.2
20.1 13.2
Televisa TV Azteca Pay-TV Others
16. 16
Regulation: TV
• Key Issues
o Concentration in Over-the-Air and Pay-TV
o Low Pay-TV penetration
o Convergence (double vs. triple play)
• Key Policies
o Digital TV transition
o TV Network licensing
o Must carry - Must offer
17. Index
I. Market Overview & Regulation
• Fixed Telephony
• Mobile Telephony
• Broadband
• Over-the-Air TV
• Pay-TV
II. Telecomm & Broadcasting Reform
• Digital TV
• TV Network Licensing
• Must Carry – Must Offer
• Open Broadband Network
• Asymmetric Regulation
17
18. Digital TV
18
Source: INEGI.
Over-the-Air-Only TV Households, 2010
(%)
TV Accessibility by Technology, 2011
(% of total households)
Source: Own calculations using INEGI data.
0
10
20
30
40
50
60
70
80
90
I II III IV V VI VII VIII IX X
Income decile
83.4
16.6
Analog Digital
19. 19
TV Network Licensing
TV Penetration
in Households
(national average, %)
Commercial TV Network Coverage
(locations*)
*/ 136 locations (out of 153) from the TV Licensing Program.
Source: Own estimation using COFETEL data.
e/ Own estimation.
Source: Own calculations using INEGI data.
0
20
40
60
80
100
2002 2004 2006 2008 2010 2012e
Over-the-Air TV Broadband
Loc: 35%
Pop: 13%
Loc: 64%
Pop: 87%
2 choices
More than 2 choices
20. 20
*/ Refers to the average of Argentina, Brazil, Chile, Colombia, Mexico, Peru
and Central America (Costa Rica, Guatemala and Panama).
Source: BofA-ML estimations & IBOPE Establishment Survey as reported by LAMAC.
Pay TV Penetration, 2013
(% of households)
Must Carry – Must Offer
0
20
40
60
80
100
Canada
USA
Argentina
Colombia
Chile
Mexico
Brazil
LATAM
Average*
21. 21
PC Penetration Growth in Households,
2002 - 2010
(percentage points)
Open Broadband Network
Source: Own calculations using INEGI data.
0
10
20
30
I II III IV V VI VII VIII IX X
Income Decile
Source: As stated in the Reform proposal.
700 MHz band
2.5 GHz band
CFE assets (fiber)
Open Broadband Network
+
22. 22
Source: Based on Urzúa (2008).
Household Expenditure
(%)
Average Mobile Prepaid Rate Change
Jan-11 – Dec-12
(as classified by “refill” amount*, %)
*/ Includes “frequent numbers” and “bonus minutes”.
Source: Own calculations based on operator’s data.
-80
-70
-60
-50
-40
-30
-20
-10
0
$50 $100 $150 $200 $300
Asymmetric Regulation
70
30
Markets relatively competitive
Markets with lesser competition
23. Reform Overview
23
Digital TV
TV Network
Licensing
Must Carry
Must Offer
Open
Network
Asymmetric
Regulation
FDI
Fixed Telephony x x x
Mobile Telephony x x
Broadband x x x x
Over-the-Air TV x x x x
Pay-TV x x x
24. Telecomm & Broadcasting
Regulation in Mexico
Alexis Milo
Federal Telecommunications Commission - Mexico
Harvard Kennedy School of Government
April 18th, 2013