Javier Juárez Mojica, interim president of the Federal Telecommunications Institute, warned that Mexico could lose competitiveness and put the arrival of new investments at risk if the federal government maintains its collection policy.
“Investments are looking for places where they are given the best conditions to invest and while spectrum remains expensive in Mexico, we will not be as competitive,” the official said during his participation in the Imagine Live forum.
Although by 2023 there will not be an update of the payment of annual rights for the spectrum, thanks to the initiative that the IFT sent to the Chamber of Deputies, the measure is insufficient if one takes into account that the deployment of 5G will require 10 times more current infrastructure.
The cost overruns that the spectrum has in the country have generated negative effects in the telecommunications industry. A recent case is that of the spectrum auction, IFT-10, organized by the regulator in October last year: of 41 blocks that were offered, 38 were deserted. This translated into an annual loss of 1,300 million pesos for the Public Treasury.
Another example is Telefónica, which due to the high cost of the spectrum, and implement its infrastructure sharing model with AT&T. This decision, according to Juárez Mojica, has resulted in an annual revenue loss of 4,500 million pesos.
“In the end, the expensive spectrum ends up affecting the public treasury due to the income that is no longer received… That saved spectrum, which is not being exploited by a concessionaire, is of no use to anyone,” assured the interim president of the IFT.
Telecommunications operators in Mexico such as Telcel and AT&T pay up to 89% more of the total cost of the bands and the right to the radio spectrum than in other markets such as Germany, Italy, Greece, and the Netherlands. In other countries such as Switzerland, Sweden, Austria and Denmark, companies only pay 5% of the total cost to access the bands, according to the consulting firm The Ciu.
This situation means that telecommunications companies have to spend between 22% and 30% of their annual income to pay for spectrum bands, an input that is the backbone of operators to provide connectivity services and increase their presence in the country.