EconomyFinancialThe return of Telefónica's spectrum has cost the government...

The return of Telefónica's spectrum has cost the government 1,100 million pesos

The cost policy for the use and right of the radio spectrum in Mexico, which has been described as ‘expensive’ by the operators, has already charged the treasury. Telefónica’s resignation and return of the spectrum bands that it had tendered to offer its connectivity services has brought with it not only a decrease in spectrum in the country, but also important losses in terms of collection.

In 2019, the telecommunications operator of Spanish origin became the first company to return the spectrum bands to the State, and instead opted for an infrastructure sharing model with AT&T and Altán Redes to continue its operation. However, this meant that 1,100 million pesos in rights payments stopped entering the government coffers, according to data from the consulting firm The Ciu.

“Between 2019 and 2020, the operator went from paying 3.3 billion pesos to 2.5 billion pesos, while in 2021 it spent 2.2 billion pesos. The complete recovery of licenses by the State during 2022 will result in an accumulated loss for the fiscal authority, as a consequence of the onerous regime for the use of the spectrum”, assured Ernesto Piedras, general director of the consulting firm The Ciu.

Telecommunications operators in Mexico such as Telcel and AT&T pay up to 89% more than the total cost of the bands and the right to the radioelectric spectrum, while other nations such as Germany, Italy, Greece, the Netherlands and others from Continental Europe (such as Switzerland, Sweden , Austria and Denmark) only cover 5% of the total cost to access the bands, according to 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.

According to the quotas of the Federal Rights Law 2021, the payment for the rights to use the 600 MHz band is 25.143 million pesos, while for the 800 MHz band it has a cost of 73.967 million pesos.

In addition, according to data from the IFT and the Federal Rights Law 2021, it is estimated that last year América Móvil allocated 8,606 million pesos for payment of spectrum rights, while AT&T and Telefónica de México spent 7,457 and 2,226 million pesos, respectively.

5G at risk due to high spectrum cost

Ernesto Piedras believes that if the government continues with this policy of collecting the radioelectric spectrum, 5G will run the risk of postponing its development in the country, since the fifth technology in networks requires new spectrum bands, as well as more infrastructure such as radio bases. and fiber optics.

“It is necessary to seek to satisfy the principle of cost-efficiency and the generation of a fiscal policy for the development of 5G, in order to maximize the incentives to exercise resources in infrastructure that is in balance with fiscal capture in the short term and, consequently, promote both areas in the medium and long terms”, explained the director of The Ciu.

This year, the IFT plans to launch the auction of spectrum bands that are suitable for 5G, such as 600 MHz, L band and 3.5 MHz; however, it runs the risk that the call will be deserted like that of the IFT-10 due to the high cost they represent.

Telcel and AT&T are the operators in the country that have already started the development of 5G. Today Telcel already has 3,000 radio bases to enable the fifth generation of networks, as well as the largest number of suitable bands for this technology, while AT&T began 5G tests in Mexico City.

It is expected that the fifth technology will allow the development of industries such as the automotive industry for autonomous vehicles, while in health it will allow remote operations, as well as monitoring patients through connected devices, while in education it will be possible to generate applications that help to have more experiences.

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