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
