The country’s telecom regulator IFT initiated a public consultation on this 5G spectrum auction on May 7, 2024
Mexico’s 5G auction faces hurdles as high spectrum fees deter operator interest, according to a recent report by GlobalData.
The country’s telecom regulator IFT initiated a public consultation on this spectrum auction on May 7, 2024. The bidding process is set to take place next year and will feature 600 MHz and L-Band (1427-1518 MHz) frequencies, both of which are primed for 5G services.
Jesus Romo, research director at GlobalData, said: “The proposed auction combines ‘fresh spectrum’ in the L-Band and 600 MHz, and ‘leftovers’ in the 800 MHz, 1.7/2.1 GHz, 1.9 GHz and 2.5 GHz bands, some of which were actually licenses returned by Telefonica and AT&T due to prohibitive annual fees. The 3.5 GHz band is excluded from this auction, but Telcel and AT&T Mexico already own licenses in this range.”
GlobalData noted that the IFT’s decision to offer most of the spectrum in local blocks, except for the L-Band and a single 10 megahertz block of the 600 MHz band, indicates a strategic move towards smaller geographical markets.
“This segmentation could result in lower spectrum fees for winners, as fees are determined by bandwidth held and coverage area. Spectrum fees was a factor in Telefonica’s decision to return all of its mobile spectrum in Mexico. Spectrum fees is set by the Mexican Legislative Branch, with input from the Executive, and is not likely to be reduced in the short-term, especially during an election year,” Romo added.
The research firm also highlighted that the IFT proposed a combination of spectrum caps that consider holdings in sub 1 GHz bands and aggregate spectrum holdings per operator, that appear to be designed with the current market structure in mind. The design will potentially allow local carriers AT&T and Telcel to obtain low-band spectrum to enhance 5G coverage, the firm said.
“For AT&T and Telcel, the spectrum fees from the 600 MHz are likely to limit appetite, since spectrum fees for sub 1 GHz bands tend to be superior to higher bands and will add to the annual costs of the operators,” Romo added.
AT&T Mexico is offering its 5G services in various cities across Mexico. The operator’s 5G services are active in Mexico City, Guadalajara, Monterrey, Tijuana, Mexicali, Ciudad Juárez, Mazatlan, Ciudad Obregon, Navojoa, Guasave, Ensenada, Puerto Penasco Guamuchil, Hemosillo, Culiacan, Saltillo, Torreon and Morelia, among other cities.
AT&T had initially launched 5G services in Mexico in December 2022 using spectrum in the 2.5 GHz band. The telco ended last year with 47 cities covered by 5G technology.
Telefonica’s Movistar initially launched 5G services in Ciudad de Mexico, Culiacan and Hermosillo and now covers several Mexican cities with this technology.
América Móvil, which operates under the Telcel brand, recently confirmed it reached 125 cities with its 5G network The operator currently has over 10 million 5G subscribers nationwide.
Telcel initially launched its commercial 5G network in February 2022 in 18 of Mexico’s largest cities, using infrastructure from Ericsson and Huawei.
