The country’s telecommunications regulator, IFT, opened public hearings on the 5G spectrum auction on May 7, 2024.
Mexico’s 5G auction is facing obstacles as high spectrum fees are deterring operator interest, according to a recent report from GlobalData.
The country’s telecommunications regulator, IFT, launched a public call for comments on the spectrum auction on May 7, 2024. The bidding process is scheduled to take place next year and will cover frequencies in the 600 MHz and L-band (1427-1518 MHz) bands reserved for 5G services.
Jesus Romo, research director at GlobalData, said: “The proposed auction combines ‘new spectrum’ in L-band and 600 MHz with ‘leftover’ spectrum in the 800 MHz, 1.7/2.1 GHz, 1.9 GHz and 2.5 GHz bands, some of which are actually licenses returned by Telefonica and AT&T due to exorbitant 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 IFT’s decision to offer the majority of its spectrum in local blocks, with the exception of one 10 MHz block in the L-band and one in the 600 MHz band, marks a strategic move towards smaller geographic markets.
“This fragmentation could result in lower spectrum fees for the winner, as fees are determined by the bandwidth and coverage area owned. Spectrum fees were a factor in Telefonica’s decision to return all of Mexico’s mobile spectrum. Spectrum fees are set by the Mexican legislature with input from the executive and are unlikely to be reduced in the short term, especially in an election year,” Romo added.
The research firm also highlighted that IFT’s proposed combination of holdings in the sub-1GHz band and spectrum caps considering total band holdings per operator appears to be designed with the current market structure in mind. This design could allow local operators AT&T and Telcel to acquire low-band spectrum to enhance 5G coverage, it said.
“For AT&T and Telcel, spectrum fees in the 600 MHz band will likely limit demand because spectrum fees below 1 GHz tend to be more expensive than higher spectrum fees, increasing annual costs for the carriers,” Romo added.
AT&T Mexico is offering 5G services in various cities across Mexico. The company’s 5G service is available in cities such as Mexico City, Guadalajara, Monterrey, Tijuana, Mexicali, Ciudad Juarez, Mazatlán, Ciudad Obregón, Navojoa, Guasabe, Ensenada, Puerto Peñasco Guamuchil, Hermosillo, Culiacan, Saltillo, Torreón and Morelia.
AT&T initially launched 5G services in Mexico using the 2.5GHz spectrum in December 2022. The company had covered 47 cities with the 5G technology by the end of last year.
Telefonica’s Movistar initially launched 5G services in Ciudad de Mexico, Culiacán and Hermosillo, and now covers several Mexican cities with the technology.
America Movil, which operates under the Telcel brand, recently confirmed that its 5G network has reached 125 cities, and the company now has more than 10 million 5G subscribers nationwide.
Telcel initially launched a commercial 5G network in 18 major cities in Mexico in February 2022, using infrastructure from Ericsson and Huawei.
