7 Reasons why it is urgent to rethink Telecoms Policy in Mexico

It is over 10 years now that the Telecoms Constitutional Reform was approved in Mexico. It was a very ambitious package that promised to to open a period of radical transformation and opportunity in the industry. 

The sector has certainly been transformed, in positive ways in many cases. 

Nevertheless, I think that few of the people who, like me, witnessed the approval and implementation of the Reform would escape the impression that somehow its promise has not been fully met. 

Now, it is entirely normal that reality turns out to be somewhat disappointing when compared to visions, dreams and promises.

However, with a new government cycle starting mid 2024, it seems like an appropriate time to have a look at where the sector stands today and to what extent the ship is on the right course.

Here is a brief list of 7 signs that suggest that a serious rethink about the way in which the sector is being managed is required: 

1. Spectrum Usage : Virtually everyone seems to be unhappy about how Spectrum is being allocated and priced. Mobile operators are returning spectrum to avoid facing high costs. Government sees how income from spectrum fees is actually declining. Consumers suffer from a suboptimal use of spectrum. Even recognising that it is not easy to manage the competing interests and goals of different parties, it ought not be that difficult to significantly improve on the current situation.
2. Low utilities : It is certainly not the obligation of the government to ensure that private businesses make money. Still, the low utilities of the non-preponderant players in Mexico are a clear sign that something is amiss. Take AT&T, for instance. While on a clearly positive trajectory, it is still having negative utilities despite being the second largest mobile operator in the country. Reasonable utilities are needed for a healthy development of the sector, particularly given the high levels of investment required in the industry.
3. The Shared Network : it seems clear that the shared network, a bold initiative from the Telecoms Reform, has not met the expectations and the goals for which it was created. An analysis of the reasons why this has been the case goes beyond this post. One factor is probably related to the previous point. The initiative was built on the assumption that with the Telecoms Reform there would be significant entry and innovation in the market, but this is difficult in a market in which sustainable path to profitability is so harsh to find. Regardless of the causes, it is clear that a new government should take a fresh look at the status of this initiative and seriously ponder a range of options.
4. The remedies portfolio: the Telecoms Reform came with a long list of measures, remedies, that ought to be imposed on preponderant players to curb their market power. These remedies have not always proven as effective as intended in achieving their goals, for instance, the opening of the preponderant operators’ infrastructure and networks. Maybe the sweeping range of measures has spread the resources and attention too thin for everyone in the process. If this was the case, an approach  focused on a more reduced number of remedies with potential to truly make a difference, a kind of less is more attitude, could actually deliver better results.
5. Coverage extension and inclusion: the Telecoms Reform did not put particular emphasis on instruments aimed at ensuring that everyone in Mexico benefitted from the improvements in service affordability and quality. Probably it was assumed that fixing competition would make the job or it was not the priority at the time. While the exiting government has shown more interest on this policy aspect, it has not been able to translate that interest into actionable instruments and actual impact. This is a task left for the new government, which might want to look at ways to mobilise significant private funds to this mission, given the budgetary constraints. 
6. Accommodate for role of new players : in Mexico, like in every other market, a new breed of players, mostly large international tech companies such as Netflix or Meta, are competing in the provision of communications and media services. While this is hardly a specific Mexican issue, the policies and regulations of the sector need to be adjusted to his new reality, including the clarification of competences and roles between different institutions
7. National Security : geopolitical instability, the covid pandemics, cybersecurity threats are making governments around the world take a different perspective about the sector in terms of national interest and national security.

The list above, while hardly complete, hints at the scale of the challenges that any new government will face in terms of Telecoms Policy. Let’s hope that it decides to energetically confront them.