Mexico s Telecommunications Constitutional Reform, the Shared Network and the Public - Private Collaboration. MBB Forum Shanghai, China
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1 Mexico s Telecommunications Constitutional Reform, the Shared Network and the Public - Private Collaboration MBB Forum Shanghai, China
2 INDEX I. Introduction II. Current Situation III. Constitutional Reform IV. Backbone and Shared Networks Projects V. Shared Network VI. Operation VII. Benefits
3 INTRODUCTION Information about the project Consults Open and transparent bidding process
4 CURRENT SITUATION
5 (5) Canada (7) USA (8) Switzerland (10) Germany (19) Singapour (20) South Korea (24) Japan (27) Hong Kong ()27) France (32) Barbados (43) Russia (51) Panama (59) South Africa (61) Chile (62) Brazil (70) Argentina (82) Mexico (83) China (111) India The development of the telecommunications sector in Mexico has not been enough to improve the productivity and the well-being of its population Position of the telecommunications infrastructure in Mexico according to the World Economic Forum (Position of 144 countries, 2013, score 1-7) average = unaccessible 7 = accessible Developed countries Main commercial partners of Mexico BRICS Countries Latin America Countries Mexico
6 LOW INVESTMENTS Mexico stands in the second to last place on public investment per capita in telecommunications within the OECD countries Public investment per capita in telecommunications (Annual position in dollars; )
7 CURRENT SITUATION 31.1 millions of homes Source: Have access to fixed telephony Have access to mobile phone Have a computer Have internet Of the territory have a mobile coverage Of the territory does not have a mobile coverage Of the population live in 128,788 cities and towns that are the area inside of mobile coverage Of the population live in 63,457 towns that are the area outside of mobile coverage Localities has Localities have telephony rural rural telephone service with services with comunitary access comunitary access 4,002 Operating 1,436 In project Localities with rural telephony 212,663 Operators line 11,008 Project Lines
8 COMPARISSON WITH OTHER COUNTRIES Mexico registers low levels of penetration services in fixed and mobile broadband, at the end of 2013 they were around 11.4 and 13.9 subscriptions per 100 inhabitants Slovak Republic Italy Hungary Portugal Poland Czech Republic Fixed Penetración broadband banda penetration ancha fijafor (suscriptores 100 inhabitants por 100 habitantes) Switzerland 45.0 Netherlands Mexico Turkey Denmark Chile 40.0 France Korea Norway Iceland United Kingdom Germany Belgium Finland Hungary Mexico Turkey Chile Greece 80.0 Portugal Slovenia Germany Belgium Mobile broadband penetration subscribers for 100 inhabitants Penetración banda ancha móvil (suscriptores por 100 habitantes) Australia Japan Sweden Denmark Korea United States Estonia Norway Luxembourg Ireland Canada Israel New Zealand Slovenia Luxembourg Canada United Kingdom Israel Sweden Slovak Republic Iceland Estonia Australia Austria Greece Spain Finland New Zealand United States Japan France Poland Czech Republic Italy Netherlands Austria Switzerland Spain Ireland
9 The OECD reported in 2012 that The loss of well-being attributed to Mexico s dysfunctional telecommunications sector is around billion dollars ( ), about 1.8 % of the annual GDP 1. Weak state s regulatory role Inadequate and obsolete legal frame Deficient institutional design Causes 2. High levels of market concentration : On broadcasting a group concentrates 98 % of the advertizing market On telecommunications a group concentrates 70 % of mobile telephony, 68 % in fixed telephony and 67 % in fixed broad band 3. Strong entry barriers to new competitors
10 MEXICO S TELECOMMUNICATIONS CONSTITUTIONAL REFORM
11 THE TELECOMMUNICATIONS BEFORE THE CONSTITUTIONAL REFORM o Lack of incentives and legal certainty o Entry barriers o Flaws in anti trust regulations The telecommunications in Mexico have not evolved in accordance with the citizen s needs.
12 To improve the described situation, in 2013 President s office,with the support of the main political parties represented in the Congress promoted the Telecommunications Constitutional Reform: 1. Increase fundamentals rights access to ICT and to the broadband - rights of users and of hearings 2. Improve and update the legal framework Constitutional Reforms Axes 3. Re-design and to strengthen the regulatory organs IFT and specializing courts 4. Promote effective competition opening to the investment - asymmetric regulation reduce concentration - eliminate barriers 5. Universal digital inclusion connectivity of public places, homes and SME TDT - more persons connected in the whole country 6. More and new broadband infrastructure backbone and shared network projects - major coverage in the whole country
13 INVESTMENT OPPORTUNITIES FOR TELECOMMUNICATIONS IN MEXICO The sector generated an annual income of around 30 billion dollars. In last 3 years the annual investments overcame 5 billion dollars New concessionaires and commercial partnerships To invest in more and better infrastructure The new legislation offers investment opportunities at national, regional or local level for: Partnerships with current operators To take part in PPA (PPP) To develop contents and applications Foreign investment (up to 100%) Projects 13
14 BACKBONE AND SHARED NETWORKS PROJECTS
15 BACKBONE AND SHARED NETWORKS 2 % of the population 98 % of the population
16
17
18 SHARED NETWORK: CHARACTERISTICS The Constitutional Reform establishes that the State, through the President s office, and in coordination with the Federal Telecommunications Institute (IFT), shall ensure the installation of a shared public telecommunication network to promote population s effective access to communication and broadband telecommunication services. The project started in 2014, and it must be operating before the end of It shall include the use of at least 90 MHz of the spectrum released by the transition to digital terrestrial television (700 MHz band), the fiber optic backbone infrastructure resources of the Federal Electricity Commission (CFE) and any other State assets that can be used to install and operate the shared network.
19 SHARED NETWORK: CHARACTERISTICS It will give services exclusively to the comercialization companies and operators of networks of telecommunications (wholesaler). Coverage: 98 % of Mexican population. Approximate investment of 10 billion dollars through a Public Private Association (PPA, PPP). It will be operating before the end of It will diminish entry barriers in the market of mobile broadband.
20 SHARED NETWORK: CRITICAL PATH ACTIVITY BEGIN ENDS Field Tests To test the standard LTE in the band of 700 MHz frequencies August, 2014 January, 2015 Regulatory Policy Design (IFT) Obligations that will be imposed on the wholesale operator June, 2014 February, 2015 Shared Network s bidding proces Including the necessary actions to generate and to communicate the bidding requierements and to promote the bidding process. December, 2014 August, 2015
21 SHARED NETWORK: STATUS Definition of the model and use of the 700 MHz band Collaboration agreements SCT- IFT IFT/SCT/SHCP Integration of Federal Budget for 2015 Formalization on October 9, 2014 Work calendars Field tests Deployment process International promotion of the Project Promotion to attract investors, operators and manufacturers Bidding process Studies in process Coordination group for the telecommunication s infraestructure policy The first meeting of the group was held on October 16
22 OPERATION
23 SHARED NETWORK: OPERATION Disintegrated model of chain value Company owner of Shared Network (wholesaler) Commercializes telecommunications services Mobile operators Commercializes and integrates package of voice and data Consumers Benefits Price Quality Coverage
24 Public Private Partnership SHARED NETWORK: INVESTMENT 10 billion dollars for the next 10 years Public contribution Spectrum (Discount fees for regulatory burdens) Infraestructure Passive (federal sites) Private contribution Private Investment / Active infraestructure Design, deployment, operation and commercializes The model does not contemplate public subsidy
25 BENEFITS
26 Growing market Estrategic offer Competition Public assets Foreign investment
27 Increase coverage INFRASTRUCTURE INVESTMENT AS AN ENGINE FOR DEVELOPMENT IN MEXICO Economic Development Infraestructure and investment Job creation Increase internet access Social Development Well-being
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