Mexico's Telecom Agency Drafts New Rules To Attract MVNOs
October 08 2009 - 7:00PM
Dow Jones News
Mexico's federal telecommunications regulator, Cofetel, said
Thursday that it's drafting new rules that will make it easier for
mobile virtual network operators to do business, with a view to
boosting competition in the wireless industry.
Speaking on the sidelines of a conference, Cofetel Commissioner
Jose Luis Peralta said the rules, which seek to streamline the
authorization process and address issues such as number portability
and customer service, would probably take effect next year.
A mobile virtual network operator, or MVNO, typically rents
unused capacity from mobile network operators like AT&T Inc.
(T) and Spain's Telefonica SA (TEF) and resells it to consumers in
the form of airtime and data services under its own brand.
MVNO rules are one of several measures the Mexican authorities
are looking at, including the auction of wireless spectrum early
next year, to bring more competition to an industry that is largely
in the hands of two players.
Telcel, a unit of Latin America's largest mobile-phone company,
America Movil SAB (AMX), had a 72% market share, with 58.1 million
subscribers at the end of June, while Telefonica's local unit
Movistar was a distant second, with about 15.9 million clients,
equivalent to 20% of the market.
The rest of the market is divided between Grupo Iusacell SA
(CEL.MX) and Nextel Mexico, a unit of wireless carrier NII Holdings
Inc. (NIHD).
Mexico's wireless penetration rate was about 72% as of June 30,
according to Cofetel.
Jesus Martin Tello, a partner at IT consultancy Everis, said at
the conference that international experience has shown a network
operator benefits the most from an MVNO partnership when the MVNO
takes clients from a rival carrier and allows the network operator
to access segments of the population that it can't easily
reach.
The high growth rate of Mexico's wireless industry is an
opportunity for MVNOs, said Tello, who added that taking and
retaining market share through a business model that is untried in
Mexico poses a challenge.
Although MVNOs are provided for under Mexico's existing
telecommunications rules, so far no investors have stepped forward
to test the model.
Morgan Stanley analyst Vera Rossi said in a report Tuesday that
media group Grupo Televisa SA (TV) is considering an MVNO to
complement its cable TV operations, which currently offer bundled
packages of phone, broadband and pay-TV services.
The MVNO industry in the neighboring U.S. is undergoing
consolidation, with Sprint Nextel Corp. (S) in the process of
acquiring Virgin Mobile USA Inc. (VM), an MVNO focused on the
prepaid market.
America Movil unit Tracfone Wireless Inc. has emerged as one of
the largest and most successful MVNOs in the U.S., boasting nearly
12.5 million subscribers at the end of the second quarter.
The conference panelists, who included executives from America
Movil, Telefonica and fixed-line carrier Maxcom Telecomunicaciones
SAB (MXT), said it was unclear if MVNOs would take root in Mexico
in the short term.
"An MVNO in Mexico needs to be one of two things. A leader that
offers a range of services... or have a niche market focused on a
community like a university, a specific group of people or
[geographic] regions," said Jorge Halvas, director of legal and
regulatory affairs at Maxcom.
-By Ken Parks, Dow Jones Newswires, 52-55-5001-5723,
ken.parks@dowjones.com