Telecomm & broadcasting regulation in mexico (f)

Telecomm & Broadcasting

Regulation in Mexico

Alexis Milo

Federal Telecommunications Commission - Mexico

Harvard Kennedy School of Government

April 18th, 2013

Index

I. Market Overview & Regulation

• Fixed Telephony

• Mobile Telephony

• Broadband

• Over-the-Air TV

• Pay-TV

II. Telecomm & Broadcasting Reform

• Digital TV

• TV Network Licensing

• Must Carry – Must Offer

• Open Broadband Network

• Asymmetric Regulation

2

3 Source: ITU.

Fixed Telephony Market Shares

(% of total subscribers)

Market Overview: Fixed Telephony

Source: COFETEL.

Fixed Telephony Penetration

(subscriptions per 100 inhabitants)

14

18

22

26

30

35

40

45

50

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

Developed

Global

Mexico

70.8

8.6

13.4

7.3

20

40

60

80

100

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

Telmex Axtel Others Cable Co's

• Key Issues

o Declining technology

o Concentration (double vs. triple play)

o Valuable networks for new services/rights of way

• Key Policies

o Number portability

o Accounting standards

o Asymmetric Regulation

Master Interconnection Agreement → TV

Local Loop Unbundling

o Fixed Termination Rate 4

Regulation: Fixed Telephony

5 Source: ITU.

Mobile Telephony Market Shares

(% of total subscribers)

Market Overview: Mobile Telephony

Source: COFETEL.

Mobile Telephony Penetration


69.9

18.9

7.4

3.8

20

40

60

80

100

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

Telcel (AMX) Movistar (TEF)

Iusacell-Unefón Nextel (NIHD)

0

20

40

60

80

100

120

140

160

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

Chile ArgentinaMexico BrazilColombia Peru

6 Source: Analysys Mason, Euromonitor, Wireless Intelligence.

Mobile Telephony Penetration in Households

(as classified by income decile, %)

Market Overview: Mobile Telephony

Source: Own calculations using INEGI data.

Number of SIM Cards per Mobile User, 2011

(ratio – SIMs / Users)

2.3

0.0

0.5

1.0

1.5

2.0

2.5

Bra

zil

Me

xic

o

Ru

ss

ia

Ch

ile

Arg

en

tin

a

Pe

ru

Po

lan

d

Ita

ly

Co

lom

bia

Sp

ain

US

A

Can

ad

a

Au

str

alia

Fra

nc

e

UK

0

20

40

60

80

100

2002 2004 2006 2008 2010

Ist Decile National Average Xth Decile

• Key Issues

o Decelerated penetration

o Concentration

o High SIM/User ratio → room for growth

• Key Policies

o 2010 Spectrum auctions

o Number portability

o Mobile Termination Rate

7

Regulation: Mobile Telephony

8 Source: OECD.

Broadband Penetration in OECD Countries, 1S2012


11

26

0

15

30

45

Sw

itzerl

an

d

Ne

the

rla

nd

s

Den

mark

Ko

rea

No

rway

Fra

nc

e

Icela

nd

Ge

rma

ny

UK

Be

lgiu

m

Sw

ed

en

Lu

xe

mb

ou

rg

Can

ad

a

Fin

lan

d

US

A

Ne

w Z

ea

lan

d

Jap

an

Es

ton

ia

Sp

ain

Isra

el

Au

str

alia

Au

str

ia

Slo

ven

ia

Gre

ec

e

Irela

nd

Ita

ly

Po

rtu

gal

Hu

ng

ary

Czech

Rep

.

Po

lan

d

Slo

vak R

ep

.

Ch

ile

Mexic

o

Tu

rke

y

Fixed Average

10

57

0

40

80

120

Ko

rea

Sw

ed

en

Au

str

alia

Fin

lan

d

Den

mark

Jap

an

No

rway

US

A

New

Zeala

nd

Icela

nd

Lu

xem

bo

urg

Esto

nia

Ire

lan

d

UK

Neth

erl

an

ds

Czech

Rep

.

Po

lan

d

Sw

itzerl

an

d

Au

str

ia

Isra

el

Sp

ain

Fra

nce

Can

ad

a

Gre

ece

Germ

an

y

Po

rtu

gal

Slo

vak R

ep

.

Italy

Slo

ven

ia

Be

lgiu

m

Ch

ile

Tu

rkey

Hu

ng

ary

Mexic

o

Mobile Average

Market Overview: Broadband

9 */ Chile, Estonia, Israel and Slovenia are excluded due to lack of data for the relevant period.

Source: OECD.


Fixed Broadband Penetration Growth in OECD Countries*,

2002 - 2012


11

22

0

10

20

30

40

Sw

itze

rla

nd

Ne

the

rla

nd

s

Fra

nc

e

No

rwa

y

UK

De

nm

ark

Lu

xe

mb

ou

rg

Ge

rma

ny

Ice

lan

d

Ne

w Z

ea

lan

d

Be

lgiu

m

Fin

lan

d

Sw

ed

en

Au

str

alia

Ja

pa

n

US

A

Gre

ec

e

Sp

ain

Ire

lan

d

Ca

na

da

Ita

ly

Hu

ng

ary

Po

rtu

ga

l

Au

str

ia

Czec

h R

ep

.

Ko

rea

Po

lan

d

Slo

va

k R

ep

.

Me

xic

o

Tu

rke

y

Average

10

Contribution to Internet Penetration Growth,

2002 - 2010

(percentage points)

Internet Penetration Growth in Households,

2002 - 2010

(percentage points)

Source: Own calculations using INEGI data. Source: Own calculations using INEGI data.


0

10

20

30

40

I II III IV V VI VII VIII IX X

Income Decile0 5 10 15

National

I

II

III

IV

V

VI

VII

VIII

IX

X

11

Fixed Broadband Market Shares

(% of total subscriptions)


Mobile Broadband* Market Shares, 2012

(% of total subscriptions)

*/ Includes smartphones & other devices (USB dongles, etc.).

Source: COFETEL. Source: COFETEL.

64.9

19.0

15.50.5

Telcel (AMX) Movistar (TEF)

Iusacell-Unefón Nextel (NIHD)

65.4

18.7

9.7

6.2

0

20

40

60

80

100

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

Telmex Cable Co's Axtel Others

12

Regulation: Broadband

• Key Issues

o Low penetration – room for growth

o Mobile – opportunity to “leapfrog”

• Key Policies

o Backbone/Data transport (CFE, rights of way)

o Social coverage programs

o 700 MHz and 2.5 GHz bands

13

Market Overview: Over-the-Air TV

TV Penetration in Households

(national average, %)

e/ Own estimation.


93.5

34.4

0

20

40

60

80

100

2002 2004 2006 2008 2010 2012e

Over-the-Air TV Pay-TV

14 Source: Operators as cited by CIDE.

Market Overview: Over-the-Air TV

TV Rating Shares, 2010

(%) Advertising Revenues Market Shares, 2010

(%)

Source: LAMAC as cited by CIDE.

68.3

31.2

0.4

Televisa TV Azteca Others

44.5

22.2

20.1 13.2

Televisa TV Azteca Pay-TV Others

15 */ Own estimation.


Market Overview: Pay-TV

Pay-TV Penetration in Households

(national average, %) Pay-TV Subscriptions in Mexico

(millions)

Source: COFETEL.

0

1

2

3

4

5

6

7

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

Cable Satellite (DTH) Microwave (MMDS)

0

5

10

15

20

25

30

35

40

2002 2004 2006 2008 2010 2012e

16

Regulation: TV

• Key Issues

o Concentration in Over-the-Air and Pay-TV

o Low Pay-TV penetration

o Convergence (double vs. triple play)

• Key Policies

o Digital TV transition

o TV Network licensing

o Must carry - Must offer

Index

I. Market Overview & Regulation

• Fixed Telephony

• Mobile Telephony

• Broadband

• Over-the-Air TV

• Pay-TV

II. Telecomm & Broadcasting Reform

• Digital TV

• TV Network Licensing

• Must Carry – Must Offer

• Open Broadband Network

• Asymmetric Regulation

17

Digital TV

18 Source: INEGI.

Over-the-Air-Only TV Households, 2010 (%)

TV Accessibility by Technology, 2011

(% of total households)


0

10

20

30

40

50

60

70

80

90

I II III IV V VI VII VIII IX X

Income decile

83.4

16.6

Analog Digital

19

TV Network Licensing

TV Penetration

in Households

(national average, %)

Commercial TV Network Coverage

(locations*)

*/ 136 locations (out of 153) from the TV Licensing Program.

Source: Own estimation using COFETEL data.

e/ Own estimation.


0

20

40

60

80

100

2002 2004 2006 2008 2010 2012e

Over-the-Air TV Broadband

Loc: 35%

Pop: 13%

Loc: 64%

Pop: 87%

2 choices

More than 2 choices

20

*/ Refers to the average of Argentina, Brazil, Chile, Colombia, Mexico, Peru

and Central America (Costa Rica, Guatemala and Panama).

Source: BofA-ML estimations & IBOPE Establishment Survey as reported by LAMAC.

Pay TV Penetration, 2013

(% of households)

Must Carry – Must Offer

0

20

40

60

80

100C

an

ad

a

US

A

Arg

en

tin

a

Co

lom

bia

Ch

ile

Mexic

o

Bra

zil

LATAM Average*

21

PC Penetration Growth in Households,

2002 - 2010

(percentage points)

Open Broadband Network


0

10

20

30

I II III IV V VI VII VIII IX XIncome Decile

Source: As stated in the Reform proposal.

700 MHz band

2.5 GHz band

CFE assets (fiber)

Open Broadband Network

+

22 Source: Based on Urzúa (2008).

Household Expenditure

(%) Average Mobile Prepaid Rate Change

Jan-11 – Dec-12

(as classified by “refill” amount*, %)

*/ Includes “frequent numbers” and “bonus minutes”.

Source: Own calculations based on operator’s data.

-80

-70

-60

-50

-40

-30

-20

-10

0

$50 $100 $150 $200 $300

Asymmetric Regulation

70

30

Markets relatively competitive

Markets with lesser competition

Reform Overview

23

Digital TV TV Network

Licensing

Must Carry

Must Offer

Open

Network

Asymmetric

Regulation FDI

Fixed Telephony x x x

Mobile Telephony x x

Broadband x x x x

Over-the-Air TV x x x x

Pay-TV x x x

Telecomm & Broadcasting

Regulation in Mexico

Alexis Milo

Federal Telecommunications Commission - Mexico

Harvard Kennedy School of Government

April 18th, 2013

Telecomm & broadcasting regulation in mexico (f)

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