email: nadim.chaudhry@ibcuk.co.uk
Results of the Mexican PCS and WLL Auctions
By Carlos Hirsch, Mexico
In this report I will specifically address the outcome of the Mexican wireless access auction. In a previous GCN report on the Mexican spectrum auctions, I provided regulatory background information (July 1997). Three different types of wireless local access bands for fixed and mobile services were auctioned at the same time. The country was divided into nine regions (consistent with the current cellular concessions), and 59 simultaneous auctions in several frequency bands started on November 17:
Band (MHz) Bandwidth Definition
18501865. 19301945 30 MHz PCS A
18701885, 19501965 30 MHz PCS B
18651870, 19451950 10 MHz PCS D
18851890, 19651970 10 MHz PCS E
34003425, 35003525 50 MHz Wireless Access A
34253450, 35253550 50 MHz Wireless Access B
34503475, 35503575 50 MHz Wireless Access C
34753500, 35753600 50 MHz Wireless Access D
440449, 485494 14 MHz Wireless Access
Licenses will be granted for 20 years, with the potential for renewal for a similar 20-year period. At the same time, there is no regulatory distinction between mobile and fixed services, and the technology definition is up to the carrier. The auction lasted for 128 rounds, ending on May 8 with total bids in excess of US$1 billion. In average a national license in PCS 30 MHz was worth US$276 million (US$3.03 per POP), a national license in PCS 10 MHz US$156 million (US$1.72 per POP), and a national WLL license US$51 million (US$0.56 per POP). The major winning companies were TV-Azteca affiliate SPC, a partnership between a TELEVISA affiliate and QUALCOMM, Korean Telecom backed MIDICELL, Telmex-Telcel, Bell Atlantic subsidiary IUSACELL, and Bell Canada supported TELINOR. All are looking for vendor suppliers and are selecting the wireless technology to rapidly deploy in their networks.
Local competition has not started until now in Mexico, and several key issues are pending such as interconnection rates, reciprocal payments, and the geographic scope of local calling areas. Another relevant issue not solved yet is the expansion of the numbering plan to 10 digits which the government committed to two years ago. Long distance competition started in Mexico in January 1997 and domestic rates have fallen to US$0.16/min at peak time from US$0.50 in 1995, but local service charges have increased steadily to compensate Telmex, the incumbent carrier.
The Mexican cellular market currently has two carriers per region with 2 million mobile users in total. Most current customers use AMPS technology, but digital technology has been introduced recently with CDMA and TDMA, and new services like caller ID and short message service are being sold in the main cities to expand the market before PCS services arrive. In particular, prepaid cellular service has been offered for two years having extraordinary acceptance covering at this time more than 50 percent of total cellular customers. Calling Party Pays (CPP), the normal worldwide standard which has been recognized as a trigger to expand service accessibility, has not yet been implemented in the Mexican market because of the reluctance of Telmex to sign reasonable billing and collection agreements.
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