The Mexican spectrum auction proposal for 5G aims to bring new operators into Mexico, according to Alejandro Navarrete, head of the Radio Spectrum Unit at the Federal Institute of Telecommunications (IFT).
During a media briefing, Navarrete highlighted that, unlike other countries, Mexico currently has only four major operators with national coverage.
In the Mexican market, radio spectrum costs are exceptionally high, which significantly impacts the success of an auction.
"Even if the auction fees were set to zero, the payment for spectrum rights would still represent more than 60% of the international median in some frequency bands," explained Navarrete.
For instance, a small operator winning spectrum in the auction would need to pay annual rights fees before acquiring equipment or having customers. Unfortunately, previous auctions have remained unsuccessful due to this financial barrier.
To mitigate the risk of an unsuccessful auction, the current proposal introduces mechanisms. However, Navarrete acknowledges that the risk remains as long as the fees remain high.
The goal is to make the auction attractive to new participants while also allowing established operators to acquire the spectrum of their choice.
To achieve this, the proposal suggests a new geographical subdivision, including 320 Partial Service Areas similar to those existing in the United States, where there are approximately one thousand Partial Economic Areas.
The auction's base terms include incentives, such as a 40% reduction in spectrum fees for new entrants. Even Telefónica could benefit from this discount, said Navarrete.
Additionally, to ease the financial burden on new entrants, the proposal recommends postponing the issuance of the concession title for up to two years. This will allow operators to acquire equipment and make their first annual payment for spectrum rights after obtaining the title.