Mexico telecom reform leads to plunging prices - OECD

News General Mexico 1 SEP 2017
Mexico telecom reform leads to plunging prices - OECD

Mexico’s 2013 telecom reform has brought tangible benefits to the country, boosting competition that has increased access and sharply bringing costs from among the highest in advanced economies to among the lowest, according to a report from the OECD. In fact, prices for mobile internet now stand below the OECD country average with the cost of a low-usage mobile broadband basket of 100 calls and 500 Mbps falling by 65 percent from USD 44.05 PPP (at purchasing power parity) to USD 15.39 PPP, while the price for a high-usage basket dropped by 75 percent from USD 101 PPP to USD 24.93 PPP. The price for a medium-usage basket fell by 61 percent.

Although the overall market shares of incumbent operators remain high, the OECD notes a shift in the mobile broadband market, where Telcel’s share has fallen by 12 percent from 83.8 percent in 2012 to 71.8 percent in 2016 following gains made by rivals. The commencement of the “Red Compartida” wholesale wireless 4G network in 2018 should further boost competition, said the report.

However, the OECD said progress has been slower in broadcasting, where limited competition and restrictions on foreign investment are factors behind a 5 percent rise in pay-TV prices over 2013-16. In that regard the report recommends lower barriers to foreign investment by abolishing the last restrictions in broadcasting and easing requirements for investing in satellite communication services. It also advises the telecom regulator IFT to consider allowing Telmex to enter the pay-TV segment to boost convergent services in the country once it completes its structural separation.

Other recommendations include the need to address the uneven levels of internet access and quality across Mexican States including by reducing obstacles to infrastructure deployment at the local and municipal level such as over-complex or divergent regulations and to eliminate the special tax on products and services (IEPS) that is currently levied on fixed and mobile telephony and pay TV services as a way to further foster access and usage.


Categories:

General

Companies:

Telcel,  Telmex,  IFT

Countries:

Mexico

Tags:

Regulations, Market research

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