Joel Pacheco Gonçalves
The project is a $7.2bn public-private partnership that is part of Mexico’s 2014 telecommunications reform. Altán Redes, the private consortium that won the right to build the network, chose Finland’s Nokia and Huawei as technology providers to deploy the infrastructure expected to reach 92.5% of the country’s population by 2024.
The “Red Compartida” was officially live on March 21st, 2018 – a couple of days ahead of schedule – covering 30% of Mexico’s population which is about 36 million of people.
How does it work?
In plain English, the government will provide spectrum in the 700MHz band and 18,000km of fiber-optic cables. Altán Redes won’t sell internet services to end-users but must instead offer capacity to other network service providers in Mexico. It is worth mentioning that the network is built for easy upgrading to 5G, which is hailed for its high connection speeds, low response times, and flexibility.
As an independent wholesaler, Altán Redes is obliged to offer its services to everyone; fostering competition and attracting new players to the market.
How is competition in Mexico?
Even after years of the Telecommunication Reform in Mexico, which ultimate goals were to lower prices for end-users and foster competition in the country, the market share of network providers hasn’t changed a big deal. América Móvil, the giant owned by Carlos Slim, still controls around 65% of the mobile broadband market. The other two companies – Telefónica and AT&T – fall behind with a little over 20% and 10% respectively. MVNOs account for a 1% market share, compared with 10-15% in most of Europe and North America.
The Shared Network is aimed to improve the internet penetration in Mexico, where one of the main issues – due partly to the unbalanced competition – is that existing service providers do not offer coverage to large parts of the country.
Why is it so important for domestic and international carriers?
Domestic network operators such as Axtel, Megacable, Telefónica, and Televisa would be able to strengthen and expand their service offering cost-effectively without having to deploy its own infrastructure in the country. It is expected that the Shared Network attracts more interest and development of IoT services, telemedicine, and cybersecurity in Mexico.
Peering with Mexico networks would also become more attractive to international carriers due to the rise in traffic demand as domestic networks expand within the country reaching more eyeballs with internet services. Mexico has been growing rapidly in the streaming market over the past few years; it is one of the largest markets for Netflix, and Spotify’s third-biggest market worldwide by volume of streams, just to name a few.