Following the announcement that the Federal Telecommunications Institute (IFT) plans to analyze the different variables to exploit the fifth generation (5G) radio spectrum, the high costs for spectrum rights will limit such an objective.
Currently, any telephone operator interested in participating in one of the spectrum bands will have to pay an extremely high amount on an annual basis, as stipulated by the Ministry of Finance and Public Credit (SHCP). Ifetel has not been willing to resolve the very high cost of the spectrum established in the Federal Law of Rights. Mexico is one of the most expensive countries to use the radio spectrum.
In Mexico, annual fees are 5.8 times higher for the 850 MHz band, 9.9 times higher for the 600 MHz band, and 3 times higher for the 3.5 GHz band, all in comparison with the rest of the countries that make up the Organization for Economic Cooperation and Development, according to data from the consulting firm The Competitive Intelligence Unit (The CIU). Last week it was announced that the IFT plans to create a committee, made up of academics, businessmen, and specialists, which will analyze the legal, economic, and technical mechanisms for the exploitation of the fifth generation spectrum.
At the time, if this spectrum is optimally developed, sectors such as health, education, industry, transportation, and agriculture will benefit the most, in addition to the population that will be able to access this technology. Depending on the band variation, it will be more expensive. For example, the low 700 and 800 MHz bands are more expensive because they cover the same territory with fewer base radios; while the high 2.5 GHz bands have to put in many base radios to cover the same territories.
In hard data, the annual royalties for a 20 MHz block in the 850 MHz band are at a level of 255 million pesos; however, the SHCP itself expects a collection by private parties of 1,479 million pesos. If the market's demands are not met, Mexico could lag behind the rest of its trading partners and Latin America, since in this region alone, mobile data consumption is expected to grow 5 to 8 times in the next five years, with more than 62 million 5G connections and 666 million mobile connections in total.
Levying additional taxes and fees on telecom operators on top of existing levies risks discouraging investment and harming economic progress. The International Telecommunication Union (ITU), a specialized agency of the United Nations (UN), maintains that encouraging mobile broadband penetration by 10 percent would increase Gross Domestic Product (GDP) by 1.5 percent worldwide and by 2.46 percent in developing countries.