Mexico’s wholesale network a model for SA
Mexico’s new wholesale mobile network, which SA regulators want to emulate to an extent, could have 20 contracts in place with private-sector operators by the end of 2018.
SA’s contentious Electronic Communications Amendment Bill, which is ready to be presented to parliament, recommends the creation of a wholesale open-access network that would give smaller operators and new entrants a leg up.
Along with a controversial clause that says Vodacom and MTN will have to open up their networks to rivals, the bill is also aimed at boosting competition and lowering connectivity costs.
Mexico’s version of a wholesale national network, which launched in March, has signed contracts with 13 groups that will buy capacity from the network.
“There has been a lot of interest, we will probably have more contracts, I guess in a month,” says Fernando Borjon, project manager and head of Mexico’s Telecommunications Investment Promotion Agency.
Mexico’s Red Compartida shared network is a publicprivate partnership operated by the Altan Redes consortium, which has investors including Morgan Stanley and the International Finance Corporation. The financiers are mandated to raise the national network’s coverage from 32% to 92% by 2024.
Borjon says that of Mexico’s three network operators, AT&T was considering buying capacity from the wholesale network, and Telefonica had already signed a contract.
Dominant operator America Movil, whose grip on the market the regulators are trying to break, believes its own infrastructure is sufficient.
Broadcasting and connectivity company Grupo Televisa will also participate, Borjon says, as will mobile virtual network operators and internet service providers.
He says regulators in Mexico have forced America Movil to open its network up to competitors and to the wholesale network.
The company’s market share has since decreased from 82% to 70%.
America Movil was pushed to unbundle its tower business in 2015, though regulators remain concerned that the business still charges high prices, Borjon says.
Some regulators in Europe are also considering forcing telecommunications companies to spin off their infrastructure businesses to spur competition.
Borjon says it makes sense that operators share infrastructure, particularly ahead of the launch of broadband-intensive 5G services, as sharing will lower costs and raise levels of coverage and services.
“We need to find ways to ease the transition to 5G and provide better services … and the way to do it is to share costs through collaborative models,” he adds. “One way is the wholesale model — instead of competing on infrastructure, compete on services.”
However, Borjon points out that the wholesale model is an option to which operators do not have to subscribe. “In Mexico, it’s a market-driven model; we believe very much in the market. We have a legal obligation in Mexico that if the government goes into business, it shall not negatively affect the market,” he says.
Besides proposing a wholesale open-access network, SA’s Electronic Communications Amendment Bill says that a service provider with “significant market power” — or at least 25% of the country’s network infrastructure — must share its infrastructure with competitors.
The Independent Communications Authority of SA is to prescribe the “costoriented” rates these operators can charge their rivals, according to the bill.
Dobek Pater, director at Africa Analysis, says that Mexico’s wholesale national network operator is free to operate with no prescriptions from the government, which is not a shareholder.
Mexico has only reserved the 700MHz spectrum band for the wholesale network, leaving other “high-demand” spectrum available for auctions to privatesector operators, which also do not have to participate in the centralised network.
In SA, however, the industry is still in the dark about the
REGULATORS IN MEXICO HAVE FORCED AMERICA MOVIL TO OPEN ITS NETWORK UP TO COMPETITORS
wholesale network’s shareholding, funding, decisionmaking and operating model — but it appears as though the state wants to allocate most of the “high-demand” spectrum to the network, Pater says.
Companies that want to apply for leftover spectrum will first have to make large commitments to the wholesale open-access network, which means the government is trying to force larger operators to participate in the network.
Pater says the state is expected to influence the wholesale network.