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Competition in the Telecommunications Sector in Mexico

Competition in the Telecommunications Sector in Mexico. April 2008. Coverage of Telecommunications services have still not reached its full potential. This Administration is promoting measures to increase penetration of telecommunications services.

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Competition in the Telecommunications Sector in Mexico

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  1. Competition in the Telecommunications Sector in Mexico April 2008

  2. Coverage of Telecommunications services have still not reached its full potential. This Administration is promoting measures to increase penetration of telecommunications services. Fuente: Unión Internacional de Telecomunicaciones

  3. Over the last year, there has been a dramatic fall in prices of close to 30% in mobile telephony, due mainly to an increase in competitive pressures. In other services more competition and faster reduction in rates are needed, particularly in Internet access. OECD Basket of Mobile Telecommunications, October 2006 Source: OECD, Communications Outlook 2007.

  4. Household Expenditure in Telecommunications Services as percentage of Total Expenditure, by Population Deciles ICTs have an important share in households expenditure, regardless of their income level. 1/ According to its monetary income 2/ Includes telephone installation and local calls. 3/ Includes initial payment, equipment acquisition, prepaid cards and mobile telephony service payment. Total communications expenditure includes public telephony and other services such as mail, telegraph, public fax, beeper and others not specified. Source: Own estimates based on Household Income and Expenditures National Survey 2006.

  5. In order to reduce the income gap it is necessary that Telecommunications Services reach the entire population. Penetration of Telecommunications Services in Mexico, by Population Decile Source: INEGI, Household Income and Expenditure National Survey, 2006.

  6. Competition in the telecommunications sector has intensified, particularly in the mobile market. Market Share Distribution in Main Telecommunications Markets in Mexico Broadband Access Fixed Telephony Mobile Telephony Source: Pyramid, Communications Markets in Mexico 2007. Datos a diciembre 2006. Source: Merrill Lynch, Global Wireless Matrix. Datos a diciembre 2006. Source: Pyramid, CANITEC y Telmex. Datos a diciembre 2006.

  7. Spectrum Auction Program Competition will be fostered by making more spectrum available.

  8. Auction Programs since 1996 This program is the most ambitious that has been published * Pay TV auctions ** Mobile service auctions which include 30% of the country. ***The inmediate use is fixed service, however no restrictions existe forl delivering mobile services in the future..

  9. In order to effectively increase competition it is important to set more efficient conditions in interconnection. Indicators of tariffs, lines and traffic 1/ Pesos per minute 2/ Figures in millions of lines in service. 3/ Millions of minutes. 4/ Millions de Telmex calls. 5/ 2006 Figures correspond to estimates up until December. Source: Cofetel and Telmex

  10. Fixed local termination should be cost based and symmetric for all carriers. Fixed Local Termination Rates in Selected Countries (US cents per minute) Source: European Communities Commissions, “European Electronic Communications Regulation and Markets 2006, march 2007. Peak-hour rates, adjusted by 85% factor (Exchange rate 1.3 dollar/euro); FCC, “Intercarrier Compensation and Retail Rate Regulation in the US”; China and India: TRAI, Financial Analysis of Telecom Industry in India and China, june 2006.

  11. Competition of backbone services has been enhanced by the entrance of Electric companies in the Market. Telecommunications Service Offerings of Electric Companies in selected Countries Source: Internet web-pages of the companies *They are not related with electric companies, but with other utility companies such as railway in the case of Adif and the local government in the case of Stokab.

  12. CFE entrance into the telecommunications market will lower prices, particularly for internet access services. OECD basket of national leased line charges 2 Mbps, August 2006 (000’ USD PPP) OECD basket of national leased line charges 34 Mbps, August 2006 (000’ USD PPP) Fuente: OCDE, Communications Outlook 2007.

  13. CFE entrance into the provision of Internet access will help to lower the price disparity between rural and urban areas. Leased Lines Prices for Internet Access (2 Mbps)

  14. Local Call Revenue of the incumbent when its costumers make Long Distance Calls and Calls to Mobiles(Millions of Pesos per year, 2005 prices ) Competition will be also impacted by empowering consumers- Practices such as double billing should be avoided. Source: Own estimates based on information reported by the Company.

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