Spectrum and fiscal policy for full connectivity

The disproportionately high cost of the radioelectric spectrum in Mexico, an essential input for telecommunications, has been repeatedly documented.

It does not cease to cause controversy, especially in these days of discussion and approval of the Economic Package, which integrates the setting of the annual payment of fees for the use and exploitation of that resource, included in the Federal Law of Rights for the Fiscal Year of 2022.

Precisely, the high adjudication and spectral tenure positions for operators in Mexico, have been erected as a barrier to their entry, to the exercise of investments for the deployment of infrastructure and the development of effective competition.

It has even caused the return of spectrum by Telefónica and AT&T, discouraging their participation in bidding processes and / or their acquisition through the secondary market.

In recent days, again, the Federal Telecommunications Institute (IFT) also urged that the Congress of the Union reconsider its fully tax collection approach to migrate to a scheme that contributes to incentivize the development of networks in currently disconnected populations and, with this, move to next-generation services.

Costs from an international perspective. In accordance with the reform proposals to the Federal Law of Rights (LFD) in matters of radioelectric spectrum of the IFT, the total costs of this resource in Mexico, considering the initial payments and the payment for annual rights in a horizon of 20 years, they reach an average price premium of over 60% compared to international levels, even 120% higher for cases such as those of the AWS / PCS bands.

The latter is mainly attributable to the setting of high annual fees for the use of the spectrum, a regime that does not exist in developed countries or does not represent more than 5% of the total value of the assigned bands, as in the cases of Germany. Austria, Italy, Switzerland and Sweden, among many others that enjoy competitive environments.

In the case of the bands that will be assigned for 5G services (600 MHz, L Band, 3.3 to 3.6 GHz) in future tenders, the IFT proposes to define costs at 30% of the international benchmark.

This would suppose a significant reduction, since in the current LFD, the annual quota per KHz is at an average level of 80% of the median of a group of countries.

Investment accreditation scheme. Additionally, the IFT proposes to move to an accreditation regime for expenditures made in localities without mobile connectivity coverage against the payment of spectrum rights, precisely to encourage the deployment of networks.

According to the regulator, 41,356 localities are identified that lack connectivity, of which 5,161 qualify as priority in the Social Coverage Program 2020-2021 of the SCT.

It will be up to the tax authority to determine the percentages and maximum amounts of accreditation per year, based on the public policy objectives that are established.

All in all, the establishment of competitive quotas for the use of the radioelectric spectrum can become a magnificent instrument for national capitalization and, simultaneously, for promoting the development of competitors in the market, thereby boosting the availability, affordability and quality of telecommunications services.

Maintaining high charges only imposes barriers to full connectivity, causes waivers of rights and generates losses for the treasury.

Here are some notes and lessons for the tax authority and legislators, in terms of collection for the use of the radioelectric spectrum in Mexico.


Ernesto Piedras

Director General de The Competitive Intelligence Unit

Competitive intelligence


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