WASHINGTON-Mexico will receive US$1.06 billion, plus value-added tax, for Personal Communications Services (PCS) and Wireless Local Loop (WLL) spectrum auctioned in a six-month process completed 8 May.
The Sistemas Profesionales de Comunicacion (SPC) consortium, Qualcomm Inc. with consortium partner Grupo Pegaso, cellular operator Radio Movil Dipsa S.A. de C.V. (Telcel), cellular operator Grupo Iusacell, Midicell and Grupo Hermes were awarded 30 megahertz and 10 megahertz 20-year PCS licenses. SPC, Midicell, Telefonia Inalambrica del Norte S.A. de CV (Telinor) and Telefonos de Mexico (Telmex) won WLL licenses.
The SPC consortium, headed by Ricardo Salinas Pliego, owner of TV Azteca and Elektra stores, won all nine A-band 30 megahertz licenses, in addition to the D- and H-band 25 megahertz WLL licenses. SPC has since signed a US$700 million contract with Lucent Technologies Inc. for system buildout, and rapid network deployment is expected.
“Salinas Pliego has a very pragmatic experience with the telecom market and, more importantly, with the demographics [he wants] to serve with these licenses-the B to E tiers of the population. [He is] not interested in `cherry-picking’ customers,” said Ed Czarnecki, director of international consulting at U.S.-based BIA Consulting Inc.
Qualcomm won 30 megahertz licenses in regions 1, 2, 4, 6 and 9, as well as 10 megahertz licenses in the four remaining regions. It intends to initiate service in early 1999 using CDMA (Code Division Multiple Access) technology. Because auction rules prevented the same bidder to hold more than one PCS license in the same region, Qualcomm withdrew its winning bids for 30 megahertz licenses in regions 3 and 5. As a consequence, the auction was considered deserted for those licenses, and Qualcomm was penalized with a US$14 million fine.
Because Dipsa, the cellular arm of wireline operator Telmex, already holds cellular licenses in all nine regions of the country, it was not allowed to bid for the 30 megahertz licenses, but won all nine 10 megahertz D-band PCS licenses. Midicell, a subsidiary of Korea Telecom, received one 30 MHz and three 10 megahertz PCS licenses in region 7 and regions 2, 6, and 9, respectively.
In the WLL results, Dipsa won all nine licenses in both the C and G bands; Telinor won bands B and F; and Midicell was the top bidder for bands A and E.
Consumers should not expect a drop in prices because of the new wireless competition, said Czarnecki: “Operators have incentives to be rational, realistic and cautious [when setting up prices]. They will learn from the long-distance experience in Mexico and Chile, and will not engage in extreme price-cutting behavior.”