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Axtel: Market not ready for number portability
(BNamericas.com Via Thomson Dialog NewsEdge) Mexican long distance operator Axtel has warned telecoms regulator Cofetel that there may be disadvantages to the immediate introduction of number portability, local press reported.
Axtel believes the enabling of number portability would force operators to focus on client retention above all else, and would result in decreased fixed line expansion investments.
Mexico has fixed line penetration of 19.5% whereas mobile penetration is 48.9%, according to figures released recently by the transport and communications ministry SCT. Axtel believes the country should put number portability on hold until fixed line penetration is 40%.
One of the reasons for introducing number portability is to give cable TV operators an incentive for launching telephony services. However, a greater number of service providers does not necessarily mean there will be an increase in fixed line subscribers, according to Ana Gabriela Ocejo, telecoms analyst with Scotiabank Inverlat in Mexico.
Given the high spending power of the cable operators' existing clients they are the natural target for new services such as telephony, and to steal a significant number of clients from the fixed line operators the cable companies will have to offer price cuts in excess of 5-10% - and even then will only attract heavy users, Ocejo thinks.
In this respect, an executive of Spanish telecoms group Telefnica (NYSE: TEF) suggested that fixed line expansion in Mexico will only happen if telcos are forced into it by new regulations.
In fact the recent drafting of rules under which cable and telephony operators can offer triple play services was a missed opportunity for curbing the power of Mexico's largest fixed line operator Telmex (NYSE: TMX) over its competitors, news site Telcos IT reported Miguel Menchn, chief executive of Telefnica's Mexican mobile unit Movistar Mxico, as saying.
According to Menchn, the core issue of the new rules - known as the convergence agreement - was to remove the restrictions that prevent Telmex from offering TV services. Telmex's desire to have these restrictions removed gave the government some crucial bargaining power.
Instead, the government treated the agreement primarily as a means of increasing competition in the paid TV arena, Menchn believes. It has been said that the cable operators' concession contracts already allow them to offer telephony services.
Cofetel has published preliminary rules for allowing number portability and is now studying feedback from interested parties. The regulator expects to publish a final draft of the rules by November when it will pass the document on to the regulatory reform committee Cofemer. If the rules are approved Cofetel expects number portability to become a reality by May 2007.
Axtel further highlighted evidence that in countries where number portability has been introduced it has not had the desired effect of reducing telephony rates. On this point Telefnica disagrees and believes the measure has proved successful in most countries belonging to the Organization for Economic Cooperation and Development (OECD).
Copyright 2006 BNamericas.com
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