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July 23, 2009

Report: Mexican Broadband Market to Grow Exceptionally Well

Contrary to expectations, the Mexican fixed-line market has reportedly registered growth in the third quarter of the year, according to Mexico Telecommunications Report for Q3 2009. The report also said that the exceptional growth of broadband connections recorded in 2008 will continue for some time.

While the incumbent player Telmex has witnessed a dramatic fall in their fixed-line market share, alternative operators have played a significant role in moving the market up, the report said. Telmex (News - Alert), which had a slight respite in the third quarter last year, it continues to see its subscriber base decline. Despite this, company still retains more than 80 percent of the market.
Two of the largest alternate operators, Axtel and Maxcom, also had a drop in their lines of services. According to the report, the main reason behind this was the introduction of number portability in July 2008 in which Telmex was initially a gainer, but later returned to see subscriber losses.
Dual-play and triple play services have acted as boosters in this deteriorating economic condition, the report finds. Cable TV operators have gained success from these bundled services.
To offer pay-TV services under the existing concession, Telmex has applied to the regulator, Cofetel, to offer the service, as the company said all interconnection and interoperability requirements were met with the implementation of NP.
Telmex also announced a joint billing agreement with Dish Mexico to offer pay-TV services with its broadband and fixedline services. This move prompted protests from Canitec, the cable operators' association, which claimed that the concession did not allow for such a partnership.
The company is likely to proceed with its plan to acquire a broadcasting license and has previously hinted that its platform is ready to offer Internet Protocol TV.
Despite these difficulties in the fixed-line market and pay-TV segment, Telemex has reported exceptionally strong growth in broadband connections. At the end of 2008, the operator had over 5 million broadband connections and added around 500,000 new subscribers in each quarter of 2008.
This trend is likely to continue in 2009 and Telemex will continue as the dominant operator in this market for some time.
The report also found that new operators and new technologies are set to enter the market and contribute for even faster growth in broadband connections in Mexico. Fiber optic networks and Worldwide Interoperability for Microwave Access are gaining momentum in Mexican broadband market.
Additionally, competition among the players will result in price reduction and enable more subscribers to have access to high-speed Internet services.
According to the report, Mexico retained its second place ranking in our Business Environment Rankings, mostly on the back of a higher regulatory score.
Cofetel has played a role in bringing this growth to the industry. It has encouraged the incumbent players to compete in the market. Cofetel is also set to auction WiMAX (News - Alert) spectrum in 2009. This would further stiffen the competition and drive exceptional growth in broadband connections.

Rajani Baburajan is a contributing editor for TMCnet. To read more of Rajani's articles, please visit her columnist page.

Edited by Amy Tierney


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