Convergencia Research, Consultoría especializada en Latinoamérica y Caribe
Thursday, August 22, 2019

The creation of CFE Telecommunications faces operational, financial and legal challenges

The new operator of the Mexican State, promoted by President AMLO (Andrés Manuel López Obrador), has an initial budget of US$ 32.6 million and infrastructure of the Federal Electricity Commission. Its goal is to connect 75% of the national geography and provide free Internet and solidarity rates to residential users.

At the end of July, President  AMLO (Andrés Manuel López Obrador) announced the creation of the public company “CFE Telecommunications and Internet for All”, after the public and international tender scheduled for May and the deployment of 25,000 km of the fiber optic backbone network, without private sector bidders, was suspended for the fourth consecutive time. The challenge being faced by the initiative promoted by the Executive is enormous, with not only financial and operational, but also legal borders.

The objective of the new state operator is to reach 75% of the geographic coverage (with emphasis on the most remote areas) in Mexico, to offer free internet in public places and solidarity rates for residential users. As stated by the President, the company would start operating in 2020, with an initial budget allocation of US$ 32.6 million and attached to the CFE (Federal Electricity Commission).

Its functions include those of forming a public non-profit telecommunications network, which guarantees access to the country’s population that does not have coverage of said services; promote the social and economic development of the population and, maximize the infrastructure applicable to its telecommunications services, through the use of the capabilities of the National Fiber Optic Network.

In the midst of the austerity policy imposed by the AMLO government and a macro-economy that shows signs of economic recession (in the second quarter of this year, industrial production fell 2.1% and GDP 0.2%), it is worth evaluating the feasibility of such a large project, as is the CFE Telecomunicaciones, which since its genesis poses a significant change in the Mexican market and whose creation was not contemplated in the National Development Plan 2019-2024.

Another factor that plays against it is the lack of studies on the viability of this new state-owned company and the deployment of coverage that arises. In fact, this last point was one of the reasons why private operators gave up in participatingin the tender of the Trunk Network, because the costs for consideration were very low and the route to deploy the Network was not clear.

Starting Point

The starting point to deploy the network will be done through the infrastructure of the CFE. Meanwhile, the SCT (Ministry of Communications and Transportation) announced the definitive cancelation of the public and international tender to deploy the Trunk Network, which included the deployment of 25,000 km of fiber optic, which is expected to be assigned  to the new telecommunications operator

According to preliminary information, the new agency will rely on radio base antennas provided in the CISBaR (Rural Basic Services Integration Centers), to provide the service wirelessly.

It should be remembered that under a similar premise, the Altán’s shared network has been operating for more than a year, whose national coverage currently reaches more than 45 million people (more than 40% of the population of Mexico) and it is expected that, by October of this year, reach 60 million users (in 29 markets, 56 villages and almost 19,000 rural populations). Additionally, it is responsible for providing wireless, fixed and mobile services on a wholesale basis.

 

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