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A. SalcedoAMCIS 2006
Mobile Wireless Services and Technology in
Ubiquitous and Embedded Computing: Trends
Ante Salcedo
ITAM
AMCIS 2006
Current Status and Trends of Wireless Mobile in Mexico
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A. SalcedoAMCIS 2006
Objective
Present an overview of the cellular industry
in Mexico, as well as its trends and future
expectations
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A. SalcedoAMCIS 2006
Contents
• Current trends and situation
• Short term implications
• Global industry trends
• Long term implications
• Conclusions
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A. SalcedoAMCIS 2006
We have seen a fast growth in the past
• Fast adoption of mobile voice communications, since it appeared in Mexico in 1989
• In the first half of 2006, the number of subscribers has surpassed 51 million 140
thousand (47.8 % penetration)
• 8% increase in penetration from 2004 to 2005, and 4% increase in penetration in the
first half of 2006
0.0 0.1 0.2 0.4 0.5 0.6 0.8 1.1 1.83.5
8.0
14.2
21.6
25.4
29.1
36.3
44.1
Mobile phone density
(lines/100 citizens*)
1989 20051990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
* Mexican population ranges around 100 Million citizens; estimated by the end of 2005 is 107.5 million
Source: COFETEL (Federal Telecommunications Commission)
Year
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A. SalcedoAMCIS 2006
Mexico has potential for even more growth
0
20
40
60
80
100
120
140
$ 0 $ 5 $ 10 $ 15 $ 20 $ 25 $ 30 $ 35 $ 40 $ 45
Mexico
Peru
USA
Canada
Japan
Australia
Italia
France
England
GDP percapita
US$ Thousands
in 2005
Mobile lines/100 habitants
•Mexico has a lower penetration
than countries like Argentina,
Brazil, Colombia & Venezuela;
even though it has s similar GDP
• An 8% growth to reach 52%
overall penetration implies, 8.5
million additional subscribers;
which (assuming low utilization of
$10USD/month) imply additional
income of ~85 million USD/month
Chile
ArgentinaBrazil
Colombia
Ven
Source: UIT, COFETEL (Federal Telecommunications Commission)
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A. SalcedoAMCIS 2006
What Mexican consumers look for?
• Pay few (low utilization), rather
than low fares
• Easy to install and use
• Convenience to buy and add time
• Local coverage at low cost
• Added value features
– Chat & messaging
– Take/send pictures
– Download/play music
– Download/view photos, videos
– Play videogames
– Watch TV
94% choose the “prepaid” form of
service, even if this option can be
more expensive that the subscribed
(“post payment”) form of service
Most popular market demands
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A. SalcedoAMCIS 2006
Five service providers, with one incumbent
Mobile line participation
100% = 46.6 Million lines in 4Q05
2%3% 4%
14%
77%
Source: The Competitive Intelligence Unit
Telcel
Telefonica
Iusacell
Unefon
Nextel
35.9
6.5
1.9
1.4
0.9
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A. SalcedoAMCIS 2006
Telcel (Telmex, AT&T) key success factors
• First player in the market
• Exploits 77% of cellular subscribers & coverage over 99% population
• Protected by regulation
• Aggressive marketing
• Promotion of loyalty and high utilization
• Extensive distribution chain: group retail stores, self stores, concession
stands and stores, salespeople at the streets
• Leverages synergies & economies of scale, with group companies
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A. SalcedoAMCIS 2006
Yet, there is a strong fight for the market
• Numeric portability
• Interconnection between providers (cost)
• Who calls pay
• Triple play
Not Exhaustive
MarketingMarketing
Value added
services
Value added
services
Legal rightsLegal rights
• Offer photos, music & videos, for download
• Mobile TV broadcasting
• Mobile internet and e-mail
• Subsidize cool cellular phones, and keep exclusivity
• Shopping, electronic payments & financial services
• Strengthening of brands
• Encourage utilization:
The more you talk, the less you pay
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A. SalcedoAMCIS 2006
Short terms implications
Legal rights
Value added services
Marketing
• Stronger adoption in the market
• Large investment
• Rich/complex services
– MMS
– TV to the cellular
– Shopping and financial services
• Fast migration to new technologies
• Lower fees for interconnection between
carriers and for fixed lines
• Facility to exchange service providers
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A. SalcedoAMCIS 2006
However, the market is changing
• Globalization around the world
• Consolidation with other industries
(e.g., consumer electronics,
communication services, content
providers), to:
– Support the establishment of
wireless, smart, personal
environment area networks
– Provide mobile/fixed broadband
access everywhere and anytime,
supporting triple play
– Provide rich content for the
subscribers
• New competing technologies:
– VoIP
– Wi/fi, WiMax
– PLC
• New complementary technologies:
– Bluetooth, WUSB
• Convergence of voice, data and
video
• Consolidation across countries,
value chain, and industries, to
offer better/improved services,
gain synergies and leverage
economies of scale
Changing worldwide trends Implications for cellular industry
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A. SalcedoAMCIS 2006
Consolidation with other industries blurs
the idea of cellular communications
Fixed access
– Telephone line
– Cable TV line
– Power supply line
– Mobile phone cells
– WiFi/WiMax cells
– Wireless (3.4GHz)
Mobile access
– Mobile phone access
– WiFi/WiMax access
Devices Services ContentsAccess
Local voice
Long distance
Mobile voice
VoIP
SMS, MMS
Voice messages
Video calls
Internet & e-mail
Shopping
Banking
Financial services
Broadcast TV
Video on demand
Music on demand
Photos
Movies
Gaming
Applications
PC
Laptop
Telephone
Cell phones
Camera
TV
DVD,VCR
Music player
PDA´s
...
* Software and application developers included in devices
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A. SalcedoAMCIS 2006
Cellular providers in Mexico begin to compete and
establish alliances with other industry players
Compete with access &
service providers
Establish alliances with
equipment and content
providers
Not Exhaustive
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A. SalcedoAMCIS 2006
Long term impacts for Mexico
• Mobile/fixed broadband access anywhere, supporting
the triple play
• Pricing based on mobile/fixed amount of bits
• Intelligent Personal devices that conform user
environment area networks; and optimize
communication resources transparently to the user
• Few consolidated groups of companies that offer
complete solutions including: devices, access,
services and content
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A. SalcedoAMCIS 2006
Conclusion
• Mexico is an attractive market for cellular communications
• There are four players, but one dominates the market
• Current competition stands on legal fights, marketing and value
added services
• Due to worldwide technology and industry changes, cellular industry is
being incorporated into a larger one, that includes: devices, access,
services and content
• Consolidation and globalization will bring to subscriber a whole new
experience around their personal electronic devices, and communication
capabilities
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A. SalcedoAMCIS 2006
APPENDIX
SUPPORT SLIDES
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A. SalcedoAMCIS 2006
While 99.9% of the population has access to the
cellular signal, penetration is low
Region 1 (60%)
Region 2 (45%)
Region 3 (45%)
Region 4 (53%)
Region 5 (46%)
Region 6 (37%)
Region 7 (27%)
Region 8 (39%)
Region 9 (55%)
Source: UIT, COFETEL (Federal Telecommunications Commission)
0
10
20
30
40
50
60
70
1994 1996 1998 2000 2002 2004 2006
Mobile phone density
(lines/100 citizens)
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A. SalcedoAMCIS 2006
Mobile has become the preferred option for
voice communications
Mobile lines have reached 50 million subscribers, substituting the use of fixed lines
Lines in service
(Millions)
0
5
10
15
20
25
30
35
40
45
1998 1999 2000 2001 2002 2003 2004 2005
Mobil
Fixed
Source: COFETEL (Federal Telecommunications Commission)
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A. SalcedoAMCIS 2006
Prices reflect current competition framework (Prices for prepaid plans, in pesos, without 15% Tax)
Cell to cell
Same Co.
Cell to cell
Other Co.
Local
To/from
fixed lineUS &
Canada
Long distance (US, Canada)
Telmex
Telefónica
Iusacell
Unefon
Nextel***
$0.7 - 1 /min(+1yr)
$5 /min(new)
$5 unlimited $10 unlimited$3 / min $5 unlimited
$0* $22 /min$ 3.5 / min $ 2 / min
* Only with prepaid cards of $200; otherwise ± $4.5
** Only with prepaid cards of $300; otherwise goes up to 3.48/min
*** Does not offer prepaid plans, so the rates are only with plan
$1** / min $2.5 / min
Mexico
Same Co.
Mexico
Other Co.
$5 unlimited $3 / min
$2.5 / min $ 2.5 / min
$5 / min$4 / min $8 / min $11.5 / min $15 / min
$11.5 /min $11.5 /min
$ 0.8 – 1.8/min $ 0.8 - 3 / min $ 0.8- 3 / min
$ 1 / min $ 1 / min
$ 0.8 – 1.8/min $ 0.8 - 3 / min $ 0.8 - 3 / min
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A. SalcedoAMCIS 2006
Globalization explains aggressive
investments in Mexico and L. America
0
10
20
30
40
50
60
70
80
1990 1995 2000 2005
Chile
Argentina
Colombia
Venezuela
Brasil
Mexico
Peru
Uruguay
• Telefonicas has invested
~ 100,000 million Euros in
Latin America (since 1993),
to earn a strong position in
such a global market
• Telmex, partnering AT&T
is also continuously
investing to sustain a
position that goes beyond
the Mexican border
• Nextel, partnering with
Sprint, is also in the fight
Source: COFETEL (Federal Telecommunications Commission)
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A. SalcedoAMCIS 2006
Smaller competitors go for different strategies
* 95,000 Million Euros in Latin America, between 1993 and 2005; and planning to invest 7,000 million USD in Mexico in 2006
• Technology: 3G
• Coverage: All the country
• Huge investments to gain penetration with low fees and
aggressive marketing*
• Encourage utilization
• Constant fight for regulation that encourages competition
• Partner with Sprint (USA service provider)
• Technology: 3G
• Coverage over main cities
• Focus on the corporate/business market
• Long distance as local (Mexico, USA & Canada)
• Belong to the same owner
• Technologies: 3G (Iusacell), CDMA2000 (Unefon)
• Coverage: All the country (some regions with agreements)
• Marketing
• Constant fight for regulation that encourages competition
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A. SalcedoAMCIS 2006
Steps taken Telmex/AT&T
• Small investments to try and learn about new technologies
• Be prepared for fast deployment of potential technologies
• Invest in large scale deployment only when necessary
Only provider with EDGE technology
Came up with Mobil TV two weeks after its competitors
• Take maximum advantage of a protective regulation
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A. SalcedoAMCIS 2006
TV on the Cellular
$125.- + TAX
$173.- + TAX
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A. SalcedoAMCIS 2006
User Environment Area Networks
UWB
Bluetooth
WiFi
¿Uno o varios
accesos a la red?
¿Uno o varios
accesos a la red?
• TV, VCR, DVD
• Equipos de audio
• Bocinas
• Teléfono
• PC, LapTop
• Impresoras
• Handheld
• Celular
• Videojuegos
• Cámara digital
• MP3 players/IPod
• Actuadores remotos?
• Memoria central?
• Servidor central?
• Acceso a red?
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A. SalcedoAMCIS 2006
Cellular providers will have to compete
with access and service providers
• Avaya is rapidly taking over companies
• Skype and Vonage are taking over individuals
• CFE: Supply electric power to
• Avantel compite con RED UNO de Telmex
• Axtel: Wireless fixed local and long distance voice
services
• Alestra: Owns a fiber optic network, provides
access to the AT&T worldwide network, and
provides voice & data communications service
(100 MMUSD)
Not Exhaustive