Fifth generation (5G) technology continues to increase in terms of its relevance among mobile users as well as in a growing number of areas in the economy. Despite the well-documented case explaining the economic benefits for countries of having efficient and well-deployed 5G technology that we outlined in our previous report on the subject (“The future of connectivity is already here (5G): Mexico’s perspective”), the deployment and adoption of the technology in Mexico seems to be progressing at a very slow pace, which although in line with the LatAm region is falling behind not only most other regions in the world but also other countries in the region.
An acceleration in the deployment and adoption of 5G in Mexico both need to be addressed urgently if the country wants to keep up with the competitiveness of neighbouring countries and take advantage of the economic opportunities that nearshoring offers. However, the technology expansion seems to have reached an impasse due to the lack of sufficient spectrum for its deployment in the country, which seems to be driven by conflicting interests between telecom operators’ investment profitability and the government’s fiscal policy, and has become a political issue that will now have to be addressed by the incoming government.
We saw that Mexico made modest progress in the deployment and adoption of the 5G technology in 2023 compared to what is required in the country. The number of 5G users that enjoy enhanced connectivity and speeds is increasing, but most of the technology rollout and expansion still lies ahead, at a time when Mexico’s leadership in this field in LatAm is fading. Attention should be paid to the development of 5G demand drivers in order to meet the levels of customer satisfaction needed to maintain the positive momentum in terms of the adoption of this technology, and these drivers anticipate an accelerating demand for data traffic that requires an imminent step-up in investment in 5G networks
Spectrum costs in Mexico are more than ever at the forefront of the debate around 5G technology, as Mexico is a long way from meeting the international standards of spectrum availability required for the adequate deployment of 5G mobile telecommunications. The relatively high cost of the spectrum in Mexico (by international standards) has discouraged telecom operators from acquiring additional spectrum, arguing insufficient profitability for their business models; which has led to delays in future spectrum auctions due to a lack of interest from participants. Unfortunately, this results in the worst scenario possible for the country, as the government is failing to maximise revenues from: i) the impact that the new 5G technology will have on multiple industries; and ii) the annual spectrum payments and corporate taxes that the government would be able to collect.
It will be the government’s job to evaluate whether or not a faster deployment of 5G with additional spectrum is required to i) strategically position Mexico to profit from future economic opportunities, like nearshoring; and ii) take advantage of all the additional technological capabilities that 5G offers, which will drive the industrial revolution 4.0.