The 2.5 MHz band and Altán: the dispute of the 4T government against the IFT

Within the IFT-12 spectrum auction, the still telecommunications regulator seeks to place 40 Megahertz of the 2.5 MHz band, whose frequency is one of the most coveted by mobile phone companies, thanks to its ability to expand the network of 5G nationwide.

This band is key for the deployment of high-speed networks, since it offers a balance between coverage and capacity, allowing efficient data transmission in urban and rural areas.

One of the operators that has shown interest in this band is Altán Redes, a Public-Private company where the government has become the majority shareholder as there is only one private investor: Morgan Stanley.

The company has sought to access this frequency through a different legal figure than that stipulated in the IFT auction. Altán has suggested that the 2.5 Megaheartz band be established as “a non-discriminatory good to guarantee optimal use of the band”, as the 700 MHz band was constitutionally cataloged at the time and for which reason he was able to access its entirety, according to with the comments that the company itself issued last July in the IFT public consultation for the spectrum auction that is now being sought to be cancelled.

Altán’s proposal would imply that the spectrum be given to him for free. But the Institute decided to tender the 2.5 MHz band without this figure and making it public, meaning that Altán must compete with AT&T and Telcel to obtain the frequency. This situation would be one of the reasons why Sheinbaum Pardo’s government is now seeking to cancel the auction.

José Merino, head of the Telecommunications Digital Transformation Agency (ATDT), said last Friday in the president’s morning conference that several of the spectrum bands that the IFT seeks to auction are compatible with Altán to offer 5G services.

“Some bits of spectrum (that will be auctioned) such as the 600 MHz (band) can allow a cell phone provider to provide or grow 5G services. There are frequencies similar to the 700 MHz that Altán has. (…) So, we believe that the tender as it is is not appropriate, especially due to the issue of social coverage,” the official said.

Reversing the IFT tender would give the Moreno government time to include in the National Frequency Allocation Program that the 2.5 MHz, 3.5 MHz and 600 MHz bands – ideal for 5G – are assignable to public entities for the State to deliver. directly to players like Altán.

Sheinbaum Pardo’s administration could invoke what the Broadcasting Law stipulates in article seventeenth “to guarantee the optimal use of the 700 MHz and 2.5 MHz bands (if used) under principles of universal, non-discriminatory, shared and continuous access” .

“You can understand the consequence of that (the cancellation of the tender), which is for the 2.5 MHz band. José Merino knows that the only way to guarantee that band is through a non-discriminatory regime, just as Altán suggested, but To do this, the question arises as to whether there should be any indication at the constitutional level as there is for the 700 band,” explained Adolfo Cuevas, former commissioner president of the IFT.

The company chaired by Carlos Lerma faces pressure to transition to the fifth generation of networks. For example, the Mexican Association of Virtual Mobile Operators (AMOMVAC) has asked it to offer 5G capacity to compete head-on with companies such as Telcel and AT&T.

Altán currently offers 4.5G capacity because it only has the 700 MHz band, whose spectrum allows it to cover areas with less than 5,000 inhabitants and lay the foundation for 5G. But if the company acquires the 2.5 MHz frequency and combines it with its 700 spectrum, it could fully develop a fifth-generation cellular network to market mass services.

However, Altán does not have the financial muscle to acquire new spectrum bands. Despite exiting bankruptcy in 2022 and obtaining two financings from the Development Bank, the company faces economic problems to pay for the exploitation of the 700 MHz spectrum, according to sources with knowledge of the matter. The company owes around 500 million pesos.

But if the government decides to hand over the 2.5MHz band, this would imply greater subsidies for Altán who currently operates asymmetrically due to non-payments for the 700 MHz frequency spectrum. In addition to bringing greater distortion and uncertainty in the mobile market where Operators such as Telcel and AT&T must pay up to 30% of their income to access spectrum to expand their 5G networks, the cost of which ends up being passed on to users.