The Death of International Roaming and the Battle for the Mexican Mobile Market

by Matt Klassen on July 20, 2015

Through key acquisitions and promotions over the last year or so American telecom operators have set their sights on Mexico, the next logical step for expansion for companies struggling to grow in a saturated American market.

But as AT&T has started to scoop up smaller Mexican telcos and other American operators like T-Mobile have broken down the digital roaming walls that once separated the countries, Mexican telecom giant America Movil, which operates wireless provider Telcel, has been roused from its slumber, offering its own free voice and data roaming across the U.S. and pledging to invest $6 billion USD in growing Mexico’s wireless infrastructure.

Now there’s no question that AT&T has challenged America Movil’s dominance of the Mexican market, with Ma Bell acquiring two separate Mexican telcos and pledging to invest $3 billion in the foreign market. With Mexican regulators set to impose tough restrictions aimed at breaking America Movil’s virtual monopoly in the wireless market, the fact is the company can no longer sit on its laurels. But now with true choice finally available in Mexico we’ll see if those efforts are enough to retain the interest of the Mexican mobile consumer.

If you want an example of the power of free market capitalism, look no further than the Mexican wireless market. Like any big fish in a relatively little pond, America Movil has operated for many years without any real competition, dominating the vast majority of the Mexican wireless market. With the entrance of AT&T, a company who is hungry for expansion and views Mexico as a key growth market, America Movil has been forced into action, selling off assets to curb the ire of Mexican regulators and pledging significant investment in the local telecom infrastructure, something the company didn’t really need to do previously.

Couple this investment with the fact that operators on both sides of the border are offering lucrative free (or cheap) data roaming packages between the countries, and what we’re seeing here is one of the first steps towards tearing down the completely arbitrary digital borders that continue to separate nations.

While eliminating the wireless divide between countries is great for consumers, the fact of the matter is that it eliminates a key revenue source for telcos (not that I’m feeling sorry for them, mind you), as stiff roaming charges were a lucrative cash cow for entire industry. Of course without such income wireless providers are forced to better define what they actually do—what their role is in the world of wireless technology as a whole—but that is something that has been long overdue in my mind.

In the end let me say that as a Canadian living near the U.S. border I’m keenly aware of the ironclad boundaries between the countries’ respective wireless networks, as walking a few metres to the south often means the difference between connecting to my local network and incurring international calling and roaming charges. In fact, for as long as wireless technology has existed, national borders have served as barriers between wireless networks, imaginary walls preventing seamless Web access and affordable calling services. With AT&T’s entry into Mexico such boundaries are quickly being torn down, as companies on both sides of the border are jumping into action, some motivated by the prospect of growth, others motivated by the need to maintain control.

But whatever spurs them on, let me say that breaking down these imaginary digital divides will be great for the consumer, allowing our connected everything existence to follow us wherever we might go.

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Written by: Matt Klassen. www.digitcom.ca. Follow TheTelecomBlog.com by: RSS, Twitter, Facebook, or YouTube.

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