Region/Countries: Mexico, North America Industry: Other Date: August 2017

Why this is important to Wisconsin businesses: The sector is growing at a rate much faster then Mexico's overall GDP.

During the last 20 years, telecommunications technology has been changing rapidly worldwide: digitization of content, the popularization of mobile services, the convergence of radio broadcasting and telecommunications markets and the provision of voice, data and video services over a single platform.

In Mexico, technological advances have led to a more competitive atmosphere with lower prices for voice, data and video services. According to the International Telecommunication Union (ITU), prices for voice, data and video services decreased by almost 53 percent from 2008 to 2009 in Mexico. This dynamic has also caused an increase in land lines and mobile phone subscriptions, as well as an increase in broadband internet service speed. Recently, the Federal Telecommunications Institute (IFT in Spanish) announced that the country's telecom sector witnessed 8.4 percent year-over-year growth in revenues for the second quarter of 2016. This rate of growth is the highest among all sectors of Mexico’s economy. Remarkably, the telecom sector's growth rate is more than three times higher than the 2.5 percent overall growth rate of Mexico's GDP in the same timeframe. In Q2 of 2016, the broader telecom sector of Mexico generated total revenue of approximately 485 billion pesos (over $26 billion).

Recently, Mexico has seen massive investment in its telecom sector. In June 2016, the country's Secretariat of Communications and Transport (SCT) declared that a total of more than $6.5 billion has been invested over the last three years. In addition, around $13.5 billion has been invested recently in the telecom sector.

The government of Mexico initiated major reforms within its telecom sector in 2013. IFT took several steps to promote competition in this highly monopolized industry, and those reform measures have started producing results. These results include a dramatic decrease in prices due to increased competition. This has also led to an increase in the purchase of paid television services, as well as internet and mobile internet services. Paid TV service in Mexico has grown more than 30 percent since the telecom reform. Consequently, nearly 60 percent of households and companies in Mexico now have cable or satellite TV. Before the telecom reform, the growth of fixed broadband (FBB) services was practically stagnant. From Q4 of 2013 through the end of 2015, household internet service levels grew by 12.5 percent. By March 2016, the FBB penetration rate had climbed to 47 subscriptions per 100 households, signaling a growth of more than 20 percent in household internet services during the last five years. The revenue generated by the telecom industry has grown by 17 percent from 2013 to 2016. Moreover, as the domestic economy was growing at an annual rate of 4 percent over the last five years, the telecom sector grew by 11 percent annually, thus growing nearly three times faster than Mexico’s overall GDP.