According to The Chicago Tribune, North America’s wireless carriers are in a race to attract customers who make frequent calls and trips between the U.S. and Mexico.
America Movil, AT&T, T-Mobile US and Telefonica Mexico have all introduced plans this year that end cross-border roaming charges and take advantage of a two-country region with more than 400 million people.
Mobile operators are finding ways to further tap into the closely linked economies. Almost 11.6 million Mexican immigrants live in the U.S., according to the Migration Policy Institute in Washington. About 97 percent of all long-distance calls to and from Mexico in the last quarter of 2014 were from or to the U.S. and Canada, according to data from Mexico’s telecommunications regulator IFT.
“There’s pent-up demand there,” said Sebastian Cabello, Latin American director of the mobile industry group GSMA. “People between the United States and Mexico have been yearning for new plans and better ways to communicate with each other.”
While the 1994 North American Free Trade Agreement helped expand ties between the neighbors, the fusion of the regions’ telecom markets “tells the story of a deeper economic integration,” said Pablo Bello, Secretary General of the Inter- American Association of Telecommunications, based in Uruguay.
“Part of the accords between the two countries, that lower entry and fiscal barriers in the context of NAFTA, are factors that have likely led this to happen,” Bello said in an interview in Cancun, Mexico.
The cross-border telecom push appears unaffected by recent events that have strained U.S.-Mexico relations. America Movil and T-Mobile announced their plans in the weeks after Republican presidential candidate Donald Trump labeled Mexican immigrants as rapists and drug dealers. Interior Minister Miguel Angel Osorio Chong called the comments “prejudiced and absurd.” The July 11 escape from a Mexican prison of Joaquin “El Chapo” Guzman, once called the world’s most powerful drug trafficker, rattled officials in the U.S., where he’s been indicted in at least five cities.
America Movil, controlled by billionaire Carlos Slim, said last week it would offer calling and coverage to and within the U.S. to its monthly subscribers in Mexico for an additional 50 pesos a month. The company estimates about 8.7 million of those customers travel to the U.S. and could sign up for the deal.
“We’re eliminating the frontier between the U.S. and Mexico,” America Movil Chief Executive Officer Daniel Hajj said last week at the company’s headquarters in Mexico City. “In terms of telecommunications, it will be one region.”
Last year, Mexico signed reforms into law meant to increase competition in a market that has been dominated by America Movil. The company controls 80 percent of the country’s fixed- line market and 70 percent of mobile phones. The rules required America Movil to share its infrastructure with competitors and cut the costs charged to other operators for connecting to its network. The company also had to eliminate national long- distance roaming as of this year.
Since the laws were signed, AT&T bought competing units — NII Holdings Inc.’s Nextel Mexico business and Grupo Iusacell SA — making it the country’s third major telecom player, with about 12 percent of the market, according to data from the telecom regulator. AT&T’s entry intensified the battle for Mexico’s consumers.
International free roaming may cost America Movil in the short term, putting pressure on revenue, Itau BBA SA analysts Gregorio Tomassi and Arturo Langa said in a note last week. They said the move could be beneficial in the future.
America Movil will profit in the mid- to long-term depending on the number of people that sign up for the new plan, a press official said in an e-mailed statement.
“The higher volume of calls will translate into higher earnings for them down the road,” said Irene Levy, president of Observatel in Mexico City, which provides analysis of the telecommunications industry.
“To avoid the migration of users, operators are catching up with really aggressive commercial plans,” Levy said in an interview. “That is, until the difference between them is set by quality.”
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