In Mexico, how much of an opportunity exists for new or smaller pay TV, internet and telecom providers? According to Frost & Sullivan, it’s an extremely challenging environment since the market there is dominated by Telmex and its mobile arm Telcel. There is an exception in the pay TV segment, where Televisa has the largest share.
In this current situation dominated by big players, Frost & Sullivan says it can be difficult for smaller competitors to grab market share and prove return on investment (ROI). And when you add the growing number of over-the-top (OTT) services provider options in Mexico, it’s a complex scenario within a mature market.
The developing OTT market in Latin America was the focus of a recent Digital TV Research report, which backs up the premise that service delivery competition is fierce in that area of the world. The research forecasts close to a fifth of Latin America’s TV households will pay for a subscription video-on-demand (SVOD) package by 2021, which is up from the 10.9 percent projected by the end of 2016. For the overall SVOD market in Latin America in that timeframe, Mexico will mark about 26 percent of it, Digital TV Research predicts.
In terms of overall telecommunications competition, Frost & Sullivan points out that regulators have been trying to curb the dominance of Telmex and Telcel in Mexico with only limited success. But the recent Axtel/Alestra merger could provide realistic new telecom competition.
“Although the regulatory effort to curve down Telmex/Telcel dominance over the Mexican market is still underway, the competitive landscape has already been revitalized, in particular with the entrance of AT&T into the mobile segment and the merge of Axtel and Alestra, which gave birth to a more solid competitor with a solid customer base combining residential and enterprise customers,” Ignacio Perrone, digital transformation industry manager at Frost & Sullivan, observes.
Perrone further notes that mobile data in the area is expected to grow at double digits, while mobile voice is declining. Among fixed broadband technologies, ADSL is losing share, while cable modem and FTTH are growing steadily, he adds.
“In the pay TV segment, CATV is expected to decline, while DTH and IPTV will continue to grow,” Perrone says. “Data communications technologies present a very diverse scenario, with Metro Ethernet growing at double-digit rates, while circuits and private lines are declining. The only exception is fixed telephony, where all services — local voice and international long distance — are decreasing.”
The Frost & Sullivan report concludes that service providers are likely to find more success for growth in the market areas that are less penetrated in Mexico, such as pay TV and data communications. The company also points out that in pay TV, specifically, OTT services are increasing adoption and stimulating price repositioning of traditional services.
