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network interconnection

Good News for Mexican Telecom Consumers as Network Interconnection Costs Fall

A study by the Organisation for Economic Cooperation and Development (OECD) has found a rapid reduction in mobile network interconnection costs in Mexico, an indication that the country’s telecom market is becoming ever more competitive.

Network interconnection costs — the price mobile operators pay one another to connect calls on each others’ networks — declined a stunning 84% between June 2014 and June 2017, while the average decline in other OECD countries stood at 42%.

Such costs, also known as ‘termination fees’, remained highest in Switzerland, while in the United States a new system known as “bill-and-keep” cut the rates carriers were required to pay each other to zero.

Mexicans are also increasingly signing up for fixed broadband services, with the OECD finding broadband penetration increased by 8% during the three year period.

Considering its review of the Mexican telecom market published in August last year, there has been a sharp increase in the number of mobile consumers since the 2013 telecom reform. Mobile broadband teledensity in Mexico grew 16%, higher than the rate achieved by Hungary (15%), Belgium (13%), and Canada (11%).

The Paris-based organization credited the government with reducing the telecom prices by nearly 75%. Despite the news, America Movil has still managed to control more than 70% of the country’s wireless market.

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Mexico “should make changes to public policies, regulations, and the legal framework in order to further increase the competition,” the international agency said, urging the government to encourage telecom providers to invest in innovation.

Narayan Ammachchi

News Editor for Nearshore Americas, Narayan Ammachchi is a career journalist with a decade of experience in politics and international business. He works out of his base in the Indian Silicon City of Bangalore.

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