Last week, MVS Comunicaciones SA announced plans to invest about US$700 million in WiMax technology, along with minority stakeholders Clearwire Corp. and Intel Corp., to offer wireless high-speed Internet service in 23 Mexican cities. Breakdown of the investment was not disclosed. The partners are reported to be starting the network in the second half of 2010. The Mexico City-based company expects to win government approval by the end of this year for a request to extend its license to operate airwaves necessary for the project.
MVS Communications is a telecommunications service provider offering its service over diverse transmission media (copper, fiber, wireless), and is the parent of MVS Television and MVS Radio. In 2002, E-Go, the Broadband wireless solution of MVS was launched for the first time in Mexico City. In 2004, E-Go formed an strategic alliance with Clearwire initiating an aggressive plan of national growth. In 2005, E-Go partnered with Alestra to launch MasterNet, an integrated solution of voice and Internet. Apart from offering wireless broadband services it also deals in radio broadcasting and cable television. MVS partnered with US-based WiMAX provider NextNet Wireless (acquired by Motorola) and finalized construction of a wireless broadband networks in Mexico City, Guadalajara, Monterrey and Toluca. As of Q1 2009 the company had a customer base of over 60,000 using proprietary equipment from Motorola and Aperto. MVS is waiting for COFETEL's approval to launch a WiMAX nationwide network along with its US partners, including Intel.
The company was expected to invest US$100 million in 2009 and to launch a nationwide network by late 2009. Should this come to fruition, MVS's broadband ambitions are a direct challenge to fixed-line incumbent Telefonos de Mexico SAB (TMX), the country's biggest Internet service provider with 6.3 million broadband accounts at the end of September. Telcel, the country's No. 1 mobile operator and a subsidiary of wireless giant America Movil SAB (AMX), has also invested heavily to upgrade its network in recent years to offer high-speed data services.
This is not the first time Intel reached into its pockets to invest in promising WIMAX carriers to help boost the momentum for the technology. In fact, Intel already invested close to US$2 billion in service providers across the globe, mainly in the 2.5 GHz band where mobile WIMAX is best suited to drive sales of its WIMAX embedded mobile devices.
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Intel has invested heavily both in R&D and the development of the WIMAX ecosystem. Estimates are that Intel invested over US$3 billion in the WiMAX opportunity, and has much to lose if WiMAX does not deliver on its promises.
On another note, this week the WiMAX Forum Congress Americas is taking place in Fort Lauderdale. Among the topics discussed during yesterday's focus day on the US stimulus package, was whether the US$7 billion package could make a difference in the “revival” of the WiMAX ecosystem. Not all agreed that WiMAX needed a revival, but the moderator noted that the market capitalization of WiMAX vendors was not very high. The portion of the US$7 billion that will fall into the hands of WiMAX applications will translate almost entirely into CAPEX for WIMAX vendors with a multiplying effect on the rest of the ecosystem. Although the bulk of applications are for fixed applications, economies of scale are expected to benefit mobile WiMAX vendors as well and rural areas are expected to migrate to mobile WiMAX in the long term.
Another question debated in the program was the role of Tier 1 Carriers in the stimulus package outside of Clearwire. The requirement of openness in the network was one of the reasons seen for larger Tier 1 vendors not applying for the stimulus funds besides the fact that many are simply not interested in serving rural markets, which tend to be comprised of large areas and little population.
Finally, the 3.65 GHz is expected to attract more applications including in the 2nd round of applications.
Enjoy!
Adlane Fellah
Maravedis CEO & Founder
For more information, contact the author at afellah@maravedis-bwa.com
Copyright © 2009 by Maravedis Inc. All Rights Reserved.
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