Photo credit: Amazon Android1 by melenita2012
I am recovering a July post from Homo Zapping, an independent news blog in Mexico, which reported that President Peña Nieto is trying to set up a big data project that would bring together information from government files and social networks. This project could be in charge of Google, Inc., EMC Computer Systems and Kio Networks with an annual cost of 100 million USD.
On the other side, Amazon announced today that Kindle Store will be available to Mexico. In fact, Amazon has been selling Kindle ebooks since the beginning to Mexico, but they localised the costumer experience.
In addition, announced that it has a deal with Ministry of Education to host content in indigenous languages like Nahuatl and Mixteco.
Amazon is also negotiating contents with major local publishers like Fondo de Cultura Economia (a Government funded book-house), Porrua (the major and oldest publisher of legal textbooks and many classics) and Ediciones Era (a publisher of many big name Mexican writers).
And finally, Amazon declared to be open to sell other “categories”. Mexico’s installed capacity for manufacturing would allow Amazon integrating one North America retail operation under NAFTA. Under recent Telecom Reform, Amazon could also render cloud services, as law allows 100% of foreign investment in telecom licenses, and have a cross-border Ad platform.
Just to add on the landscape here, Mexico has 47 M internet users, 4 M internet mobile users, 33.5 M registered taxpayers and 40 M social network users. That is big time big data to have it analysed and a critical mass for launching an e-commerce platform.
Forbes calculates a potential market of e-commerce in Mexico of 1 B USD. Somebody has to awake this market from its slow growth and certainly you can trust credentials of Jeff Bezos.
This Administration is updating the National Digital Agenda focusing on deploying a better and more efficient eGovernment infrastructure and reducing the digital divide. So far, the agenda still in discussion in the Congress and diverse fora, but always on the line of defining an open public policy for using ICTs.
However, the fine line of success for internet services and e-commerce is to grow trust into users. The users are those who impulse the internet with their purchases and interactions. They are the ultimate creators of jobs. The secret to bloom is updating commercial laws in parallel with public policies. It is urgent to simplify registrations of internet services companies and to provide for a detailed regulation on social media and data mining. After all, trust is the foundation of the internet and users perceive otherwise.
Finally, there are no coincidences in the world of the internet companies. They step on each other´s backyards all the time. So, whether Google and Amazon dream of Mexican market or just electric sheep, it is pretty clear there is going to be big business.
Photo credit: EPROM CLCC-44 Devices by yellowcloud
This is part 1 of 3-part post on the recently published Mexican Telecom Reform. Follow me to explore the great opportunities to come.
What ever happened to the Telecom Market.
Mexican Telecom Reform is now on effects. It is the end of the industry, as we all knew it. Frankly, I feel fine and exited about the new regulation.
We need to double-check landmark case law on interconnection, spectrum assignment and antitrust to connect the dots backwards. All those years in court made telecom law history, though.
This Reform offers a fresh start for entrants and opens a wide range of opportunities, as now investors have less barriers for mobile, data and TV.
Telecom regulation is moving in gigaflops. Just now, COFETEL (telecom body) has concentrated all operators annual report formats into one single document. Also, has reduced the local service areas from 397 to 172. Satellite services, fixed-mobile cost models, standards for DTV decoders (NOM-192) and mobile antennas installation are under review. Other issues like passive infrastructure interconnection and white spaces are between the lines on the debate.
Now, foreign companies and individuals can invest in telecom companies up to 100%, and 49% in TV/radio companies (the latter subject to country reciprocity to Mexicans in those sectors). Previously, some investors invested only in no-voting shares with the obvious consequences.
From recent data of COFETEL, telecom services increased an aggregate of 12.5% during first quarter of 2013, comprising broadband connections up to 12 million, CATV up to 13 million, DTH up to 7 million, mobile users up to 101 million and fixed lines up to 20 million. Satellite and trunking decreased.
After the transition, the new IFETEL (succeeding to COFETEL) will review and simplify telecom licenses in one single type, and hopefully will reduce red tape to obtain it.
While the reforms encourage and support free competition on these telecom services, it is also true that incumbents have been preparing for this face-off for years. Yes, it is great for telecom lawyers, but paradise for antitrust telecom lawyers.
However, the less explored side of the Reforms is niches, trends and side markets that could generate businesses while the telecom industry grows in the years to come. Also, the Public Private Associations Law grants rights to private companies or individuals to pitch projects on all levels of Government, so the sky is the limit.
A sweet spot is in cameo here. The Reform is a game changer and abilities of the entrants and possibilities created could generate business, and hopefully profit will come along. Where to start digging?
Project Finance, Convertible Debentures, Secured Loans and other Financial Operations.
Telecom is a money consuming business with small incremental profits. It requires big amounts to acquire infrastructure and clients, as well as to run and expand the business. Now that foreign investment caps have disappeared for telecom and have risen for TV/radio, loans secured with shares can be fully executed in an event of default, as transfer of property is no longer restricted to Mexicans-only. Also, foreign VCs can acquire voting shares without restrictions on caps (except TV/radio).
TelecomMexico will become a market incubator.
Telecommuncaciones de México (TelecomMexico), is a state-owned company operates satellite services, money wires and telegraphy in Mexico. Along with the Telecom Reform, TelecomMexico is in the process of getting a telecom license for SMS, voice and data, fixed and mobile through cellular technology and satellite backbone. TelecomMexico will target low-income communities to reduce the digital divide. This strategy is expected to be in the digital agenda, which could include universal broadband. As TelecomMexico is paying for sunk costs of bringing on telecom services to low-income users, operators could ask for interconnection whether for transporting throughout that area or providing low-income niches services.
Second installment is coming in a couple of days …
Photo credit: Firefox Mobile by Johan Larsson
It happened Sunday just before midnight. Politicians from The Pact for Mexico, this is, an alliance made by major political parties for debating amendments to structural laws in Mexico, agreed on a Telecom Bill to be presented to the Mexican Congress.
Yesterday, at noon, The Pact for Mexico and the Federal Government made a press event to officially present the Telecom Bill to society. This means that this Bill has already received pre-approval from majority of congressmen, and most likely will pass in essence.
As wrote in my Post: “How I Learned to Stop Worrying about Telecom and Love the Pact” the Telecom Bill was imminent with no way back. Increasing growth of telecom and IT services, would eventually make politicians to reach agreements to set things right in the telecom industry.
Certainly, this Bill will boost telecom business at mid and long-term, taking many industries with them. For first-movers, time is of the essence. Here are some highlights to understand the range of this Amendment:
1.There is a constitutional right to access broadband and access to information. Infomercials disguised as news are forbidden.
2. State will transform current COFETEL (telecom agency) and COFECO (antitrust agency) from subordinated government bodies to the Ministries of Communications and Economy, respectively, into two autonomous agencies with enough power to coordinate telecom industry and commercial markets (other than telecom).
3. Licenses and spectrum will be reorganised to allow converging telecom services. Meaning that companies may render converging services under one license, rather than having several permits, authorisations and concessions. New telecom agency will grant and revoke licenses, rather than the Ministry of Communications, as happened in the past.
3.Two new free-to-air networks will be placed under tender. Major players with 6 MHz are not invited.
4. Must-carry and must-offer obligations are included. Free-to-air TV has to offer broadcasted content and CATVs must carry those signals, both for free. There is an exception to “major” players, that would pay for them.
4. Foreign investment will be allowed at 100% in fixed and mobile services, and up to 49% in free-to-air TV and radio.
5. Local bundle for telecom, radio and TV networks of “major” players must be shared.
6. Government will grow its telecom network allowing private-public projects.
7. Bands of 700 MHz and 2.5 GHz will be reorganised, and a part used for wholesale.
It is important to notice that this Bill is to the Mexican constitution, and would require to have federal laws to detail all these aspects. However, the business expectations are great.
I can hardly find some time to discuss all aspects that come to my mind at this moment, of write “deep thoughts” of each topic. However, some topics come to my mind:
- Mexican telecom operators, no matter size or network size, have just increased market value.
- Content will be required to fill-in air time and CATVs.
- Big data analytic will play a big role in the expansion of the services, as well as in the market defence.
- The internet of things could have found broadband access, but also an emerging market that loves gadgets.
- Videocasting, internet-TV and VOD could explode during next years. Internet radio could find a niche too.
- Advertising must find other lucrative niches other than infomercial news. Maybe migrate to the internet.
- Telemedicine, electronic files and other e-health business will be pushed by this Bill.
- Local governments will be more likely to implement e-government policies with better and cheaper internet access.
- Digital products will find a bigger market.
Telecom Bill appears to have a “Do Business in Mexico” all over it, and will attract many players into the market share. Now, it is the time of Mexico embracing this historic transformation.
I will find some time to write on several topics of the Bill, and some other that are not covered by it. Meanwhile, so long, and thanks for all the first-movers …
Photo credit: Internet café by Jared Tarbell
This post is far from being a black humor political satire. In case you missed it, on December 3, 2012 members from 3 leading political parties signed the Pact for Mexico.
This Pact is a pre-agreement on backbone amendments to promote Mexico´s growing. In telecom, we find very interesting public policies that could boost that and other industries:
1. Anti-trust Agency (COFECO) will have authority for structural and functional separation of trusts.
2. Creation of special telecom and anti-trust courts.
3. Constitutional access to broadband.
4. New rules for challenging resolutions from Federal Telecom Agency (COFETEL) and COFECO.
5. COFETEL will be autonomous.
6. Comision Federal de Electricidad (CFE)´s Telecom Network will grow.
7. The Bands of 700 MHz and 2.5 GHz will be reorganized. 90 MHz of the 700 MHz Band will be used for wholesale.
8. There will be free internet acess in public spots and buildings.
9. Promotion of public and private investment in apps for telehealth, telemedicine and electronic patient records.
10. New policies for e-government, open government and open government data.
11. A bidding for new free-to-air TV will be launched with obligations of free must-carry and must-offer for CATVs.
12. Dominant firms of telephony and data will be subject to assimetric regulation for tariffs, combo offering and M&As.
13. Telecom Law will be updated and reorganized in one single estatute.
14. New policies for TV, radio, telephone and data will be implemented in parallel.
15. Most of these policies will be implemented as early as first quarter of 2013 and finishing implementation on 2015 or 2018.
The fact that all political parties pre-agree on amendments forsee a majority on the Congress and of course, a coordination with Peña Nieto´s Administration for implementing them. The new Administration also has shown pre-consent from Telmex and Televisa, biggest telecom and media companies in Mexico. No Supreme Court support has been shown yet, though.
Take it with a grain of salt, but there are some rumors about an amendment on current foreign investment limitations to fixed telephony and free-to-air TV to boost competition.
If you google telecom bills and policies, sure will find most of these items. The difference goes beyond the manifest majority of the Congress to promote competition in telecom, but the State declaring that will lead the telecom growing during next 6 years.
However, there are other pledges hidden for the untrained eye. Sales of Mexican telecom industry growing at a 15.1% pace and mobile broadband at 56.4% during third quarter of 2012, shows consumer is demanding the coming of big data.
In parallel, official information from Ministry of Economy shows that IT Industry has 32 clusters nationwide with 1340 companies. During last 10 years, the industry has grown 12.9% and the jobs 12% As such, there are 115,000 IT professionals graduated annually.
Have you stopped to think on the potential of this combo growing?
The Pact is in fact pushed and guaranteed by data consumer, who actually creates the IT and telecom jobs by paying for higher end services, but also by new era technologies that make hard for firms to keep market share without competing and innovating.
As Muhammad Ali once said “Impossible is temporary”. Today we are thinking on mobile broadband, while some are starting to foresee a hardware-less future based on the cloud with big data crossing across converging networks.
Mexico is paving the road for this. If you are smart enough you can grab a bit of business. If you are smarter, you will prepare yourself for a terabit. Just do not be foolished by technology, a business plan still will be required covering financial, tax, legal, IP, marketing and other traditional aspects of doing business. The Devil is in the details.
I already asked permission for hijacking this phrase from José Alberto Sanchis, a US-based serial entrepreneur I met at an alumni event early this year. Back then, global crisis seemed falling rock-bottom with little hope for a quick end.
“No jobs, all the opportunities” is so true in times of crisis. Not only for moguls with enough cash flow for shopping bargains, but for the increasing interest on start-ups from investors and entrepreneurs.
Tech startups are on the spotlight as a key business niche for economic recovery that even governments aggressively support them.
In Mexico, Federal Government has included IT industry into the lines of SMEs projects. E-Government Commission from Mexico City Government organizes Ciudad Movil DF, an IT event where coders access public data and write mobile apps for improving the City. Even, Telmex, Latam telephone mogul, has joined on the quest for finding profitable tech startups through its Innovation and Technology Center.
Business means risk. Startups are riskier by definition. Tech startups are riskiest by nature. Nobody knows if a project only has fantastic coding, magnetic GUI or real money behind it. Hopefully all of them.
Crisis forced us to slow down and rethink business models that were profitable before, and of course, made us think on new legal models for getting the deal through.
A lawyer is a risk filter for an investor to close a deal with a reasonable risk. Then, it is crucial for a pitch to learn about the lawyer´s vision. Here are some hints:
1. Show trustworthy if you are. Lawyers hate mixed signs and contradictory documents. It is important to prepare a small brief of the business for the lawyer or write a specific legal risk section into the business plan, including of course, assets and guarantees to cover contigencies. Most probably, investors/buyers will require full disclosure of your sensitive information for assessing any funding or investment. Be prepared with a good non-disclosure agreement with specific provisions on how to identify confidential information, persons authorized to read and process such information, as well as an enforceable penalty.
2. Corporations are less risky. Corporations could be vessels to make a sell, a joint venture or secure a loan (with stock options, handover deals or the like). In my opinion corporations are more transparent in relation to liabilities than people. Laws have more controls on corporations, so it is cheaper, faster and more secure to perform a due diligence on a company than a person.
3. IP property is a must do. Tech business is all about IP and its legal protection. Tech startups might not have big budget already, but IP must be on the top of priority expenses. Having IP in good standing might not cheap, but not having it could be a deal breaker.
4. Put all agreements in writing. There will be a time when people want look back at negotiations for reference. Verbal agreements and handshakes are hard evidence to discover. Remember, any deal could end up in court, so be careful on reviewing terms in writing.
5. BYOL (Bring on Your Own Lawyer). Remember that all deals are unpredictable storms, and you will require an experienced team to maneuver to safe harbor. A lawyer from acquiring/investing party will not protect your interests. In fact, most probably will not advice you in order to prevent a complaint due to conflict of interest.
Before skipping 9 to 5, it is important to understand that a successful startup requires time, planning and talent to execute. Who knows? Maybe your project is the Internet’s next big thing? And honestly, I hope it is.