Uruguay spectrum allocation under fire in a big year for Latin America 5G

In Latin America, 2023 may see several long-anticipated auctions awarding 5G spectrum. The one that seems the closest at the moment is Uruguay's planned tender for 300MHz in the 3.5GHz band, but it has been bombarded with criticism from all sides.

Most recently, Uruguay's communication services regulator Unidad Reguladora de Servicios de Comunicaciones (URSEC) has postponed the auction, which will award three blocks of 100MHz, to May 9. Initially, it was supposed to start on April 28.

One of the main isssues for private companies is that one block – 3.6GHz to 3.7GHz – is automatically reserved for the state-owned Antel. Its competitor Claro, which is owned by America Móvil, has complained that, as a result, Antel can start importing and installing equipment. This allegedly gives it a competitive advantage against other telcos, which need to wait and see what spectrum they are awarded.

Figure 1: (Source: Philipp Dimitri/Westend61 GmbH/Alamy Stock Photo)

Another complaint is levied by Dedicado, a broadband provider that was hoping to participate in the auction but is prevented from doing so by the auction's rules. To take part, a company is required to have offered mobile services for at least two years in two countries in the Americas or in Europe, and to collect subscription fees of at least $50 million a year.

This puts Dedicado, the only interested company that isn't owned by a multinational telco, in an unenviable position. The firm has already started to roll out a 5G network using equipment from Nokia and Ciena. Its CEO, Arturo Vargas, has told Uruguayan media that it has so far invested $80 million in its 5G rollout, with another $45 million committed.

Dedicado has said it will take legal action, with documents reportedly showing it was initially promised it would be allowed to participate in the spectrum auction.

As things stand, the two other bands will most likely go to Telefónica's Movistar, which is the second-largest operator with 30% of mobile subscribers, and Claro, the third-biggest telco with a 21% market share, according to URSEC data. Antel, meanwhile, holds the biggest market share with 49% of subscribers.

Operators have also reportedly complained about the base price of the blocks, which is set at $28 million, although these rates still sound low when compared to Europe. In the UK, BT paid £168 million (US$209 million) for 40MHz in the same band in 2021.

Uruguay allows winning parties to source equipment from any company – including Huawei – despite recent efforts by the US to block the vendor from accessing other markets.

High costs hinder Mexico's 5G

Uruguay is just one of several countries where 5G spectrum auctions are in the works – and not the only country struggling with spectrum allocation. In January, Mexico's Federal Telecommunications Institute (IFT) opened a consultation on an auction that would assign 330MHz of spectrum that can be used for 5G, having only awarded three blocks of the 41 put on offer in a 2021 auction due to lack of interest.

The problem is the high annual fees charged for spectrum, which are far above regional and national averages. These are having a strong impact on the market, with Telefónica announcing in July it would hand back all of its spectrum and operate on AT&T's network partly due to high spectrum costs.

The two largest operators have, meanwhile, already launched 5G. The America Móvil-owned Telcel said at the end of 2022 it had brought 5G to 100 Mexican cities and covers 60% of the population, according to data from Light Reading's sister company Omdia. America Móvil maintains around 70% of the mobile revenue market share.

AT&T has opted for a more conservative rollout and said it was offering 5G services in 31 cities at the end of 2022.

Another country gearing up to auction 5G spectrum is Argentina, where a limited network has been available since 2021 via Telecom Argentina. The country was expected to launch an auction for the 3.3–3.6GHz band in March or April, but no announcements have been made so far.

Peru is also gearing up to award spectrum at an as yet unspecified date. An auction for spectrum in the 1.7GHz and 2.3GHz bands was launched in 2021, requiring winners to expand mobile coverage to remote and rural areas. It was, however, cancelled in 2022. Operators can, meanwhile, offer 5G services using already allocated spectrum, but coverage is limited to certain parts of the capital, Lima, according to Omdia.

In Colombia, nine companies have expressed interest in an upcoming multiband spectrum auction, which is expected to take place in the third quarter of 2023. These include Claro and Telefónica. In Chile, meanwhile, an auction for 50MHz in the 3.5GHz band is also planned for 2023, according to the local regulator.

Omdia notes 5G is still in its infancy in Latin America, adding that the few markets that have deployed it lack innovative applications to harness its potential. By 2027, it expects 5G will account for 47% of total connections in the region.

Spectrum problems, like those facing Uruguay and Mexico, will likely not help it get off the ground any faster.

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— Tereza Krásová, Associate Editor, Light Reading