Observacom
Análisis - México English

Thirteen points regarding the upcoming tender for TV frequencies in Mexico

This is the second tender process called by the Federal Telecommunications Institute (FTI). In 2015 the body made an invitation to tender for two national television networks, with 123 channels each, based on a mandate included in the Constitution.

Gabriel Sosa Plata*/Mexico/June 2016

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1. The Federal Telecommunications Institute (FTI) will call for tenders for 148 open digital television channels, distributed throughout 123 transmission zones, in a process that will begin next October and conclude in the second half of 2017.

2. This tender process includes two channels in each of the country’s three largest cities: Mexico City, Monterrey and Guadalajara. This may increase the interest of potential bidders.

3. It is the second tender procedure called by the FTI. Last year it called for tenders for two national television networks, with 123 channels each, based on a mandate included in the Constitution itself, which was part of a structural telecommunications reform initiated in 2013.

4. The main objective of this opening up of commercial television is to break up the highly concentrated structure of this media sector. As may be recalled, of a total of 461 franchised commercial stations, 224 are operated by Grupo Televisa (48% of the total) and 180 by Televisión Azteca (39%). In addition, 34 affiliated stations broadcast the programs of Televisa. Both companies also had (and still have, given that at the time this article was published Cadena 3 had still not initiated its activities) more than 90% of the national audience and the same percentage of advertising revenue towards this media segment.

5. The historic bidding process for two open digital television networks initially generated interest from a dozen companies, but at the end of the day only two reached the final round of selection. One of them, Olegario Vazquez Aldir of the Angeles Business Group (Cadena 3), paid a cash consideration of 1.808 billion pesos and received one of the networks. The other, Francisco Aguirre, of the Radio Centro Group (GRC) did not pay the agreed cash compensation of 3.58 billion pesos, and lost a 415 million peso warranty. Before winning the bid, the Angeles Business Group already operated Channel 28 (known as Cadena 3) in the Mexican capital.

6. In late May the FTI published the draft document for the call to tender, opening a public consultation process to receive feedback on the document from the 2nd to the 29th of June. Following this, and once proposals and comments have been analyzed and duly incorporated, the call to tender will be published after approval by the plenary session of the FTI.

7. One of the novelties of the draft document is that the channels will not be franchised as a national chain, unlike in the previous tender process. This means that participants may choose one or more channels according to their interests, which will encourage the creation of local channels or regional networks. The draft document also provides for incentives (10% in cash considerations) for those bidders who do not exceed 15% of national coverage in all the TV stations in which they participate.

8. Another new feature of the draft document is that those companies that already own a channel in the population area covered by the bidding process may not take part. According to this stipulation, Televisa, Televisión Azteca, Cadena 3 and Multimedios Television may not participate in many of the cities or towns where they already have a presence, although they make take part in areas where they have no channels.

9. In Mexico, local or regional commercial television is almost nonexistent. Of the 461 commercial channels, only 17 stations operate independently in cities such as Monterrey, Torreón, Tampico, León and the state of Mexico. One of these companies is Multimedios Television, a partner of Televisa in the cable television company (Televisión Internacional) in Monterrey and other locations in the north of the country. Televisa and Televisión Azteca broadcast some local programs in a few channels outside of the capital, especially news and local programming, although the highest percentage of its programming comes from Mexico City.

10. If it is possible to create local channels or regional networks, this tender could lead to plurality and diversity of content in television, although much will depend on the business plan that is developed, as there are no restrictions placed on channels simply repeating the content of the major TV networks. Neither is there any obligation regarding domestic or independent production.

11. A third significant element of the draft document is that only administrative, technical, legal and financial capacities will be assessed. The programming project is only a requirement, and has no value when it comes to defining the winning bid of the tender. Money and promises of investment will remain the determining factors for winning broadcast frequencies.

12. Sin Embargo reported on June 7, 2016 that the opening of commercial television has arrived a bit late for the phenomenon of declining audiences (especially among the youth and children) and the drop in advertising revenue (with a fall in this media sector of 5 percentage points between 2011 and 2015, from 55% to 50%, according to the Association of Media Agencies) toward this area of the media, although the process can still be very beneficial for audiences in countless zones of the country that only receive the transmissions of commercial broadcasters and in the best of cases the transmissions of public television. It may also prove useful for the 50% of households without pay television and the more than 60% with no connection to the Internet (National Statistical and Geographic Institute-INEGI figures), but which do have access to one of the 10 million free digital TVs provided by the government of Enrique Peña Nieto between 2014 and 2015 at a cost exceeding 26 billion pesos. Another interesting fact: 93.5% of Mexican households (30.6 million) still own TV sets.

13. Finally it is important to note that according to new telecommunications regulations, all open broadcast television should be rebroadcast via cable television or IPTV (internet protocol television). In the case of national television networks, the source channels should be placed on satellite systems (Sky and Dish). These obligations allow, in some cases, for the coverage of open broadcast television to be extended; in others, audiences are increased by adding the viewers of different platforms and from the Internet.

*Professor and researcher at theUniversidad Autónoma Metropolitana
UAM-Xochimilco

Related Links:

Telefónica analiza participar en la licitación de los canales de TV digital y sorprende al mercado (Telefónica analyzes its participation in the bidding process for digital TV channels and surprises the market)

Lanza IFT nueva licitación para 148 canales de TV (FTI launches new tender for 148 TV channels)

IFT pondrá a consulta esquema de licitación de TV (FTI opens consulation for bidding process)

... (en este espacio hay varias líneas de código de programación personalizado)