Analyst: CPP Regulations to Bring Social Benefits

The upcoming expansion of Mexico's calling party pays billing system to cover long distance calls to mobile users will benefit isolated segments of the population in particular, telecommunications analyst Ernesto Piedras told BNamericas.

Long distance operators run a risk of seeing an imbalance in their revenues, but on the whole the social benefit is of greater importance, said Piedras with Mexican consultancy The Competitive Intelligence Unit.

There are 395 local telephony areas in Mexico, many of which are isolated and where practically every incoming call is a long distance call, he said.

These communities also typically have the lowest purchasing power and so do not have their accounts sufficiently charged to be able to receive calls, which is necessary under the current regime.

"They have low teledensity, low purchasing power and don't have air time on their cell phones. With these regulations they are going to be able to receive long distance calls more easily. The social benefit is immeasurable," according to the analyst.

Mexico's telecoms regulator Cofetel has given mobile operators until October 16 to implement the necessary measures to extend CPP for national and international long distance calls to cell phones.

Consulted by local daily El Norte, dominant mobile operator Telcel (owned by América Móvil) said it welcomed the new regulations and was examining the legal means to implement them. Telcel's main competitor Movistar (owned by Telefónica Móviles) has reportedly already begun steps to implement the new measures.

"We believe that the extension of the program is excellent news for the industry as there will be greater clarity for the user and that will generate more calls," the paper quoted Telefónica Móviles Mexico's corporate communications director Lyssett Bravo as saying.

Both Telcel and Movistar declined to comment on the negotiations they will have to carry out with long distance providers.

Commenting on the CPP measures, Deutsche Bank analyst José Ramírez also welcomed the news, as the rural market is relatively untapped due to the absence of fixed line and wireless services.

However, "wireless players may benefit from the potential incoming traffic from the vast population of immigrants working in the US that will pay an interconnection fee," Ramírez said.

BNamericas.com"

Posted to the site on 20th April 2006