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07 June 2019
In March 2018 the Federal Electricity Commission (CFE) published draft terms of reference for a new tender procedure in which 50,000km of two strands of dark fibre will be allocated for the provision of free internet services to all citizens under the so-called 'Internet for All' project.
The winner of the tender must provide, at its own cost, free internet to 8,535 of the sites listed in the draft terms of reference (eg, schools, hospitals, parks and federal buildings) within six months of signing the agreement. This cover must extend to 70% of the sites within two years and 100% within three years. In addition, the winner must pay a consideration for signing the agreement and all operational and maintenance costs for the fibre, which remains the CFE's property. The winner will be free to use any remaining capacity to provide commercial telecoms services.
The tender will be open to national and international bidders. The total duration of the project is 20 years, with two potential extensions of five additional years.
Specialist opinions on the project's feasibility have been mixed. On the one hand, the Red Troncal auction that was initiated at the end of the last administration is currently on hold. This project also aimed to assign, under a public-private partnership (PPP) structure, two strands of the same network of dark fibre for the creation of the National Backbone Network (for further details please see "TELECOMM invites applicants to bid for National Backbone Network"). However, on the other hand, the previous administration successfully assigned the Red Compartida PPP project, the winner of which currently provides more than 33% of the Mexican population with 4.5G-LTE technology in the 700 MHz band on a wholesale basis and owns the other two strands of the same CFE fibre network (for further details please see "Red Compartida: president launches major telecoms project").
President Andres Manuel Lopez Obrador has stated that if no winner of the Internet for All bidding procedure is published in the near future, he will create a government agency to provide internet services throughout the country.
However, if it becomes evident that the private sector cannot complete the project as provided for in the draft terms of reference, it is even more unlikely that the government will be able to undertake such a commitment without the resources and experience of the private sector.
That said, Lopez Obrador's government is taking direct responsibility for activities in other sectors which previously would have been unthinkable, such as the construction of a new refinery and a new airport. Therefore, this administration may – against all odds – enter the telecoms sector (as previous administrations were able to do) by creating a new public entity to provide internet services to all citizens.
For further information on this topic please contact Federico Hernández Arroyo at Hogan Lovells BSTL by telephone (+52 55 5091 0000) or email (firstname.lastname@example.org). The Hogan Lovells website can be accessed at www.hoganlovells.com.
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