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Puerto Vallarta News NetworkNews Around the Republic of Mexico 

Today, Mexico's Mobile Users Have Compelling Choices

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July 4, 2016

To keep up the growth of Mexico's booming mobile industry, competitors are offering smartphones for every budget and plans that let users choose which services they want and how much they want to spend.

Twenty years ago only one out of 10 people in Mexico had a telephone of any kind. Today, more than 100 million people (out of a population of roughly 125 million) have cell phones and, more amazingly, more than 70 percent of those are smartphones.

To keep up the torrid growth, scrappy competitors are offering smartphones for every budget and plans that let users choose right from their handsets which services they want and how much they want to spend.

Three factors have catapulted Mexico's mobile industry into the 21st century.

First, Mexico has grown into the world's 11th largest economy (in terms of purchasing power) in just the last two decades.

Second, millennials are Mexico's largest demographic group (they make up more than half of Mexico's online population) and they want and expect what their counterparts in developed countries have.

And third, the towering presence of a company that Mexico's government considers a monopoly in both the landline and mobile markets has spurred its smaller (though not unsubstantial) competitors to be more inventive and aggressive.

That monopoly is the creation of a man who for four years in a row was ranked the world's wealthiest individual, Carlos Slim. His flagship business, America Móvil, is one of the largest telecom concerns in the world, with operations in nearly 30 countries. The telecom titan controls roughly 80% of Mexico's landline market and 70% of its mobile market. The Mexican government has been trying unsuccessfully for years to break up Slim's empire. However, his mobile competitors aren't waiting for that to happen. Instead, they are challenging the status quo that America Móvil is struggling to preserve by bringing innovative technology and business models to Mexico's mobile market.


Mexico's second largest mobile operator, Telefónica, is shaking up the market by offering users a more modern solution for purchasing and managing mobile services. As the fifth-largest mobile operator in the world, Telefónica has the financial assets and know-how to give America Móvil serious competition. The company introduced a new service, branded as Movistar On, in response to the rampant confusion and frustration among consumers that it discovered through intensive market research.

Telefónica partnered with Silicon Valley-based ItsOn to build Movistar On around that firm's cloud-client platform. "Cloud-client" is the architecture of choice among internet phenoms like Amazon and Uber. The cloud component enables the operator to quickly introduce new services, while the client piece gives users the self-service functionality that millennials crave. The combination enables Telefónica's marketers to engage subscribers directly, presenting them with timely offers and closely tracking their choices.

While traditional mobile operators force users to purchase data by the megabyte or gigabyte, Movistar On gives users more comprehensible buying options, such as "1 day of YouTube," "3 days of Netflix," and "30 days of Spotify." Users can see exactly what they've used at any point in the billing cycle and make adjustments right from their phones. This appeals to millennials who prefer self-service over calling customer service and being put on hold, and who feel they have a right to know exactly what they are getting for their money. Such are the expectations of young people who have grown up with the internet and smart devices.

Mexico's third-largest mobile carrier, AT&T Mexico, holds the remaining 10 percent of the market. The company is leveraging its operations in the U.S., Canada and Mexico to provide seamless service throughout the North American Hispanic community. With smartphones, subscribers can keep in touch with friends and family just by participating in the same social networks, and by using over-the-top services that make voice and even video calls more affordable.

The shift to smartphones in Mexico has been nothing short of spectacular. Smartphone penetration soared from 17.9% in the second quarter of 2014 to 59.8% in the third quarter of 2015. That means the number of smartphone users tripled in little over a year.

Why are so many Mexican users making a relatively big investment in their phones? Because a smartphone gives them all of the capabilities of telephones, TVs and personal computers in a single device that is loaded with intelligence and goes wherever they go. Despite America Móvil's dominance, which is very real, Mexico's mobile users have compelling choices, and the way that operators are competing for their business is a case study for mobile carriers everywhere.

Mexico's millennials did not grow up in a wired world with its physical limitations and bureaucratic practices. They are flocking to smart devices that add new features almost on a weekly basis. They demand mobile operators find new ways to engage and empower them - and Mexico's mobile operators are advancing to make it happen.

This article was contributed to techcrunch.com by Ira Brodsky, who has written five books about technology and founded Datacomm Research in 1989.