Digitalizing the Telecoms IndustryWed, 05/08/2019 - 10:29
The Telecommunications Reform approved by President Enrique Peña Nieto in 2013 changed the relationship between Mexicans and e-commerce, technology and the internet. It also forced Mexico to adopt international technological standards and allowed the development of many companies related to the industry, both Mexican and foreign, says Steve Logue, CEO of Virgin Mobile Mexico, who expects more innovation as a result.
“We are innovators in Latin America. We have created a sustainable and viable Mobile Virtual Network Operator (MVNO) in countries like Colombia and Chile and now we are trying to bring these innovations to Mexico,” says Logue. Virgin Mobile, an MVNO, was the first fully digitalized mobile phone operator to arrive in Mexico.
According to the E-commerce Study Mexico 2017 published by Internet Association, 51 percent of online shoppers are between 18 and 34 years old, 92 percent have a cell phone and 70 percent have used it to make a purchase online. For this reason, in countries with telecom operators as strong and large as those in Mexico, MVNOs must differentiate themselves to stand out among the competition. Logue says innovation is key. “Virgin Mobile competes in the Mexican market through innovation processes because it is the best way to satisfy the country’s emerging and digitalized market.”
In this context, Virgin Mobile Mexico has become a benchmark for other Mexican operators because it is the only company in the sector that has fully digitalized all its processes. The company is transforming telecommunications services by offering its customers different digital options through alliances with market leaders such as Amazon, Uber and Walmart. “In June 2017, the company’s digital sales represented only 1 percent; in March 2018, they represented 35 percent. We enjoyed a similar experience with our customer service, which today is 72 percent digitalized,” Logue says.
Digitalization also offers opportunities to capitalize on the use of Big Data, although there are issues. In particular, there is a large amount of unstructured data that is generated through different applications and devices, which complicates its analysis. “Virgin Mobile is planning to use Big Data to do market analytics and to take advantage by participating with online networks in a more democratic way. This is one way to compensate for the differences between us and the large telecommunications operators,” says Logue.
Another challenge Virgin Mobile faces in Mexico is the low percentage of users that participate in e-commerce and the country’s limited financial inclusion. However, Logue is optimistic. “We sell more chips than any other supplier in the industry. We are becoming the telecom leaders in e-commerce because our business model adjusts better than traditional models.” According to a Federal Institute for Telecommunications (IFT) report titled The Public Consultation on the Cost Models to Determine Tariffs for the Services Provided, between June 2013 and September 2017, total access to broadband grew 37 percent. MVNOs also present a positive growth in their market share, with a total 1.4 million new subscriptions only in 2017, representing 1.2 percent of the total market and 18 percent more than in 2016, according to the IFT.
Despite the numbers, MVNOs like Virgin Mobile Mexico must contend with the country’s dominant operators from which they rent their networks, which eats up more than 50 percent of revenues. “In this context, there is the possibility that MVNOs cannot survive the market unless there are associations that work together with operators and regulatory authorities,” says Logue. According to Athens Information Technology, a private nonprofit organization that does research into innovative technologies, the most common conflict between MVNOs and host operators is access to the network.
Virgin Mobile Mexico expects a positive evolution in the way that telecommunications service providers compete in the market. In addition, the company believes fervently in the opportunities that exist in its market niche in Mexico and wants to continue leading the digitalization and innovation in the market. “The way to provide better services and digital products is for all players and telecommunications authorities to focus on improving services and not on protecting the market,” says Logue.