Mexico is stirring interest among those seeking lower costs and more provider options. IBM’s January announcement that it would open a SoftLayer cloud center in Querétaro is a prominent sign of Mexico’s emergence as a business market — as is the 25 percent growth prediction for the region cited by the company. The center is designed to provide global integration to local customers and give Mexico and Latin American-based customers access to location-sensitive data. Data protection, business continuity, and redundancy will all be offered as well.
In the telecom space, AT&T’s investment to expand Mexico’s wireless network infrastructure is another major development. Already this year, the company purchased Mexican wireless carrier Iusacell for $2.5 billion and finalized a $1.9 billion deal for Nextel Mexico. The moves — driven by Mexico’s growing middle class and young population — position AT&T to battle against Telefónica’s Movistar and América Móvil, the latter of which controls the lion’s share of the national wireless market. AT&T’s strategy on roaming fees is also a consideration, as the prospect of Mexico becoming a “51st state” in terms of roaming charges could be a game-changer for customers.
In anticipation of this competitive threat, América Móvil has said it will eliminate roaming for some customers and invest up to $6 billion in network infrastructure. Facing regulatory pressure to reduce its market share, América Móvil is also in the process of spinning off its wireless-tower assets to Telesites and opening up its infrastructure to grant rivals network access. The potential growth of mobile virtual network operators (MVNOs), which lease infrastructure from the big carriers, could provide additional market options (although likely not at the enterprise level).
These developments are welcome news to enterprise buyers that have been pigeonholed into limited choices for IT infrastructure and network services. In this changing environment, the timing is right to assess options and consider what steps might help improve pricing and service quality — especially in the wireless space.
To navigate options, the starting point for buyers is to assess their existing landscape and services portfolio. Define the current network/telecoms carrier strategy, quantify annual network budget (by carrier if possible), consider expiration dates of existing contracts, and identify any significant events planned for the next 12 to 18 months. Specifically, note whether the organization planning a technology migration, acquisition, divestiture, or global expansion on this horizon.
With regard to mobile services, weigh the existing solution and policy against the emerging options. Examine the overall mobile-sourcing strategy and whether it can evolve towards a centralized, global approach versus a regionally focused outlook. Be sure to also note how changes to the global strategy might impact BYOD and corporate mobility. And regardless of the nature of the global strategy, enterprises should seek to optimize their mobile relationships. Audits of mobile pricing and inventory management are a great method to identify opportunities to improve.
Though the news is promising on many fronts, it doesn’t change everything. While new choices are emerging, Mexico remains a highly regulated environment. And though major carriers have been willing to invest — to an extent — in facilities within major centers such as Guadalajara and Monterrey, Mexico tech infrastructure still lags behind the United States and Europe as a competitive landscape. Many global enterprises maintain large production facilities in Mexico, but few operate key corporate hubs there.
As such, buyer enterprises should be cautiously optimistic about the timing of these changes and the expected increase in competitiveness. Drastic strategic changes might not be the appropriate response, but gaining insight into market trends and staying ahead of the curve is imperative.