Digital Inclusion and Mobile Sector Taxation in Mexico

Seeking to extend ICT access, the government and international organisations have identified affordability and investment as key issues that create barriers to digital inclusion. First, devices and services remain unaffordable for many Mexicans, particularly those in the poorest segments of the population. A basic device accounts for over 5% of annual income for the poorest 10% of households, and more advanced smartphones are even more unaffordable. Second, further investment is needed to extend networks and improve service quality. Mexico has the lowest level of mobile investment per capita among the signatories to the Convention on the Organisation for Economic Cooperation and Development (OECD countries), and provision of network capacity is required to ensure users can access the benefits of highspeed mobile broadband. Against this background, the Mexican government has recently introduced a series of wide regulatory and policy reforms that are intended to address these issues. These reforms have three pillars – national coverage, competitive prices and quality of service. The reforms involve changes to the mobile market, including a set of regulatory changes, a publicprivate partnership network and a “universal digital inclusion” policy. As a result of these reforms, several new regulations have been introduced in the mobile market: for example a number of wholesale services (e.g. mobile call termination, SMS termination, national roaming, and MVNO access) are now subject to regulation and lower rates. If successful, the reforms have the potential to increase subscription, usage and economic growth. However, there is considerable debate over aspects of these reforms. Even in these reforms, the government has not yet addressed the policy issue of imbalanced taxation on the mobile sector, which creates significant costs for mobile consumers and operators.

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