July 1st, 2019

1. CPR LATAM 2019 Competition and Consolidation in the Internet Ecosystem Mario Fromow Commissioner July 1st, 2019

2. In this digital age, connectivity plays a central role • Connectivity has become an essential input for our development 2

3. Impact on productivity (Growth associated with Internet, Deloitte) Due to its great scope and dynamism, Internet is having an increasing impact on the social welfare of Mexico Reduction of infant mortality (Impact associated with Internet, Deloitte) Farmers' earnings (Growth associated with Internet, Deloitte) Impact on education (Improvement in academic skills, Samsung) - 7% + 33% + 11% language skills + 12% learning skills + 19% digital skills + 25% 3

4. Hyper connected future Internet of things Artificial Intelligence By 2025, connections between devices will triple./1 For the next decade, it could contribute an additional 1.2% to annual GDP. /2 Machine to Machine Cloud computing By 2025, only 1 in 10 connections will be between humans./1 By 2025, its impact can reach up to 6 billion dollars each year. /3 4 Sources: /1 GSMA; /2 McKinsey Global Institute; /3 European Internet Forum.

5. Hyper connected future • 5G will allow multiplying connections with greater speed and capacity • Connection of 1 million devices per km2 • Greater speed and efficiency in connections • It will facilitate the connection of all kinds of objects • Lower latency and better communications in real time • It will reduce energy consumption • Net Neutrality & Network Slicing 5 Source: “The 5G business potential”, 2nd Edition Ericsson

6. Hyper connected future • 5G will offer the unique opportunity to promote at least 10 industries. • El 5G ofrecerá la oportunidad única de impulsar por lo menos 10 industrias Expected growth in revenues associated with 5G (2019-2026) 6 Source: “The 5G business potential”, 2nd Edition Ericsson

7. Connectivity advances in Mexico Two out of every three people and just over half of the households have Internet Source: IFT with information from telecommunications operators and the National Population Council (CONAPO) 7

8. Connectivity advances in Mexico 8 out of 10 people live in areas with 4G LTE coverage 70% 29% More affordable services • - 26% 8 Source: IFT

9. Connectivity advances in Latin America We must continue promoting coverage in our countries Mobile broadband growth in the last 5 years (subscriptions per 100 inhabitants, June 2013 - June 2018) OECD Latin American countries average (69 subscriptions per 100 inhabitants, June 2018) OECD Average (107 subscriptions per 100 inhabitants, June 2018) 9 Source: OCDE Broadband Portal

10. Connectivity panorama in Latin America - 2018 Adoption of 3G and 4G in the world - 2018 (% mobile connections average, GSMA - The Mobile Economy 2019) Type of technology currently used Europe 3G: 36% 4G: 46% Pacific Asia 3G: 21% 4G: 45% Canada and USA 3G: 21% 4G: 69% Latin America 3G: 39% 4G: 35% World 3G: 28% 4G: 43% Sub-Saharan Africa 3G: 35% 4G: 6% 10

11. Estimated connectivity in Latin America - 2025 5G adoption forecast in the world - 2025 (% mobile connections average, GSMA - The Mobile Economy 2019) • We have an important way to go for adopting new technologies Europe 4G: 63% 5G: 29% Pacific Asia 4G: 67% 5G: 15% Canada and USA 4G: 44% 5G: 47% Latin America 4G: 65% 5G: 8% World 4G: 59% 5G: 15% Sub-Saharan Africa 4G: 24% 5G: 3% 11

12. IFT 5G Spectrum Study IFT carried out an study to identify the frequency bands that are considered feasible for the deployment of fifth generation (5G) systems in Mexico, in accordance with: • The current use of the radio spectrum in the country • The planning of the radio spectrum • Recommendations from international organizations • International trends and best practices • The relevance of spectrum in the introduction of new technologies The Radio Spectrum Unit of IFT has identified, in the first instance, nine susceptible frequency bands for the deployment of 5G technology in Mexico 12

13. Spectrum bases for 5G systems 5G systems will require access to radio spectrum with particular and diverse characteristics, since they need to be flexible and heterogeneous in order to provide simultaneous connectivity to a wide range of applications that include autonomous or unmanned vehicles, massive IoT, virtual and augmented reality, and agro-industrial automated processes, among many others. In this sense, the spectrum needed for 5G systems can be divided into three frequencies ranges that are commonly identified as: • Low-bands (less than 1 GHz) • Mid-bands (between 1 and 6 GHz) • High-bands (above 6 GHz) Fuente de la imagen: “CMR-19 y CCP.II Bandas claves para 5G” - Ericsson 13

14. 5G Spectrum Availability for Mobile Services 11,190 MHz of Spectrum Available for 5G in Mexico 14

15. New digital environment challenges 4. Digital gaps Coverage Access Appropriation 1. Growing demand for data Spectrum allocation Networks deployment Investment certainty 2. Digital environment Cybersecurity and privacy Network neutrality Technological preparation 3. New ways to compete New business models Convergence of services 15

16. Challenges: 1) Growing demand for data It is necessary to allocate more spectrum and continue managing it efficiently. • Identification Planning • Reordering • Assignment • Release Although the allocated spectrum has been more than doubled to meet the growing demand for data in recent years in Mexico, it is necessary to continue allocating more of this input. It is recommended to review spectrum valuation as a fundamental input for services provision. 16

17. Challenges: 1) Growing demand for data Greater deployment and efficient use of infrastructure Investment certainty Solid legal framework Local barriers (state and municipal) Predictable regulation Use of passive infrastructure Existing infrastructure sharing Transparency and consistency in the performance of regulator Rights of way 17

18. Challenges: 2) Digital environment • Secured networks and devices Cybersecurity and privacy Network neutrality • Traffic Management • Devices homologation • Transition to IPV6 Technological preparation 18

19. Challenges: 3) New ways to compete Nuevos modelos de negocio y convergencia de servicios New business models and convergence of services. • Global companies • Boom of Internet platforms • Regulatory asymmetry with respect to traditional services • Mergers 19

20. Challenges: 4) Digital gaps - coverage and access Coverage gap Access gap Mobile telephony and smartphones2 27% without mobile telephone 38% without smartphones Mobile service1 16% of the population without coverage 4G-LTE 20 Sources: /1 IFT; /2 INEGI-ENDUTIH 2018.

21. Challenges: 4) Digital gaps - coverage and access Actions to reduce digital gaps Shared Network Coverage obligations Government projects • Indigenous (1)* • Social (3) Secondary market of spectrum Social and indigenous telecommunications concessions • We must explore all options to move towards universal coverage * Allows an civil association called “TelecomunicacionesIndígenasComunitarias” to provide mobile services in 256 municipalities in Oaxaca, Puebla, Veracruz, Chiapas and Guerrero. 21

22. Challenges: 4) Digital gaps - appropriation Appropriation gap Main uses of Internet in Mexico(percentage of users)1 Entertainment 90.5 % Communication 90.3 % Education 83.6 % Social networks 77.8 % Reading(newspapers, magazines and books) 48.7 % E-government 31.0 % E-commerce 19.7 % On-line banking 15.4 % • Digital Literacy 22 Sources: /1 INEGI-ENDUTIH 2018.

23. Challenges: 4) Digital gaps - appropriation Connectivity to improve the quality of life of people • Public safety • Public services • Health • Education • Agriculture • Financial inclusion 23

24. Multistakeholder Collaboration We are facing a technological ecosystem in constant change and we need a multistakeholder collaboration scheme in order to promote competition, connectivity and digital appropriation in Mexico and Latin America 24

25. Thanks for your attention • www.ift.org.mx • @IFT_MX iftmexico www.facebook.com/IFT.mx