Mexico has a relatively low level of broadband penetration. In an interview with ZTE Technologies, Salvi Folch, CEO of Izzi Telecom, talked about the company's fiber-based broadband strategy and highlighted the great prospects that telecommunications will have in Mexico. Izzi is owned by Mexico's largest media company Grupo Televisa. It is a triple play operator that offers television, internet and telephone bundles.
"It's the bundle, the price and OTT."
In the pay TV sector, what differentiates Izzi from the other operators?
First, Izzi is part of Grupo Televisa. Grupo Televisa has been the most important producer of Spanish contents in the world. So we have an integration between a company that originally was producing contents and now is distributing contents. Within Grupo Televisa, there are two companies that distribute contents. One is Sky, the DTH platform that has nationwide coverage; and the other one is Izzi.
The great advantage we have is that we can offer triple play services, offering our customers a very attractive offer at very attractive prices that solves all their needs in terms of pay TV, fixed telephony and broadband connectivity. Our pay TV offer includes a lot of channels that are attractive in terms of prices and some exclusive contents that put us in a competitive position. We offer our customers attractive services. For example, we have an application called izzi go where you can watch the contents when you are away from home. This also includes many on-demand contents. So it's the bundle, the price and OTT. And we are using new technologies to allow the use of new-generation services like being able to stop, to rewind, to go forward and to pause.
OTT video services are growing fast. How is Izzi embracing this trend? What are the challenges?
There are many challenges. Certain OTT players are becoming very strong. They are becoming global brands like Netflix, Amazon and YouTube. They have big budgets for content production. The way that we look at things is that they are a complement to our services. In the Mexican market, the pay TV service is relatively cheap. Our entry price is about 10 dollars a month. For 10 dollars, you get about 60 channels and also a lot of contents on demand. So unlike other markets where pay TV service fees amount to 100 dollars, our pay TV service is more attractive. Also, if you want to use an OTT platform, you need a broadband connection of good quality, a device and you need to pay for the subscription. The competition from OTT in the Mexican market is growing and is very relevant, but we are well positioned to integrate those OTT services within our services. Our strategy, the same as that of the other operators in the world, is to include those relevant contents for our customers. If they want to subscribe to the relevant OTT platforms, they can do it through us. I think we can provide added value by putting everything together in a bundle.
"We have to get ready."
Izzi has been making great efforts to deploy FTTH in Mexico. Could you tell us more about it? What's the driving force behind it? What's your plan to improve customer experience?
Telecommunications is extremely important for any country or any economy. Mexico is lagging behind many other countries in the world in terms of broadband penetration. If you look at the statistics for OECD member countries, we rank the second lowest in terms of penetration and in terms of speed. That's why our government has made a telecommunications reform and amended the constitution, trying to foster competition. We are part of that. Over the last 13 years, starting from 2006 when we started acquiring cable TV companies and trying to grow our business, Grupo Televisa has invested over 10 billion dollars on deploying infrastructure. As a part of that plan, we are now deploying FTTH to be able to offer a better experience, better speed and more connectivity to our existing and new customers.
It's true that today probably the speeds that people demand are not as high as that in the other countries because if people at home don't have many devices, probably with lower speeds, they are not fighting for the bandwidth, or if they don't use it for video or if 4K is not there yet but will come in the future. So we have to get ready and we have to be very competitive. What we are doing on our FTTH deployment is to look at the best in class in the world, to determine the type of infrastructure, and how to deploy the best network. We have a legacy product because it was the cable company with HFC that was deployed all over the country. But for the new investments and the new areas, and other areas that are relevant, we don't want to go back to that network.
How is ZTE helping you in the project? How do you assess ZTE's team and solutions?
ZTE is in many ways similar to us because it is not the largest player in the industry and is willing to compete in customer services and trying to find solutions for clients. ZTE is a crucial part of our Monterrey project. We have very good communication to try to find solutions together that can solve our business problems.
What's your expectation for the future cooperation between Izzi and ZTE?
ZTE has many customers throughout the world, has a lot of experience, and has a very relevant R&D department, working together for different solutions that we need. It is a fact that ZTE has a lot of experience on FTTH, the new set-top boxes, the Wi-Fi solutions at home, the hotspots for covering the public areas, some of the video solutions, and some of the broadband solutions (the OLTs and ONTs that we need to deploy). Today, we don't participate in the mobile side of the business. But it's likely that in the future we will somehow participate in the mobile side of the business, and it is very important to be close to different world-class suppliers of equipment and technologies. ZTE is one of those leaders in the world and we have to work together for the benefits of both companies.
"The growth prospects of the company are very encouraging."
What do you see as Izzi's greatest opportunities going forward?
Again, the greatest opportunity in Mexico is broadband penetration. Only about 52 percent of Mexican households have broadband connection. It is very low. I’m not sure how long this may take us, but broadband connection is expected to become as widely used as running water or electricity. Broadband connection will be crucial for libraries, hospitals, households, etc. It's part of the needs that people will have for everything (e.g. financial services, healthcare and education). So the opportunity, the benefit and the knock-on effects it has on the economy are crucial. You can use broadband to improve the quality of life for many communities in the country. I believe that in Mexico there is an opportunity to invest, to connect and to offer better services at very attractive prices.
If you look at the overall industry, we are tiny. We have about 7 percent market share of the overall telecommunications industry. But the growth potential is sizeable. For example in broadband, today we have 23 percent market share of all the broadband connections in the country. But in 2006 when we started, we had zero. Every single quarter we gained market share we had only coverage in only about 43 percent of the households of the country. It's about service, quality, prices and about providing the right solutions for our customers. So the growth prospects of the company are very encouraging. As I pointed out, for Grupo Televisa, the growth of the telecommunications area is very important.
What do you see as Izzi's greatest challenges going forward?
Size in this industry is relevant. So one of the main challenges we have is competition with some of those companies that are much larger than us, and we need to to be very customer-oriented, very responsible from a financial perspective and very conservative, to ensure we are growing in strong grounds.
What's your vision for the future?
Telecommunications need will grow because of the productivity and efficiency that can be achieved with global telecommunications. How the life of people is going to change when everything is connected—going from self-driving cars to virtual reality, more efficient telepresence communications. We need to be ready for those needs. I think that companies such as ZTE that invest a lot in R&D contribute a lot to the global progress because whenever they find a solution, it is not only applicable to one country but applicable to everyone. The pace at which different countries are implementing some of the solutions changes because it depends on where the country is.
I think that fixed networks and mobile networks will converge, and they will be together in terms of providing solutions—everywhere you can watch anything that you want to watch on any device. So it's very encouraging and it generates a lot of passion to see what the future can bring. Our vision is to be the best telecommunications company in Mexico, providing all the different solutions that Mexicans require. We have to work hard every day to be a better company with better technology, better people and better services.
Broadband market, Mexico, Izzi Telecom, triple play, bundles, FTTH,