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To: Ray Smith Jr who wrote (2589)	5/2/1999 10:52:00 AM
From: Kenneth E. Phillipps	Read Replies (2) \| Respond to of 14638

This news should help wireless growth in Mexico news.excite.com New Pay Plan Seen Fueling Mexico Cellphone Growth Updated 12:42 AM ET May 2, 1999 By Fiona Ortiz MEXICO CITY (Reuters) - Beginning Saturday, Mexican mobile telephone users will no longer have to pay for calls they receive, a change that analysts and industry leaders say will throw fuel on an already explosive market. "This will definitely detonate the mobile telephone business," said Roberta Lopez, spokeswoman for tiny northern Mexico mobile phone company Pegaso. "People can control their costs now and more people will get cellular phones." Mexico's three largest mobile telephone providers -- Telcel, a subsidiary of phone group Telmex ; Iusacell and a group of four northern Mexico cellular firms -- all saw 90 percent growth in 1998. Growth this year of 50 percent to 90 percent or even more is possible with the "calling party pays" system, industry leaders say. Pegaso, for one, hopes the new system will be one factor helping to increase clients from some 2,000 people to as many as 100,000 this year in the border city of Tijuana. Mexico is one of the last Latin American countries to abandon a system under which phone clients had to pay for every call they receive. The new system was approved on April 16 by the Federal Telecommunications Commission (Cofetel). All cellphones will be switched to the new system automatically. Local calls to mobile phones -- long distance dialing and charges will not change -- will take a new 044 prefix and will cost 2.50 pesos (about $0.27) per minute, a rate close to the Latin American average. Analysts said the new scheme would boost cellular subscriber growth because it will be cheaper to own a cellular phone and because providers would be able to market mobile phones to lower-income groups without running the risk that people would receive a lot of calls they could not pay for. "It changes the credit risk profile for cellular companies, improves it substantially," said Patrick Grenham, an analyst with Salomon Smith Barney in New York. Telmex, which has almost all the land lines in the country and about 65 percent of the cellular market, fought the new pay scheme with a court injunction, arguing that the traffic of calls to cellphones would diminish. But analysts do not see telephone traffic going down. "Local traffic is generally inelastic. People will absorb a higher cost," said Brad Radulovacki, an analyst with Flemings Research. Traffic will go up because the new rates, "encourage people to keep their cellphones on all the time." Grenham said that, when people do not have to pay for incoming calls they start to see their cellphones differently and give out their number to more people, generating more traffic. Radulovacki said calling party pays has generated subscriber growth in Chile, just in the two months since it was introduced. But analysts said benefits for phone companies would not be seen for several months here because Mexicans are confused about the new system. "It's not clear," cellphone user and businessman Melvyn Trejo said. Like many other cellphone clients here, Trejo thought that the option to stay with the old system meant that callers to cellular phones could use or not use the new 044 prefix depending on whether they wanted to pay for the call. He did not know that he would have to ask his provider for a new phone number if he wanted to stay with the old system. Few will make that choice, analysts and industry leaders said. Enrique Chavero, marketing director for a group of four cellphone providers in Northern Mexico, said only about three to five percent of users will opt to retain the old system. "Nobody is going to stay with the old system. Why decide to keep your bill higher?" said Grenham.