A new MVNO called Miio has been launched in Mexico with a free basic service along the lines of that previously offered by FreedomPop, according to a report. The service, called, Saldo Free, comes with 50 MB of data, 100 minutes of calls to Mexican fixed line numbers and 10 SMS a month. Users need only acquire a SIM card for MXN 30.00 (US $1.61) and download the operator’s app (available in versions for iOS or Android) to access the bundle. Miio’s out-of-bundle rates are MXN 0.85 (US $0.05) per minute, per MB of data and per SMS. Credit will only be used after the free bundle has been consumed and can be topped up via the corresponding Miio debit card at any Oxxo store in Mexico.

Tarifica’s Take

U.S.-based FreedomPop, founded in 2011, has had success with its MVNO model, based on an introductory level of service offered without charge and higher levels that are paid for and drive revenue to the operator. FreedomPop has expanded within the U.S. and in 2016 entered the Spanish market and the U.K.

In Mexico, the “free” service idea is attractive for a number of reasons, including the fact that it is a relatively budget-minded market with a large number of users who still have a lot of room for growth in terms of data utilization. As of the end of 2017, the country had a total of 14 MVNOs at the end of 2017, accounting for 1.48 million active SIMs, for 1.3 percent of the market. That was up 68.7 percent compared to the end of 2016. The Mexican market, therefore, is far from saturated when it comes to MVNO penetration.

With Miio, the main issue is, will enough users not only sign up but use more than the allowances and continue with the service? It seems to us that the allowances are relatively small, perhaps too small, to give users a real sense that they have indeed gotten a “free” service at all. The fact that the only included voice calls are to Mexican landlines could be a deal-breaker, and while SMS are never expensive, an allowance of only 10 per month is so small as to approach meaninglessness. And in an era of streaming content and other data-intensive functionalities, 50 MB per month is also very low indeed. It is possible that very small allowances might be satisfactory to introductory-level users who are newcomers to any data use, but if there are not enough of these users, Miio may face consumer rejection unless it ups its numbers.