Editor’s note: Maria Rocio Paniagua currently works as a project manager at Innku, one of the top mobile and web workshops in Mexico. She is very passionate about all things technology, entrepreneurship and innovation. Follow her on Twitter @lachinous.
Mobile penetration in the Mexican market is currently at 90+ percent, according to research firm Our Mobile Planet. Smartphone penetration is 20 percent. They made some wild forecasts about how they expect it to rise to 70 percent by 2015 — wild because the issue in Mexico and Latin America goes beyond mere access and connectivity. Monopolies are the elephant in the room. Telcel is the Mexican elephant that dictates much all of the country’s telecom use, limiting postpaid service to credit card holders. Micel is a mobile startup that challenges that.
Co-founders Gabriel Manjarrez and Pedro Zayas met in 2005, co-founding a company that gave financial services to Latin American immigrants in the U.S. They put together all the loopholes in the Mexican mobile monopoly and came up with a brilliant plan to turn them into a business. As a financial and marketing intermediary between users and mobile phone carriers whose mission is to connect those with no credit history, Micel is one of the most disruptive companies in Mexico and Latin America.
“There are millions of Mexicans with education, jobs and opportunities, but banks and credit cards are not getting to them. And that is translating into a middle-lower class of people with potential, but that are still paying their tax on poverty and, furthermore, that are remaining disconnected.” said Gabriel.
He also pointed out that around 80 percent of their clients made their first Internet connections through a Micel device. They work by selling to the user and paying the carrier. And unlike regular carrier plans, Micel bills its customers biweekly, which makes it easier to meet payment deadlines.
Micel sells Android phones with a customized home screen that tells customers how many megabytes they have used and provides direct contact to the company via WhatsApp and the phone line. The phones also come loaded with a browser, Facebook, Twitter, and Gmail, as well as a guide that helps users open accounts on those services.
Micel tracks every phone they sell and uses the information it collects to populate their financial database. As a result, they’ve been able to map out some patterns. For example, they know that if a client does not use 50MB or more in a month, they’re very unlikely to pay. So if by the first week of the two-week pay cycle, a user hasn’t hit the 10MB mark, Micel will provide the customer with relevant information — a link to news of their favorite soccer team; a Twitter feed of a popular celebrity or a link to a local news outlet — helping him learn how to use and enjoy a completely new device.
Micel is the only company in Latin America that is looking to transform prepaid plans (currently representing 85 percent of total mobile lines) into postpaid ones. Also, Gabriel and Pedro are the team of Mexican entrepreneurs that have raised some of the highest amounts of capital in Silicon Valley. Their first round amounted to $1.25 million, receiving funds from top firms like Bay Partners, IGNIA, and the Omidyar Fund, back in 2008.
Busting A Monopoly
In Mexico, Telcel (owned by América Móvil) is the leading provider of wireless communications services; their mobile network covers 90 percent of the country’s population. Telcel holds concessions to operate a wireless network in all geographic regions in Mexico. According to Cofetel (Mexico’s Federal Telecommunications Commission), as of July 2008, Telcel’s subscribers represented an estimated 77.2 percent share of the Mexican wireless market. Their scope wouldn’t be an issue if the services and tariffs that they offer made sense. Mexico has some of the highest fees on mobile communications (top 5 according to the Organization for Economic Cooperation and Development) paired with one of the slowest connections.
The way Telcel and other carrier companies work is also an issue. Post-paid plans are only available for customers with credit cards. In Gabriel’s words “not having a credit card means paying the tax on poverty,” he explained. “If you want to buy an iPhone, you’ll have to pay cash and then buy the megabytes and minutes one by one.” That means spending literally hundreds of dollars more than someone who can get a phone plan through credit. That happens with most information-based services: Wi-Fi, cable TV, data, cell phone plans… and proves that in Mexico, attractive offers are only for those who own a credit card; which leaves 85 percent of the population out.
Most importantly, they’ve managed to disrupt a market that nobody else seems to be looking at in a developing country filled with other barriers. They are currently working to take their efforts south of the Mexican border into Central America. They started Micel with the vision of eliminating the credit card as the sole de facto proxy of a person’s capacity to pay. “If I achieve that, I’ll open the world,” Gabriel concluded.