Bidders in a planned auction of two broadcast television channels in Mexico must be prepared to invest at least $1 billion to cover the cost of network infrastructure and other expenses, the head of the Federal Telecommunications Commission, or Cofetel, said.

"This amount includes consideration, the opening bid, the rollout of the network and even generation of content," Mony de Swaan said in a telephone press conference.

Cofetel on Wednesday approved a plan for an unprecedented auction of frequencies for two nationwide broadcast television channels that is aimed at bringing new competitors into a duopoly market.

The commission chief said the investment outlay could vary if cost-cutting arrangements are made among the operators in areas such as infrastructure-sharing.

"If we decide to do two big packages, we could contemplate a cheaper rollout if both networks share," he said.

De Swaan said the two new television channels or networks could begin operating in three years, when all operators will be required to have made the switch from analog to digital broadcasting.

He added that the entire process, which begins with the publication of the auction rules and call for bids and ends with the awarding of concession rights, could last up to 18 months.

"I estimate six months for the rules and the publication of the call for tenders and the rest of the process I think would take a year; I would think optimistically that we'll take 18 months," the Cofetel chief said.

De Swaan said the process is prolonged because of different aspects, including expected legal challenges by some participants.

The auction rules also must be thoroughly reviewed to determine the best mechanisms for the quick, efficient and competitive development of the projects.

No decision has yet been made on whether current broadcast operators may participate, he said, noting that the goal is to promote greater competition in the sector.

De Swaan added that the winning bidders will be evaluated not only in terms of the amount of their monetary offer but also their vision of providing effective service and low costs to society. "No one will take the auction with a big cash payout," he said.

Mexico's broadcast television is a duopoly market dominated by Televisa, the world's largest Spanish-language media conglomerate, and the smaller TV Azteca. EFE