TANZANIA. Information and Communications

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1 Telecommunications: Connecting people Introduction Tanzania has always strived to keep abreast with developments taking place in the ICTs industry by putting in place appropriate policies, legal and regulatory frameworks in order to facilitate harnessing of new technologies with the objective of enhancing socio-economic and political development. For example, in an attempt to cope with convergence of information and communication technologies, in 2003 the government formulated the National ICT s policy followed by the enactment of the Tanzania Communication Regulatory Authority (TCRA) Act No. 12 of 2003, which established a converged postal, broadcasting and telecommunications regulator, the TCRA. Overview Until the early 90 s, the ICT sector in Tanzania was under state monopoly. However, it became apparent that the government alone had no adequate resources to develop the basic infrastructure and network to provide information and communication services to the people. As part of the liberalization process initiated in 1992 in response to the effects of globalization, the government decided to liberalize the communications and broadcasting sectors, through the Broadcasting Services Act No. 6 of 1993 and Tanzania Communications Act No. 18 of 1993 respectively. The process involved separation of policy, regulation and operations in the first place and second separation of postal and telecommunication. This led to dissolution of the now defunct Tanzania Posts and Telecommunications Corporation (TPTC) and the establishment of three separate institutions namely; The Tanzania Telecommunications Company Limited (TTCL) to provide telecommunications services; the Tanzania Posts Corporation (TPC) to provide postal services and the Tanzania Communications Commission (TCC), the sector regulator. For the broadcasting sector the Tanzania Broadcasting Commission (TBC) was established as the regulator. In March 2003 the Government launched the National Information and Communications Technologies Policy. The National ICT Policy vision aims at making Tanzania the hub of ICT Infrastructure and ICT solutions that enhance sustainable socio-economic development and accelerated poverty reduction both nationally and globally. The National ICT Policy objectives aim at:- 229

2 Providing a national framework that will enable ICT to contribute towards achieving national development goals; and Transforming Tanzania into knowledge-based society through the application of ICT. The National ICT Policy further establishes an enabling environment for merging the affected sectors namely, telecommunications, information and broadcasting to work together. In November 2003, TCC merged with the Tanzania Broadcasting Commission (TBC) to form the Tanzania Communication Regulatory Authority (TCRA), which regulates telecommunications, broadcasting, postal services and electronic technologies and other ICT applications. Tanzania became one of very few African countries to liberalize fully its communication sector following the expiry of exclusivity rights given to incumbent telecommunication operators, TTCL on 23 rd February, At the same time as the formation of TTCL, the government introduced the Converged Licensing Framework (CFL), a system that allows operators to offer any type of services with the technology of their choice with one single license. Following such convergence in licensing, the telecommunication sector has become more appealing to both FDI and domestic capital, becoming one of the country s fastest growing sectors. CLF is being used as a key strategy to implement the full liberalization policy. The objectives of the CLF are: To encourage the growth of new applications and services; To simplify existing licensing procedures to ease market entry and operations; To create a set of stand-alone regulations so that issues such as interconnection, quality of service, spectrum and number allocations can be addressed comprehensively; To ensure regulatory flexibility to address market and technological developments; To ensure efficient utilization of network resources, so that individual networks may be used to provide a broad range of ICT services; To encourage market entry by a full range of operators, including large scale and micro entrepreneurs; and 230

3 To ensure that the transition to a converged licensing framework fosters a level playing field among all operators. Since the introduction of the CLF in 2005, growth has been impressive in Tanzania s telecoms market. Tanzania s teledensity was only 10 % in 2005 while today the same has reached 43%. This is the result of licensing of new operators who have made considerable investments into network development and expansion, thus giving access to most of the districts in the country including remotely located inhabitants. Sasatel), with five additional players licensed (MyCell, Egotel, Rural Netco, Smile and ExcellentCom). Companies that render services through data system are 68. Records obtained from TCRA indicate that the mobile networks shared some 17,481,432 subscribers in December 2009, an increase of 34.4% compared to Likewise, the number of fixedlined increased by 39.7% to 172,922 in 2009 from 123,809 the previous year. The market is expected to break the 50% penetration barrier during 2010, but subscriber growth is expected to slow to 20%. in 2009 and 2010 should revolutionize the market which up to that point completely depended on expensive satellite connections. In parallel, the government has embarked on a national fibre backbone rollout to connect population centres around the country by the end of This will allow Tanzania to handle a Tanzania Communication Regulatory Authority. CRJE Voice Telecom Subscriptions per Operator Operator December 2008 December 2009 % change VODACOM 5,408,439 6,883, ZAIN 3,862,371 4,910, TIGO 2,569,527 4,178, ZANTEL 1,057,652 1,378, ZANTEL (Fixed Lines) 7,544 15, TTCL 105, , TTCL (Fixed Lines) 116, , BENSON 3,000 3, SASATEL - 11,946 - TOTAL 13,130,602 17,654, TELEDENSITY 32% 43% The liberalisation of Voice over Internet Protocol telephony as well as the introduction of third generation (3G) mobile services and wireless broadband networks has also boosted the sector which has been hampered by the low level of development of the traditional fixed-line network. Tanzania has currently two fixed-line operators (TTCL and Zantel) and seven operational mobile networks (Vodacom, Zain, Tigo, Zantel, TTCL Mobile, Benson and The Internet sector is highly competitive with many ISPs, although the bulk of the market is in the hands of only a few. Internet Usage Statistics report a remarkable increase in internet users, from 30,000 in 2000 to 520,000 in However, Internet penetration is still very low (1.3%) compared to other African countries, mainly due to the high cost of connectivity. The landing of the first fibre optic international submarine cables in the country larger volume of communication for voice, data, video and high speed internet, thus meeting the demand from government, businesses and citizens for large bandwith and higher data speed at lower tariffs. Performance The communication subsector grew by 21.9% in 2009 compared to 20.5% in 2008, outpacing all other economic activities. This was due to increased investment in the sector and an overall increase Source: TCRA. 231

4 Salaam with towns and cities in northern and eastern Tanzania, and to neighbouring Burundi, Rwanda, Kenya, and Uganda. in subscription rates particularly with respect to mobile phones. Despite the stated growth, the sub-sector s contribution to GDP for 2009 was 2.1% compared to 2.5% in 2008, marking a decline in GDP contribution by 0.4%. Management of the sector Telecommunication services in the country are under the supervision of the Ministry of Communications, Science and Technology through the Tanzania Communications Regulatory Authority (TCRA). The Authority is responsible for enhancing the welfare of Tanzanians through: Promotion of effective competition and economic efficiency. Protecting the interests of consumers. Promoting the availability of regulated services. Licensing and enforcing license conditions of broadcasting, postal and Telecommunications operators. Establishing standards for regulated goods and services. Regulating rates and charges (tariffs). Managing the radio frequency spectrum. Monitoring the performance of the regulated sectors. Monitoring the implementation of ICT applications. Latest Developments National Information Communication and Technology Broadband Backbone (NICTBB) The first phase of Tanzania s 10,674-kilometre national fibre-optic backbone was completed in May 2010, connecting Dar es The completion of the fibre network closes a significant gap in the East African fibre ring connecting to the SEACOM, TEAMS and EASSy submarine cables and running from Mombasa through Nairobi, Kampala, Kigali, and Bujumbura to Dar es Salaam. Tanzania Telecommunications Co Ltd (TTCL), the incumbent fixed-line operator, has been mandated to manage the national fibreoptic backbone. TTCL is now connected to the SEACOM submarine cable, which entered service at the end of July The EASSy submarine cable landed at Dar es Salaam in April 2010, and is expected to enter service in June

5 With the first phase of 7,000 kilometres of network completed, the government is embarking on the second phase, which will connect southern and eastern towns and cities to the neighbouring countries of Zambia and Malawi. Telecommunication sector challenges Fluctuating USD exchange rates against the shilling generated revenue is driving capital investment costs higher. Poor infrastructure, especially roads, limiting penetration into remote areas. due to good business environment created by the government. The introduction of the convergence licensing was yet another mile stone to this development. As a result, the country is making good progress towards achieving its communication sector goals as envisioned in the Vision Furthermore, with the landing of the submarine cable systems and future completion of the Optic Fibre Cable Infrastucture Backbone Network, Tanzania will see more, faster and cheaper connections. But fiber is not likely to replace satellite entirely. Rather, the two will prove complementary in bringing advanced information and communications technology to the people across the country, thus connecting them to the rest of the world in ways unimaginable even just a few years ago. Vodafone mini internet browser Tanzania is one of several emerging market countries in which Vodafone will now roll out an Opera mini internet browser for low cost handsets on second generation 2G networks. Opera brings mobile data to basic handsets by compressing data to save bandwidth and processing power. Zain, Vodacom Sign Deal for Water Bill M-Payments The Dar es Salaam Water and Sewerage Corporation (DAWASCO) and two cellular operators have signed agreements to enable customers pay water bills through their handsets. The payments will be done through M-Pesa for Vodacom and Zap for Zain. Extra liberal telecommunications regulatory regime. Too much competition in a developing market may destroy value and negatively impact the investment environment. As a result, the average revenue per user (ARPU) has continued to fall in recent years. Relatively high level of taxation on telecom services inhibits customer use. Diminishing banks capability and appetite for financing expansion. Unreliable electricity power supply. Conclusion Tanzania has recorded impressive growth in the telecom sector since its liberalization in late 1990 s to date. This was made possible 234