Executive summary
Tanzania’s score on the World Economic Forum’s (WEF) Networked Readiness Index (NRI) was low (ranked 118 in 2012) and it continues to lag behind countries such as Uganda (107), Nigeria (104) and Kenya (81). Use is particularly poor amongst individuals and in the business sector. The 2012 RIA Informal Business ICT Survey highlights the challenges that informal businesses face in using broadband and the negative impact of high prices.
However, two critical events have had an enormous effect on the Tanzanian ICT sector: the linking to the SEACOM and the Eastern Africa Submarine Cable System (EASSy) networks in 2009-10; and the launch of the National ICT Broadband Backbone (NICTBB), in two phases (2010 and 2012). Allied with the increase in competition in both the voice and data markets, Tanzanians are slowly benefitting from reduced prices. Based on a prepaid mobile voice basket, Tanzania has the third lowest prices after Kenya and South Africa. Based on a prepaid mobile broadband basket, Tanzania is also ranked third, behind Kenya and Ghana. In addition, Tanzania has successfully – though controversially – completed the digital migration process ahead of time, freeing up the 700 MHz frequency band. Tanzania can build on the gains in the broadband market by making the “digital dividend” frequencies available to broadband suppliers.
Tanzania is a useful case study for similar countries in Africa for two reasons:
- Tanzania’s digital migration process provides several lessons and insights and
- The NICTBB has played a role in reducing prices within Tanzania, but how effectively it is managed will be a significant determinant of its future success.
According to a study by Analysys Mason (2013), there are several lessons that can be learnt from the digital migration process in Tanzania:
- The cost of digital reception set-top boxes is a challenge, unless a subsidy system is made available to lower- income households. (Tanzania did not have a subsidy, contributing to the low rate of digital adoption.)
- The primary challenge is one of consumer awareness – to make consumers aware of the benefits of digital transmission and aware of how to correctly install and use a digital set-top box.
- For countries starting from a low base of digital TV signal reception (e.g. most sub-Saharan African countries), meeting the June 2015 deadline will unavoidably result in a certain percentage of households losing signal.
The cost of digital reception set-top boxes is a challenge, unless a subsidy system is made available to lower- income households. (Tanzania did not have a subsidy, contributing to the low rate of digital adoption.) The primary challenge is one of consumer awareness – to make consumers aware of the benefits of digital transmission and aware of how to correctly install and use a digital set-top box.
For countries starting from a low base of digital TV signal reception (e.g. most sub-Saharan African countries), meeting the June 2015 deadline will unavoidably result in a certain percentage of households losing signal.
While the Government of Tanzania needs to recoup the USD250million cost of building the NICTBB, it must balance this with the need for relatively low-cost wholesale access in order to accelerate broadband adoption. The ability of the Government of Tanzania to reconcile these opposing points is going to be a big test of the success of the NICTBB and its effects on broadband access and use.
Within this rapidly changing environment, the Tanzanian Communications Regulatory Authority (TCRA) has been under pressure to keep pace. The 2012 RIA Tanzania Telecom Regulatory Environment (TRE) assessment shows that stakeholders’ perceptions of the policy and regulatory environment have significantly declined since the 2009 TRE assessment. The decline has been most precipitous in the areas of universal service obligations (USO), quality of service (QoS), tariff regulation and regulation of anti-competitive practices. Retail prices, for example, are extremely volatile and can jump by as much as 30% between months, and there are indications that dominant operators are using their positions to undermine entrance into their respective markets. Several important regulatory challenges face Tanzania for the coming years.
