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TANZANIA: OVERVIEW OF DATA INFRASTRUCTURE IN EAST AFRICA

Tuesday, April 20, 2021
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In this article, the third in our series on data infrastructure in East Africa, the focus is on Tanzania, one of the two largest telecommunications (telecoms) markets in the region.

Overview of data infrastructure in Tanzania

Tanzania is the second-largest telecoms market in East Africa behind Kenya. The country’s telecoms sector contributed USD 859 million to real GDP in 2018, up from USD 672 million in 2014, an increase of 28%. This growth was attributed to the increase in mobile usage and the expansion of broadcasting and internet services.

The key players[1] in the telecoms sector are the two fixed-line operators, Tanzania Telecommunications Corporation (TTC), formerly known as Tanzania Telecommunications Company Limited (TTCL) and Zantel, along with seven operational mobile networks. They are Airtel, Halotel, Smile, Tigo, TTC, Vodacom and Zantel with market shares of 27%, 13%, 0.024%, 25%, 2% 31% and 2% respectively.

With the launch of mobile broadband services in Tanzania, the mobile network operators have become the leading internet service providers. Operators are hoping for revenue growth in the mobile data services market, given that the voice market is almost entirely prepaid and average revenue per user for voice continues to fall. As a result, they have invested in network upgrades.

Data infrastructure in Tanzania has improved significantly through investments in the fibre-optic network. Internet connectivity has been boosted through the East African Submarine Cable System (EASSY), an initiative of the World Bank, the African Development Bank and other development banks, and the SEACOM cable system. There has also been investment in local internet exchange points, migration to internet protocol version 6 (IPv6) and construction of the National ICT Broadband Backbone (NICTBB).

The Government-backed NICTBB connected to SEACOM in July 2009 and EASSY in April 2010, and now extends over 7 500 km in regions and districts across the country. Meanwhile, the Fibre Consortium, comprising Airtel, Tigo, Vodacom and Zantel, has laid over 1 500 km of backbone fibre linking the major cities of Dar es Salaam, Dodoma, Arusha and Moshi. The Fibre Consortium has also constructed about 400 km of metro fibre in Dar es Salaam, Dodoma, Morogoro, Mwanza and Arusha.

Technologies such as very small aperture terminal (VSAT) internet, GSM, 3G, 4G, LTE and microwave are used extensively throughout Tanzania.

A feather in Tanzania’s cap is that it had fully migrated from analogue to digital technology ahead of the agreed deadline of June 2015.

All these infrastructure improvements have assisted in reducing internet access and voice costs, and in extending internet connectivity to more Tanzanian businesses and consumers. Citizens in rural areas are not being overlooked and the Government has introduced a Universal Communication Fund to facilitate the development of telecoms in these areas.

Government, through the TTC, has played an active part in the development of Tanzania’s data infrastructure. TTC, which has a mandate to develop telecoms services and manage infrastructure, was formed in January 2018 after the Government acquired Bharti Airtel’s 35% stake in its predecessor, TTCL.

Credit for the connectivity improvements must also go to the country’s mobile network operators and service providers for introducing new technologies such as 4G LTE data networks and e-commerce services, and for helping narrow the digital divide.

By January 2021, mobile penetration in Tanzania had reached an estimated 82.7% of the country’s population of 60.61 million. There were 15.15 million internet users, representing an internet penetration rate of 25%, and 5.40 million social media users comprising 8.9% of the total population.

As more people and companies are connected, access costs – which are high – will continue to fall and, as digital devices penetrate into previously underserved areas, digital services such as e-commerce and fintech are expected to grow accordingly.

Liberalisation of the ICT sector

ICT development has accelerated rapidly in Tanzania since 1994, when the sector began liberalising. The catalysts were the Communication Act of 1993 and the National Telecommunication Policy 1997, which provided the framework for sector reforms and private sector engagement.

A milestone in the liberalisation agenda was reached with the enactment of the Tanzania Communication Regulatory Authority Act of 2003 (TCRA Act) and the establishment of the Tanzania Communication Regulatory Authority (TCRA) in 2003 as an independent regulator for the postal, broadcast and communication industries.

The TCRA Act, which introduced a convergence licensing framework, mandated the TCRA to promote competition and economic efficiency in the sector, protect consumer interests and take responsibility for licensing matters.

Liberalisation and the converged licensing regime have brought many new players and services into the market, including voice-over-internet protocol (VoIP) telephony, third and fourth generation (3G, LTE) mobile services and wireless broadband. These developments have boosted the internet sector, which was previously hampered by the low level of development of the traditional fixed-line network.

By February 2005, Tanzania had fully liberalised its telecoms sector, which is among the most open in Africa. Despite taking back control of the incumbent telecoms operator, TTC, the Government has actively embraced competition in the telecoms market. Foreign participation has been encouraged with a view to promoting economic growth and social development.

For example, the World Bank, in collaboration with other stakeholders, including mobile operators and the private sector, has sponsored Digital Tanzania Programme (DTP)[2] aimed at assisting the country harness its digital potential. It aims to ensure that all citizens have access to high-quality, low-cost connectivity, that public services are easily accessible online and that the digital economy is driving growth, innovation and job creation.

Regulation of data infrastructure

Government position on technology

The Tanzania Development Vision 2025 highlights the importance of leveraging ICT alongside the necessary skills and capabilities to realise a well-educated and learning society; and a strong, competitive economy capable of sustainable growth and shared benefits.

The National ICT Policy 2016 articulated 10 main focus areas in harnessing ICT in Tanzania: strategic ICT leadership, ICT infrastructure, the ICT industry, human capital, the legal and regulatory framework, productive sectors and service sectors, the public service, local content and universal access.

The Government established the Ministry of Communication, Science and Technology in 2008. Later renamed the Ministry of Communication and Information Technology, this Ministry is charged with the responsibility to create a conducive environment for investment, introduction and use of ICT in national development efforts and Government operations.

The eGovernment Strategy was put in place in September 2012. The eGovernment Agency is responsible for the design and implementation of ICT-enabled public services at a local and national level.

Sector policy on data infrastructure

The National ICT Policy 2016 contains several commitments on the part of Government to support infrastructure development in the ICT sector. In relation to broadband services, this entails creating a conducive environment for public-private collaboration in exploring various means of financing access to accessible, reliable and affordable broadband services countrywide.

With regards to infrastructure development, Government’s commitments, also outlined in the National ICT Policy 2016, include supporting public-private collaboration, countrywide development of e-ready infrastructure and a supportive framework to guide infrastructure deployment and sharing.

Data infrastructure laws and regulations

The main laws and regulations governing the ICT sector in general, and data infrastructure in particular, are:

  • The Tanzania Communications Regulatory Authority Act of 2003, which established the TCRA as the regulator of telecoms, broadcasting and postal services. The TCRA is responsible for licensing operators, enforcing licence conditions, allocating and managing radio spectrum, regulating tariffs and monitoring licensees’ performance.
  • The Electronic and Postal Communications Act of 2010 (EPOCA) provides a comprehensive regulatory regime for electronic communications service providers and postal communications service providers. This includes, among other things, establishing the Central Equipment Identification Register for detachable 81M card and built-in SIM card mobile phones, content regulation, the issuing of postal communication licences, regulating competition and dealing with offences pertaining to electronic and postal communications.
  • The Cybercrimes Act of 2015 deals with offences relating to computer systems and ICTs and provides for the investigation, collection and use of electronic evidence.
  • The Electronic and Postal Communications (Licensing) Regulations, 2018 (EPOCA Licensing Regulations) make provision for the TCRA to issue the following types of licences:
    • network facilities licences;
    • network services licences;
    • content services licences;
    • application services licences;
    • postal and courier services licences;
    • installation and maintenance of electronic communication equipment licences;
    • importation and distribution of electronic communication equipment licences;
    • the sale of electronic communication equipment licences;
    • VSATs licences; and
    • spectrum usage licences.

In addition, the regulatory authority is responsible for electronic communication numbering and addresses and channel aggregators.

Licensing requirements

The four main licence categories that apply to the data infrastructure sphere are: network facilities licences (NFL), network service licences (NSL), application services licences (ASL) and right-of-way and infrastructure siting licences:

  • A NFL authorises ownership and control of electronic communication infrastructure. Examples of facilities within the scope of this licence include: earth stations, fixed links and cables, public payphone facilities, radio communications transmitters and links, satellite hubs, satellite control stations, space stations, submarine cable landing centres, switching centres, towers, poles, and ducts and pits used in conjunction with other network facilities.
  • A NSL provides authorisation to operate electronic communication networks to deliver services. Examples of network services are: bandwidth services, broadcasting distribution services, cellular mobile services, access applications services and space segment services.
  • An ASL authorises the reselling or procurement of services from network service operators. The salient feature of this licence is that the licensee does not own or operate network infrastructure. Examples of licensees are: internet service providers, virtual mobile service providers, payphone service providers, PSTN providers, public cellular service providers and providers of IP telephony, public payphone services and public switched data services.
  • A right-of-way and infrastructure siting licence authorises the licensee to undertake infrastructure siting and attendant right-of-way requirements that may be required. Municipal council approval should be obtained for right-of-way and environmental impact assessment certification from the National Environmental Management Council.

The NFL, NSL and ASL licence categories are further subdivided into four market segments to reflect their corresponding markets, as follows:

  • International market segment: The licensee is authorised to offer services from one or more of the four licence categories to the international market;
  • National market segment: The licensee is authorised to provide services nationally;
  • Regional market segment: The licensee is authorised to provide services in an administrative region; and
  • District market segment: The licensee is authorised to provide services in an administrative district.

Also, TCRA may issue an NFL or NSL either as an individual licence or a class licence, depending on the economic and social effect the issuance of the licence will have. Individual licenses are issued through a tender and carry certain obligations, while class licenses are issued without any conditions.

The requirements for the NFL, NSL and ASL application are:

  • Transmittal letter to the Director General of the TCRA.
  • Photocopy of receipt of application fees.
  • Duly completed application form.
  • A certified copy of the applicant’s certificate of incorporation.
  • Business plan for proposed services, including the following:
    • manuals, brochures and technical specifications;
    • network rollout plan (coverage, customer base projections, construction plan, radio frequency);
    • network configurations;
    • services to be offered;
    • costing structure;
    • service pricing;
    • customer care strategy (quality of services);
    • projected financial statement, cash flow and balance;
    • financing plan;
    • capital investment ratio (equity: debt); and
    • human resources development strategy.
  • Technical proposal on the services to be provided.
  • Previous experience in the provision of the services.
  • Company profile.
  • Company memorandum and articles of association with a minimum of 25% of its authorised share capital issued and paid up as an ongoing obligation throughout the life of its licence.

Specific requirements for NFL and NSL applications are:

  • Proof of financial capability in the form of a bank statement from a bank for the company or its shareholders for the past six months prior to submission of the application;
  • Proof that the minimum paid-up capital of the company is not less than 50% of the authorised share capital. This is a requirement under regulation 21 (b) of the EPOCA Licensing Regulations (which appears to contradict the requirement of EPOCA). We understand that TCRA accepts proof of the 25% paid-up capital if only 25% of the shares have been subscribed and paid up;
  • Shareholding structure (in compliance with section 26 of the EPOCA), including relationship with holding or subsidiary company, clearly indicating the ownership or shareholders of the latter; and
  • Notarised memorandum of understanding or agreement between financiers (whether domestic or foreign) and the applicant.

Specific requirements for an NFL application are:

  • Technical specifications for interoperability and compatibility of the system with other systems;
  • Network rollout plan and its implementation schedule;
  • Tariff structure;
  • Availability of emergency services;
  • Network plan and construction; and
  • Performance bank guarantee from a bank registered in Tanzania.

Specific requirements for an NSL application are:

  • Interoperability and compatibility of the system with other systems;
  • Tariff structure; and
  • Availability of emergency services.

The process for licensing in the individual licence categories (NFL, NSL and ASL) is as follows:

  • The applicant submits an application or tender documents as called for by the TCRA;
  • The TCRA informs the applicant within 28 days that the application has been registered;
  • The TCRA evaluates the applications(s) or tender documents;
  • The TCRA publishes, in any newspaper, a notice of every application it has received for the issue of a licence;
  • Any person may, within 14 days of the publication of the notice, lodge written representations with the TCRA if he or she opposes the granting of a licence;
  • Before issuing any licence with a term of five or more years, the TCRA consults with the Minister and the relevant sector Minister; and
  • The TCRA has 60 days to consider an application and may either grant a licence or refuse the application.

Effect of regulation of the sector

The legal and regulatory environment is an important aspect in the promotion of data infrastructure in Tanzania. The converged regulatory environment established by the Government in 2003 has further promoted the ICT industry and simplified business operations in Tanzania.

However, there is a need to look at various ICT laws and regulations as well as intellectual property rights regulations if these infrastructural developments are to contribute significantly to the socio-economic development of Tanzania.

The next foreseeable step in the regulation of data infrastructure would be for the Government to reform the regulatory and institutional framework for data infrastructure development. The policies and regulatory framework need to be more conducive to data infrastructure investment by businesses.

Challenges in the sector

Data infrastructure developments since 2003, including the landing in Tanzania of two international submarine cables, EASSY and SEACOM, have enhanced the country’s high-speed internet capacity and enabled landlocked neighbouring countries to be linked internationally through Dar es Salaam’s submarine landing points.

This has therefore made Tanzania a regional hub of communications infrastructure. A change of policy focus is now required for these infrastructural developments to make a greater contribution to the socio-economic development of Tanzania. Currently, the share of the ICT sector to GDP is only 1.9%.

According to the World Bank report of 2009, every 10% increase in penetration of broadband in developing countries accounts for 1.38% of GDP growth.

Aware of the value of ICTA as a catalyst for growth, the Government has sought to create an enabling environment for investment through initiatives such as the NICTBB, development of public-private partnership policy and legislation, establishment of the Universal Communications Service Access Fund, development of internet exchange points and establishment of the country code top level domain.

These efforts have contributed to cost reductions of about 99% in backhaul transport bandwidth compared to 2009 while increasing telecommunication network coverage to 85% of Tanzania’s total geographical area.

The Government has also attempted to strike a balance between regulation of the sector and creation of a conducive environment for foreign investment, particularly when it comes to market entry, terms of condition and operations. Similarly, the TCRA has played its part in allowing new players to enter and compete freely in the market.

In spite of these efforts and advantages, there are still a number of challenges that need to be addressed.

Chief among them are low broadband penetration in rural and urban underserved areas, the high cost of broadband services and the absence of a supportive policy framework for universal broadband access.

There are also challenges with regard to infrastructure development, such as a lack of appropriate frameworks for deployment and utilisation of ICT infrastructure, including data centres, right-of-way and e-readiness infrastructure. The investment cost of infrastructure is high and there is a lack of reliable power supply.

Furthermore, Tanzania has a small emerging skills capacity to support the data infrastructure sector in terms of research, development and support for innovation.

Conclusion

The data infrastructure sector is growing rapidly, supporting innovations such as mobile money and eGovernment – an evolution that is being encouraged through new legislation such as the eGovernment Act of 2019.

However, internet connectivity is still beyond the reach of most citizens living in rural areas and mobile data is particularly expensive with users in Tanzania paying more compared to other countries in East Africa.

The time has come for Government to reform the regulatory and institutional framework for the further development of the country’s data infrastructure. There is a particular need for a review of intellectual property rights law, better policy frameworks for universal broadband access and the deployment of ICT infrastructure and, most important of all, an increased focus on reducing the cost of investment and ensuring that vital inputs such as a reliable energy supply are given sufficient attention. 

[1] Tanzania Communications Regulatory Authority (TCRA) quarterly communication statics October to December 2020

[2] DTP is classified under three major components namely Digital Ecosystem, Digital Connectivity and Digital Government Platform and services. The three components focus to promote industrialization, better and improved government services, creation of youth employment for social economic development hence economic growth. DTP is implemented by the government of Tanzania.