Simplifying network licensing


In the early 1990s, Tanzania had approximately 120,000 telephone lines for a population of nearly 30 million people. The Tanzania Telecommunications Company Limited (TTCL) was created as a successor to the Tanzania Posts and Telecommunications Corporation and became operational in 1994, after the government undertook a restructuring of several entities in the country. Along with this restructuring and in response to the low levels of telephony penetration, the government initiated a partial liberalisation of the telecommunications market that enabled private mobile network operators and data communication services to emerge.

Continuing on a path to increase telephony levels and market competition, the government introduced the National Telecommunications Policy (NTP) in 1997. This policy aimed to initiate rapid development of the telecommunications sector and to increase the possibility that universal access to telecommunications infrastructure and services would be reached for the public and industry.

The NTP included strategies to promote investment in the sector, such as gradual divestment from the government’s exclusive ownership of TTCL, since the country’s teledensity was still abysmally low — in 1997, Tanzania had just 0.32 telephones for every 100 people, while neighboring Kenya had achieved a teledensity of 0.92. By the turn of the century, the business environment in Tanzania was still fraught with challenges for new market entrants — even those who partnered with TTCL — because they faced a maze of opaque regulations and high costs of doing business.

In 2001, determined to turn the tide, the government sold a 35% stake in TTCL to a Dutch-German telecommunications venture. At the same time, Tigo and Vodacom, who began operations in Tanzania in 1993 and 2000, respectively, began to ramp up their mobile service offerings. Vodacom emerged as the top telecommunications provider in the country within a year. By 2001, the teledensity in Tanzania had increased 36% to 0.50 lines for every 100 people, but even with competition on the rise, substantial room for growth remained. The government took further steps to shape the market in a way that benefited Tanzanian consumers two years later, with the introduction of the National ICT Policy, as well as the development of the Tanzania Communications Regulatory Authority (TCRA) Act, which created the sector regulator.

The TCRA Act of 2003 made the regulator responsible for the following seven areas:

  1. Promoting effective competition and economic efficiency;
  2. Establishing standards for the regulated goods and services;
  3. Protecting the interests of consumers;
  4. Promoting the availability of regulated services;
  5. Regulating rates and charges;
  6. Monitoring the performance of the regulated sectors; and
  7. Monitoring the implementation of ICT applications.

Placing responsibility for these aspects of telecommunications regulation with TCRA set the stage for later decisive policy action.

Building on the TCRA Act of 2003 and its regulatory responsibility provisions, the government introduced a Converged Licensing Framework (CLF) in early 2005. The CLF was elaborated in the Tanzania Communications (Licensing) Regulations of 2005 and offers licenses to potential market entrants on a technology- and service-neutral basis. This type of licensing framework enables operators to offer multiple services using any technology without the need to apply for and obtain a new, separate license for each service offered. At the time of its introduction, the CLF was the first of its kind in sub-Saharan Africa, and any investor was eligible to apply for a license. The framework was widely understood to be the final step that enabled full liberalisation of the Tanzanian telecommunications market, especially with the end to the government’s fixed-line service monopoly via TTCL occurring in the same year.

In its original form, the CLF included four licensing categories:

  1. Network Facilities —  to construct physical telecommunications infrastructure (towers, fibre cables, etc.);
  2. Network Services — to offer mobile, fixed-line, bandwidth, and broadcasting distribution services;
  3. Applications Services — to provide end users with electronic communications services either by establishing and operating a private facility to provide this service directly, or through reselling such services from other licensed facilities and/or network service providers; and
  4. Content Service Providers — to provide a similar service as an application services license, but through a broadcasting medium, especially TV or radio.

With the introduction of the CLF, the number of licensing categories shrank from seven to four. Additionally, the CLF made it possible for any third-party operator to use the licensed network facilities of another provider to bring a service to market. Prior to 2005, third-party service providers were obliged to use TTCL’s facilities, which gave the incumbent an unfair market advantage.

Within the first year of the CLF implementation, Tanzania began to see dramatic changes in its telecommunications market. TCRA issued 93 licenses between December 2005 and December 2006, including a third fixed-line service provider and a fifth mobile network operator. Over time, the increased level of competition in the telecommunications sector has positively affected the pricing of mobile services in Tanzania, and even though many Tanzanians still struggle to afford the cost of mobile data, the availability of choice has helped to reduce costs.

By 2009, telecommunications was the fastest growing sector in Tanzania, services were improving due to increased competition and investments, and teledensity had risen to 43%  from just 4% in 2003. When the TCRA was created in 2003, telecommunications were primarily organised around voice and SMS services; within a decade, mobile data usage was steadily increasing through a combination of increased access to mobile devices and the growing popularity of both social media and mobile money services. Overall, the introduction of the CLF has helped Tanzania consistently rank among the most competitive telecommunications markets in Africa, providing an invaluable blueprint for other countries whose regulators seek to positively transform their markets.

In 2019, Tanzania — as an earlier adopter of the converged licensing framework — had the second-most competitive mobile broadband market in Africa. This market competition is just one of the influential factors that contribute positively to greater internet affordability. While the price of 1GB in Tanzania is still just over 5% of average monthly income, it has the third-highest score for a low-income country on the Affordability Drivers Index and has seen a 3.6 percentage point drop in the cost of 1GB mobile data since 2015.