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					Negotiating the Net in Tanzania
VIGNETTE
        Most of the cafés in Dar don’t serve any food. In fact one can’t even get a drink. Yet lots
of people happily pay Tsh1000 ($1) an hour just to sit there. Well, maybe more than just sit
there, for these are Internet cafés and they provide a most valuable service. Whether in a tiny,
grimy basement near the ferry to Zanzibar barely holding a half dozen aging computers with
sticky keyboards separated by makeshift partitions or in a spacious modern room overlooking the
sea at the upmarket Slipway with rows of new computers and computer magazines to purchase,
Internet cafés are a rapidly growing phenomenon in Tanzania.
        In fact, some people estimate there are more Internet cafés- several hundred- in Tanzania
than in any other African country. Most are in Dar es Salaam, but they are also now appearing in
many regional centers. Emailing friends and family abroad is very popular and some surf the
web for jobs or music. Many customers also take advantage of Voice over IP to make cheap
international calls. The latter offering remains against the stated government policy of
exclusivity for the monopoly Telco, but is very tempting with rates of $0.30-1.00 for a ten
minute call to Europe or North America. Equivalent rates via Telco and mobile operators are
over $3 a minute.
        The question is, of course, how has Tanzania gotten to this stage of Internet
development? It all started in 1996 when Coastal Travel became the first cybercafé, with seven
PC's and a slow and very expensive 10Mbit Ethernet link to Bill Sangiwa’s Cybertwiga, the first
commercial Internet Service Provider (ISP) in Tanzania. In those days, it was mainly foreigners
and travelers reading and writing emails at $2 an hour. Soon, more outlets started appearing,
even ones that offered food. An early example was the Java Café located at a famous spot called
Cozy Café. One who remembers describes how young men would flirt with both their girlfriends
and the Internet and enjoy a plate of high quality French fries at the same time!
        Real growth in the cybercafé industry started after a protracted series of negotiations in
the telecom regulatory arena came to an end in 1998. At that time clear guidelines were issued
and several new ISPs licensed. By then the Internet was becoming much more familiar terrain, at
least for the educated urban dweller, and entrepreneurs saw the opportunity to meet a real need in
a country with a large Diaspora.1
        The diffusion of the cybercafés reflects many important aspects of Internet diffusion in
Tanzania. Their rapid spread through the country was accompanied by processes of multiple
negotiations as people in schools, cybercafés and companies sought their own best solutions to
meet their personal and professional priorities. The rise of cybercafés represents a microcosm of
the evolution of the Internet: new and unfamiliar technologies variously defined, regulated, de-
regulated, and redefined again, moving from the periphery of contemporary communications
systems used by a few ―cyber-geeks‖ to the center of a modern system used by millions. At each
step, info-pioneers have to negotiate for everything from licenses, to bandwidth, to controls over
content.

Overview of ICT in Tanzania


1
 Interestingly though it is believed that most of the early entrepreneurs had their origins in South
East Asia rather than being members of the indigenous population and their extended families in
the Diaspora.


                                                1
         In 1990 on the eve of the Information Revolution, Tanzania stood out as the most
socialized country in Africa and its economy was in poor condition due to the failure of the
economic policy known as ujamaa.2 Today, despite remaining heavily dependent on donor
funding, the country is a multi-party democracy with a free market economy, and it outshines its
neighbors in of the areas of macro-economic stability, political stability and social cohesion. This
profound political and social transformation has been accompanied by equally dramatic changes
in the telecommunications arena—from a time when the import of computers was prohibited,
there was a decaying phone system and no data communications, to the present in which
Tanzania enjoys a healthy ICT sector, rapidly expanding national and international data
communications, and significant public Internet access.
         The diffusion of the Internet in Tanzania must be seen within a context in which GDP per
capita is estimated to be only $251 and half the population live on less than $1 a day. Seventy
percent of the population lives in rural areas while telecom infrastructure is heavily concentrated
in urban areas, especially in the commercial capital Dar es Salaam. Nevertheless, there is a range
of public sector reform initiatives and a poverty alleviation program in place that in 2001 enabled
the country to enjoy substantial debt relief under the HIPC (Heavily Indebted Poor Countries)
program. This has significantly increased aid for development activities and the flows are likely
to grow over the next few years, including into the telecom sector. The country’s economic
reform process, especially with regard to privatization and investment, is also changing the
telecom landscape, with international firms entering the economy and creating infrastructure.

Education
The Education sector has faced a number of challenges over the last three decades including lack
of investment, outdated and inappropriate curricula, and departmental fragmentation. As a result,
school enrolment and literacy levels have declined significantly since the 1980s and the
education system yields graduates who have inappropriate and uncompetitive skills for the
requirements of the job market, self-employment or wealth creation. To remedy this situation,
the Government is implementing the Primary Education Development Programme, the first stage
of the wider Education Sector Development Programme that will include secondary and higher
education, non-formal education, and vocational training.


Financial Services
        On a positive note, various reforms in the financial services sector have resulted in great
improvements over the last decade. For instance, the national payments system and clearing
house started operating in March 2002 and has resulted in significant improvement in financial
services. Unfortunately, the sector is still relatively backward compared to other countries in the
region in terms of the financial instruments available. Further complicating the efficiency of the
sector, the legal framework for the sector supports paper-based transactions and does not provide
for electronic records, nor for adequate safeguards to create electronic transactions. On a cultural
level, encouraging trust in credit as well as cash transactions is also needed.




2 The ujamaa (or ―familyhood‖) policy of the 1960s supported collectivized agriculture in a
number of government-sponsored planned settlements. These settlements were over-reliant on
government finance and gradually dwindled in number.


                                                2
In all countries, the policies and strategies necessary for effective exploitation of ICT (and the
Internet in particular) need active and continuing participation from all major stakeholders. Thus,
it is significant that Tanzania’s policy makers have increasingly recognized the need for the
drafting process to be consultative and take broad stakeholder interests into account. For
example, a broadly-based Task Force under the Ministry of Communications and Transport
finalized the drafting of the first National ICT Policy in August 2002. This comprehensive
document covers topics such as the Legal and Regulatory Framework, Capacity Building, ICT
Infrastructure, ICT Industry, Productive Sectors, Service Sectors, Universal Access, and Local
Content. The policy has now been adopted by government and significant benefits are expected
once implemented. Among other things, it is expected to pave the way for an eGovernment
strategy as well as for sector-specific implementation plans that will be manifested through
continued diffusion of the Internet.

        In the pages that follow, it will become evident that tangible changes in telecom
infrastructure, end-user facilities, etc., are often the first visible outcomes of discussions, debates,
and negotiations that may have commenced months or years earlier. Particularly in the telecom
and Internet arena, there are a large number of actors whose formal, informal and even personal
relationships dictate the path into the future. Readers are encouraged to bear in mind the
following actors as they read the case material:
        Early academic and research pioneers: Enthusiasts and champions of data
communications worked behind the scenes at a time when the Internet was still ―below the
radar.‖ They used their personal contacts in government and powers of persuasion to put the first
building blocks in place that would prove essential for future Internet diffusion.
        International Development Partners: The IDRC, the NSRC, the World Bank and others
were critical players, offering technical support and funding for the high-risk ventures that
characterized the early days.
        President and Cabinet Ministers: The ultimate authority in progressive support for
Internet developments, or benign neglect, or active blockage of initiatives.
        TTCL, its data service provider, Simunet and its mobile operator Celtel: Despite
movement towards deregulation of fixed line telephony, the monopoly operator remains very
powerful in this arena, with inevitable impact on prices and service.
        Commissioners in the Regulatory Authority: The first Chair of TCC was a strong and
progressive force and led an effective team of commissioners. Subsequently the regulatory hiatus
resulted first in a regulatory vacuum and then a weak acting chair of the TCC and commissioners
appointed through an opaque process.
        The Telecom Regulator: The first regulator was a strong and especially effective force in
building an independent authority and enforcing policy and legislation.
        Mobile Operators: Have been a powerful force in telecom in Tanzania, bringing
international investment and building a vigorous mobile industry. At the same time they have
engendered ongoing disputes with government and the regulator
        Privatization stakeholders: International investors in the telecom arena include Millicom
International, Vodacom South Africa, and the MSI/Detecon consortium. Overtly and covertly
they have played a powerful role in influencing the implementation of government policy and
regulations governing telecom.
        Internet Access Providers (IAPs) The IAP’s played a pivotal role in bringing data
communications to the country. From the beginning however, competition between the four


                                                  3
original licensees dominated and prevented collaboration on international gateways that would
have significantly reduced costs of access.
         Internet Service Providers (ISPs) A highly competitive but still apparently very profitable
segment of the industry, the Internet Service Providers serve individual customers, Internet cafes,
NGOs and to a lesser extent businesses.
         Cybercafés: The top of the food chain, very much at the behest of the ISPs, IAPs, TCC
and government. In essence they are entrepreneurial in character, but often work to unsustainable
business models.
         Civil Society: Civil society has an unusually strong voice in Tanzania thanks to the
emergence and nurturing of an electronic forum known as eThinkTank that has now grown to
several hundred members. Started and maintained by a couple of dedicated people bridging the
public-private divide, this is an unusual example of an electronic community that has triggered
real change in a national ICT arena.
         An increasingly powerful private sector: Private sector consumers or providers of
services have been increasingly vocal, through initial consultations through fora such as
eThinkTank on issues that affect their bottom line.
         Tertiary education sector: Tanzania’s universities have historically played an important
role in the diffusion of the Internet although their influence has yet to penetrate further down the
education pipeline.

        This extensive list reveals how complex and interactive the process of Internet diffusion
is even in a relatively small developing country. Each of these groups of actors was at least at
one point involved in formal and often informal negotiations with other actors. Indeed, there is
so much negotiation in the evolution of the Internet that we later use a framework to identify
several ―critical negotiating issues‖ to highlight prominent points of contention and how if at all
they are resolved.


. Telecom Sector
        The telecom sector is a key sector that has been undergoing reforms since the early 1990s
that include shifting balances between public and private role-players, and moving from
monopoly to competition, domestic to foreign ownership, and centralized to decentralized
governance. In 1993, Tanzania established independent regulatory agencies for broadcasting and
telecom and agreed to the unbundling of the telecom and postal organizations. The latter took
effect in 1994 and resulted in the Tanzania Telecommunications Company Limited (TTCL).
TTCL was the first ―strategic‖ parastatal the government attempted to privatize. In 2001 the
government agreed to sell 35% of it to an international consortium generating considerable
controversy and, as is discussed in some detail later in this case, leaving the transaction yet
unconcluded..
        As mentioned briefly above, Tanzania has had at least rudimentary Internet access since
1990. Until recently, Internet use has been confined largely to Dar es Salaam, and, characteristic
of most African countries, only a small minority of the population has access. Lately, however,
there is evidence of quite rapid growth. For instance, international Internet bandwidth trebled
from 2001 to 2002, and at the same time there has been a rapid expansion of the national
network that now includes virtually all first-tier geographic regions and some districts. Dialup
subscriptions have grown by a factor of six in the last two years and there has been a


                                                4
proliferation of cybercafés providing public access to the web. Impressive as this may sound,
however, the absolute numbers of users remain very small by developed country measures.

Current National Connectivity
         Tanzania lacks an Internet backbone, has no Internet exchange point or direct landing
point for the Internet. Data service providers connect to the Internet via satellite in countries as
diverse as France, Norway, the UK and the USA. Collectively, this bandwidth amounts to only a
claimed twenty four mbps. A subsidiary to TTCL recently rolled out twenty or so two-mbps
national links to regional centers. This connectivity certainly offers opportunities for businesses,
local government and private citizens to gain access to the Internet, but as yet there is little
traffic.

Local Area Networks (LANs)
        Several large companies, central government departments and key government and
parastatal agencies have LANs and Internet connectivity, but not so the large numbers of small to
medium public and private institutions throughout the country that lack electricity, let alone
computers and connectivity.3 Regarding other sectors, with the exception of the University of
Dar es Salaam—which is a significant user and provider of Internet connectivity to the academic
community and beyond—there is minimal Internet usage in schools and the tertiary educational
sector. One exception is the Muhimbili University College of the Health Sciences (MUCHS),
one of the earliest users of the Internet in Tanzania, which continues to make use of the Internet
for telehealth purposes. In addition the Aga Khan Hospital has a new facility for using the
Internet for limited telemedicine applications.

Internet Service Providers (ISPs) and Telecenters
       A healthy industry has grown around the Internet. In addition to the hundreds of
cybercafés and emerging public call centers, there are now over a dozen ISPs in the country,
serving upwards of 30000 Internet accounts.4Alternative modes of public access such as
multipurpose telecenters have not as yet been adopted in Tanzania. There is one telecentre in
Sengerema that went online early 2001. Three more telecentres are due for construction in
refugee camps near Bukoba in the north of the country as part of a recent agreement between the
Government and the ITU.5

Cybercafés
       Cybercafés and Public Call Offices (PCOs) are the phenomena of real interest in
Tanzania. The first cybercafé opened in 1996 and growth took off in 1998. The original intention
was to open up access to the Internet in a country with minimal and expensive access to domestic
telephones and computers. A recent survey (ref. to come) suggests that there are now several
hundred cybercafés in the country, with perhaps 90% in Dar es Salaam.6 The recent rollout of

3
  A major training house in Dar es Salaam fills two large rooms with trainees learning to type on
manual typewriters.
4
  This in a country of over 30 million people, but it is estimated that each Internet account has ten
users.
5
  Compared with cybercafés, telecenters typically offer a wider range of services such as training
facilities, other information resources, professional support services, etc.
6
 It is noteworthy that the ITU has proposed changing its definition of universal access from
―telecenters in every community‖ to ―Internet cafes in every community.‖ (ITU ref.)


                                                   5
two-mbps lines to regional centers is likely to increase this user base by accelerating the growth
in cybercafés as well as business use of the Internet in the region.7
        The survey gathered quantitative data from about sixty cybercafés in several towns and
the results suggest that most have fewer than ten computers and connect to their ISPs via
microwave local loop. The survey suggests that the typical user of cybercafés in Tanzania is a
young unmarried male with a secondary or tertiary education who is either a student or self-
employed. Another survey in rural areas, however, concluded that users were more typically in
the 30-40 age bracket.8 Usage is typically for email, although there is some web surfing and—
despite being illegal—a good deal of telephony using Voice over IP (VoIP). There is also a
growing use of cybercafés for online chatting, especially by young professionals and
businessmen.
        The establishment of cybercafés boomed between 2000-2001, but inevitably competition
forced down prices to unrealistic levels and now researchers in Tanzania observe a consolidation
of the market. A considerable number of cafés have closed, some have reduced their number of
computers (especially where connectivity fees depend on the number of computers connected),
and some Internet cafés have moved to smaller premises, due to high office rents.9
        PCOs are an alternative and blossoming voice communications facility for those lacking
mobiles or landlines. Indeed at least one mobile provider has just introduced a technology
specifically geared at PCOs and any shop that wishes to introduce paid calls to mobile
telephones.
Content Production and Ecommerce.
        With regard to Internet content production, there are now several hundred Tanzanian
websites and a couple of substantial country portals. Perhaps ten percent of the sites have
Kiswahili language content.10 Some are clearly targeted at local Tanzanians offering chat rooms,
sports information, slang dictionaries, or local humor, but the sites appear to mainly target non-
Tanzanians with an interest in Tanzania and the Diaspora. There is little evidence of commerce
being conducted via the Internet in Tanzania, although there is at least one online shopping
portal, Watawetu, and some business-to-business e-commerce as well.
        The next section fleshes out this bare-bones description of the diffusion of the Internet
and traces the historical events that have led to the status of the Internet in Tanzania today. In
particular to convey the pull and push of the different social actors, we must describe the phased
evolution of their relations over time since there were important continuities as well as changes.

First Connectivity
In 1987, the Tanzania Media Women’s Association (TAMWA) was born and began to offer
perhaps the first electronic data communications in the country, TAMWA quickly entered the
ICT arena by obtaining training for members in desktop publishing to produce their magazine


7
  Observers note, however that ICT awareness raising is needed to promote ICT and the Internet
not as a ―club or high tech gadget‖ but as an everyday and everybody’s tool for efficient
communication and provision of goods and services. They note that raising general literacy and
demystifying ICT are crucial for accelerated and sustainable use and growth of the Internet.
8
  Private Communication: Olaf Nielinger
9
  Private Communication: Olaf Nielinger
10
     SIDA report on ICT in Tanzania. See www.sida.se


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Sauti Ya Siti. Shortly thereafter, empowered by modern technology, they installed a modem for
e-mail with support from the Association for Progressive Communications (APC). Fatma Alloo,

       Those were the years of the UN conferences, when women were mobilizing around
       issues of development, violence and reproductive health. At that time, the telephone
       infrastructure was poor. Nonetheless, we decided to download messages, get them
       translated into Swahili, and let women know what was happening and how to mobilize
       around issues of concern before going to these UN conferences. The exercise proved
       highly innovative and had tremendous impact nationally and globally. 11

         Thus, many years before the Internet appeared on policymakers’ agendas, NGOs and
academic institutions were preparing the way for the revolution to come. At this stage the
negotiations were primarily about spectrum allocation and not more significant than any other
negotiations about office or organization resource allocation It was not until the early 1990s that
the start of a long and more or less continuous process that would bring the Internet to Tanzania
began.
         Thanks to the pioneering efforts of biostatistician Bill Sangiwa at the University of Dar es
Salaam, others in partner countries and the IDRC, two different three-year projects became
operational in 1991. First, the Eastern and Southern African Network enabled electronic mail
between researchers at the University of Nairobi, Makerere University, University of Dar es
Salaam, University of Zambia, and University of Harare and the rest of the world. Each node ran
a suite of Fidonet software on an IBM compatible AT with a 40MB hard drive linked via a
modem and a dedicated phone line to the existing (and very shaky!) telephone system. Second
the same universities were tackling another project, planning to exchange health and medical
information via HealthNet, a satellite-based communications service operated by Boston-based
NGO Satellife.12 Because of the overlap in the participating institutions, the common source of
funding and other areas of commonality, the two projects were merged in 1991.
         The objectives of the project were to reduce costs of international calling and improve
speed and reliability of transmissions by using the satellite. This required a license for use of the
satellite frequency spectrum. Without a regulator, however, it was TPTC working with the
Department of Communications in the Communications Ministry that was integral to such
licensing procedures.13 In addition to this process being long and involved, the incumbent telco
had no desire to give up frequency allocations, or see its revenue base eroded by the use of
satellite transmissions which bypassed expensive international lines! This process led to the first
real set of negotiations, and our first CNI over the first satellite data transmissions.

       While the use of satellite technology was such new idea and the full implications were
yet unknown, the Telco did perceive that issuing licenses would result in the loss of monopoly,
lower Telco revenue, but improved access for research and health-related projects. At the same time
because the technology was so new, Telco opposition was weak compared with what it would be years


11 From Fatma Alloo,‖ Women Encountering Technology‖, in Rowing Upstream: Untold
Stories: The Beginning of ICT in Africa.
12
   Satellife purchased 60% of the capacity on the UK University of Surrey-built Low Earth
Orbiting (LEO) satellite to enable this service.
13
   The department in turn had to get clearances from Government Security functions for specific
allocations.


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later.  In opposition to the Telco, there was local support from the Director General of the
Muhimbili Medical Center and Sangiwa-led University of Dar es Salaam. In addition there was
strong international support through the IDRC, including the National Startup Resource Centre at
the University of Oregon.
         While there was no formal negotiation as such, Sangiwa describes how he had to work
―behind the scenes‖ on a person-to-person basis with government officials, enlist contacts in the
Ministry of Health to educate all the players, present the merits of the case and gain support. At
the same time he had to lobby the Tanzanian telco to get their support and approval for a
spectrum allocation.
         In due course the Ministry of Communications supported the application and granted
satellite frequencies for HealthNet and ESANet transmissions, usage being restricted to a ―closed
user group.‖ As a result of this successful negotiation usage of ESANET and HealthNet
increased by research and health professionals who used store-and-forward email procedures via
satellite.
         While of limited scope and potential for conflict, this was the first negotiation for an
alternative to the POTS (plain old telephone system) for national and international data
transmission. It prepared the way for future Internet policy, regulation, and legislation and tested
the ground rules for future negotiations. For instance with little effort during 1992, COSTECH
(the National Commission for Science and Technology) and the University of Dar es Salaam
Computing Centre, also started offering closed user group store-and-forward email services,
although in some cases the definition of ―closed user group‖ was rather broadly interpreted!

These negotiations took place parallel to several other telecom-related activities that were under
way and that would have a major influence over the future diffusion of the Internet in Tanzania.
For example, Prof. Mgombelo, a former electronics professor at the University of Dar es Salaam
(UDSM) and now Member of Parliament, chaired a government committee that, with technical
assistance from the World Bank, drafted the new Telecommunications Act—eventually
promulgated late in 1993. It called for the breaking up of the services provided by the Tanzanian
Post and Telecommunication Company (TPTC) and establishment of the Tanzania
Communications Commission to regulate telecom activities.
        The Presidential Parastatal Sector Reform Commission (PSRC) was launched in 1992.
The PSRC would oversee the progressive privatization of state-owned companies and assets,
including the telco. It is noteworthy that the span of state-owned companies covered an estimated
80% of the economy at the time. Privatization focused on smaller and non-strategic assets before
moving to the larger transactions. The privatization of TTCL following the unbundling of TPTC
was the first large transaction involving a ―strategic‖ utility.
        The Telecommunication Restructuring Programme, was designed to overhaul the whole
telephone network in Tanzania. It was delivered in three phases, TRP I – TRP III, between 1993
and 2000 as a multi-donor project with the World Bank and the Swedish International
Development Cooperation Agency (Sida) as prime donors. TRP was one of the major catalysts
for telecommunication and IT-developments in Tanzania. It comprised major network
rehabilitation and modernization and also policy and regulation and institution-building aspects.
It has seen more than $250 million invested in an almost all-digital network in the country over
the period noted.




                                                8
        Also important was the lifting of the need for a permit to import or own a computer or
television set that had been in place since 1974. The permit was initially intended to control the
import of mainframe computers and was only loosely enforced in the 1990s.
        So the period up to 1993 was characterized by the first steps towards electronic data
communications in Tanzania—well before the technology appeared on the political radar screen.
Driven by enthusiasts and champions of data communications in the research and NGO
communities in informal negotiations with the monopoly telco and the Ministry of
Communications, these informal negotiations resulted in real benefits to the emerging members
of the Internet community. The period also saw the first substantial moves towards telecom
liberalization and privatization and regulation of the rapidly developing telecom sector. Those
moves would open the way for substantially more activity in fixed line and mobile telephony and
the start of commercialization of data communications.



        The promulgation of the Telecommunications Act of 1993 clearly marks the beginning of
a most vibrant period in the evolution of telephony, data communications and the Internet in
Tanzania, including the first steps in commercialization of many telecom services. It heralded a
period of rapid, and in some cases, dramatic change in the country’s telecom landscape,
including the first competition for telecom, courier and local IT business. The much higher
stakes also led to a series of conflicts and negotiations between public and private sector players
in which the emergent Telecom Regulatory Authority played a central role.
        A key outcome of the 1993 Telecom Act was the emergence of four new legal entities:
the Tanzania Telecommunications Company Limited (TTCL), the Tanzania Postal Corporation,
the Tanzania Communications Commission (TCC), and the Tanzania Postal Bank. Overseen by
the then Managing Director of Tanzania Post and Telecommunications Company Mr Adolar
Mapunda, the change took effect on January 1, 1994 and saw TCC charged with regulation of the
postal and telecommunications industries.
The TCC was the first telecom regulatory authority in Africa.14
        The President and the Minister of Communications and Transport are credited with
having had a clear vision of the role of an independent regulator, especially in guiding the sector
reform process and implementing national sector policy. They engaged in extensive
consultations and evaluations before the President appointed Prof. Awadh Mawenya as the
Chairman of the Commission—a man known as a distinguished professional with integrity. The
Communications Minister similarly appointed a strong team of six commissioners for a three-
year term. The work of the TCC was carried out by a secretariat whose Director General, Mr.
Emmanuel N. Olekambainei, was also appointed by the President. It fell to the TCC to guide
and regulate the new and increasingly complex arena of voice and data communications. In May
1994, they published conditions, guidelines, procedures and fees for licensing service providers
and frequency allocation, and set licensing requirements for importers and distributors of
telecom equipment as well as local contractors. While TTCL was granted a ten-year period of
exclusivity for national and international voice communications, TCC encouraged limited
(regulated) competition in data communications services, paging, courier services and mobile
telephony.
14
  While such an authority had already been muted in Nigeria, it was only in 1995 that NITEL
came into being. It would take even longer before telecomm regulatory authorities in other
African countries came into being.


                                               9
         The TCC decided at an early stage to let retail suppliers operate without licenses, as long
as their wholesale suppliers had TCC licenses. The early Internet cafés therefore did not require
any license under that arrangement. During 1994-95, the TCC with the assistance of the World
Bank, provided intensive training for its Commissioners and secretariat staff on telecom and
utilities policy and regulatory skills.



                               “You Are Now Entering a Corruption Free Zone”

            This sign was displayed at the entrance to the TCC offices to impress upon all the
            importance of no corruption in regulation of the sector, especially since corruption
            was beginning to threaten public service. The Commission put out strict rules for its
            Commissioners and staff, while remunerating them well and transparently. Says Mr.
            Olekambainei, the first Regulator, “The TCC insisted on following the law and
            enforcing regulations strictly with transparency, consistency, accountability and
            without fear or favor so as to lay the right foundation and set the proper precedent.”
            Of course the real independence of a Regulator remains debatable, since the
            President hires and fires the Director General, potentially overriding the influence of
            the Commissioners to whom the DG technically reports.



In 1993, the first mobile (analog) operating concession was granted to Mobitel (jointly owned by
TPTC (later TTCL) and Millicom International.) The company started operations in 1994.
Thereafter, they engaged in a long fight with the Regulator over licensing and other issues. They
claimed that they did not need a TCC license and objected to TCC conditions on geographic
zones, migration to digital technology and the required 35% local share holding. Eventually their
concession was converted into a formal license in 1995. Also in that year a second mobile
license was awarded to Tritel through an open tender process during which TCC, supported by
the Minister of Communications, had to deal with interference from interest groups including
politicians. This competition led to a decline of about 60% in mobile charges.15
        As the first steps towards an open competitive market for telecom were taking place, so
too was an open debate on telecom policy. Towards the end of 1995 (and at the time when the
national general elections brought in a new Government) the Regulator hosted a three-day forum
of public and private sector players on the liberalization of the sector. This marked the beginning
of a process, which in 1997 saw the publication of a National Telecommunications Policy that
spelled out principles of continued liberalization of the sector and the government’s progressive
divestment of its stake in the incumbent telco. The policy also spelled out the need for
development of rural telecom services and the creation of a Rural Telecom Development Fund.
This policy recommendation has yet to be implemented, but at least the issue of universal access
and service remains on the agenda.
        Despite having to report directly to the Communications Minister and the Minister having
the legal right to intervene, the Regulator in Tanzania jealously guarded his statutory

15
   Three applicants were awarded data communications licenses—Datel (jointly owned by TTCL and France Telecom), Wilken
AFSAT and SITA (airline industry)—and there was a promise of five-year exclusivity for data transmission. These licenses allowed
international data communications and, independent of TTCL, the licensees established satellite links to the outside world. Although
there was competition between the providers, charges for dial-up access remained around $70 a month before tax, “exorbitant” in
the view of some. This was partly due to each of the operators using expensive outside gateways (Dubai, Paris and London) and
their refusal to implement a joint “international internet hub” in the country as recommended by some in the sector including the
TCC.




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independence. In the end, however, a dispute between TCC and Mobitel/Millicom pushed too
many buttons. In May 1997—on the same day that he visited Mobitel’s offices in Arusha to take
action in an alleged abuse of the telecomm regulations—the Regulator was suspended and later
relieved of his duties, in his own words, ―for being too independent, strong and pigheaded.‖ This
led to a regulatory hiatus that was to last for over a year. During the hiatus, Mobitel sued the
Acting Regulator on the question of whether its license was a national one or restricted to
particular geographic zones. It is alleged that there was political interference in the process, and
there was an illegal out-of-court settlement in the Attorney General’s office in favor of a national
license for Mobitel effectively legalizing Mobitel’s Mwanza and Arusha operations. TCC
declined to be signatory to that agreement, but Mobitel continued operations in the disputed
territories. .
         In 1998 the TCC started negotiating with existing ISPs. They sought to formally license
ISPs using their own international access rather than the Telco’s links. The ability of consumers
to choose wholesale Internet providers with independent international links would presumably
force the incumbent Telco to become competitive. Issues included initial fees, annual fees,
royalties on turnover, and whether arrangements should be retrospective or not. Clearly these
issues had the potential for a major impact on the pace of diffusion of the Internet in the country.
         The TCC wanted to open and expand the market for Internet access and services as well
as set acceptable fees. TCC’s opening position appeared to focus on generating fees to support
their annual budget: a $50,000 initial license fee, $20,000 annual renewal and 5% of revenue
from Internet customers to be applied retroactively. The existing ISPs did not want retrospective
charges and wanted minimal rates since they were getting no additional benefits. Additionally
the ISPs did not collaborate well with inordinate suspicion among the various players. The final
agreed upon fee schedule was $2,000 initial licensing fee, $10,000 annually and no percentage of
turnover.
         Soon after publication of the new licensing arrangements in April 1999, the numbers of
IAPs and ISPs started to grow and gradually prices started to decline. While the openness of this
negotiation process was regarded as very valuable, the uncertainty it generated is claimed to have
slowed down the growth in the ISP industry by upwards of a year16. The opening up of the
telecom industry in Tanzania provided real encouragement for commercial interests both local
and abroad to stake their claims in a potentially very lucrative arena. Inevitably this led to
disputes and conflicts, especially given that the TCC had to build human capacity in increasingly
complex territory and the Telecommunications Act was not explicit in some of its clauses. For
instance, as mentioned above, Mobitel was in a dispute with the regulator over the conversion of
its operating concession into a formal license, its unlicensed roll-out outside the coastal zone, and
the conditions for licensing and release of frequencies by Mobitel for use by ZanTel in Zanzibar.
There were also several disputes between Mobitel, Tritel and TTCL involving interconnection
rates and procedures.
         Sometimes the disputes required high-level political intervention. One case over the 35%
local shareholding requirement required the President to uphold the regulator’s position.
Sometimes the Regulator had to roll up his sleeves and intervene directly. An oil company was
found to be using its ―private point to point‖ communications license to communicate with its
international business contacts via South Africa. The regulator disconnected its VSAT. Then
there was a dispute with Mobitel involving its illegal roll-out and provision of service in Mwanza
and Arusha without TCC license. The regulator traveled to Arusha to give them formal notice to
padlock their doors!
16
     Personal communication: Bill Sangiwa


                                                11
        In summary, the period 1994-1998 in Tanzania was one of dramatic change in
telecommunications. There were important steps towards competition in the telecom arena, with
mobile telephony opening up to two competitors and data communications to three. The first
ISP’s launched and Internet cafés appeared. These were vital steps in the diffusion of the Internet
in Tanzania, but the period was not without significant teething problems. The independence of
the Regulator was challenged on several occasions and political interference eventually led to his
dismissal. January 1997 to mid-1998 was a period of regulatory confusion with no
Commissioners and hence legally no Regulator. The foundation, vision and regulatory culture
put in place by the original Commissioners and secretariat staff under the Chairmanship of Prof.
Mawenya were all ―shaken to the roots.‖ It is claimed that this was made worse because none of
those Commissioners who had exposure and experience were reappointed into the new team. At
the same time the restructuring of the secretariat that followed removed some of the experienced
staff and the ones who remained felt intimidated and threatened.
        While the main action played out in the mobile arena, the hiatus affected data
communications as well, and likely slowed the rollout of the Internet in the country. The
publication of a National Telecommunications Policy and eventual resolution of the regulatory
hiatus, however, heralded the next phase in Internet diffusion.

Competitive Phase (1999-)
        By the end of 1998 the Telecom Restructuring Programme was essentially complete and
95% of the national fixed line grid was digital. Regulations that required telecom operators to
apply for licenses for specific zones had been dropped in favor of national licenses. Formal
licensing procedures for ISPs were in place, allowing ISPs to apply to become data access
providers and obtain their own international gateways.17 Telecom costs and prices were coming
down. The TCC had new commissioners and a new Director General.
        With the notable exception of fixed line telephony, this was the start of an essentially
open and competitive telecom environment in Tanzania, and the result was significant growth in
the sector. By September 2002, mobile subscribers had grown from 38,000 in 1998 to 360,000,
more than double those with fixed line. The number of ISPs increased from four to six in 1998
and Internet cafés were starting to proliferate. By 2000, there were six data service providers
supporting sixteen ISPs sending and receiving data via satellite. By 2002, there were fourteen
data access providers, twenty-two ISPs, and several hundred Internet cafés. Dialup Internet
accounts had grown from a few hundred to more than 30,000, total Internet users were estimated
to have grown from 3,000 to 300,000 and Internet host names were nearly doubling each year.



The Privatization Process
         In virtually all African countries, one of the most contentious elements of ICT reform
continues to be shifting the balance between the public and private sectors. Central to this aspect
in Tanzania is the Parastatal Sector Reform Commission which during the 1990’s was gearing up
for privatization transactions, including the government’s partial divestment from TTCL. In
preparation for privatization, TTCL was restructured and obtained separate licenses for different
services. It entered the ISP and Internet café businesses via a wholly owned subsidiary, Simunet.
It also transferred its 25% stake in Mobitel to the government, freeing itself to launch into the
17
  ISPs are not allowed to operate their own international gateways. Unless they apply to become access
providers (which to date none have) they must connect through the data operators’ gateways.


                                                 12
mobile arena via its CelTel operation. There were severe criticisms that TTCL unfairly favored
CelTel in providing network access and capacity. TTCL was also accused of reneging on its
interconnection agreements with Mobitel, unilaterally offering to settle for $2 million while
allegedly owing $20 million.
        TTCL was partially privatized in 2001 with the sale of 35% of its shares to an
MSI/Detecon consortium for $120 million.18 The strategic investor paid one tranche of
$60 million and assumed management control. Government provided this first tranche to TTCL
for reinvestment in the company to enable it to proceed with the rollout of rural connections. The
subsequent establishing of Celtel, however, makes observers suspect diversion of those funds.
The consortium has placed a moratorium on releasing the second tranche of $60 million because
of squabbling over the extent of TTCL debtors’ book prior to the transaction and disagreement
                                     MSI and TTCL: The Facts
             (Extracts from paid newspaper advert by MSI/Detecon signed by the Chairman)

  MSI/Detecon paid the first tranche of $60 million [of the total payment of $120 million for 35% of
  TTCL] in February 2001. The difficulties since then, for both MSI and the Tanzanian Government,
  have revolved around establishing a set of fair and reasonable accounts to measure the financial
  performance of TTCL in the Year 2000. When the new management at TTCL began to review the
  accounting systems and data, a number of serious issues were revealed. In particular a very large
  proportion of the company's recorded revenue in the year 2000 and before was never collected, and the
  age of much of the debt was such that it was never likely to be. The total uncollected debt due to
  non-Government sources amounted . . . 115 billion shillings [$115 mn] at the end of 2000.

  MSI has not conspired with the TTCL Auditors
  MSI has not sought to cheat the Government
  MSI has not sought to obtain loans from TTCL at any time
  MSI and its backers have the funds and will make whatever second tranche payment is due when
  the accounting issues are resolved.
  The TTCL Executive Management has followed the rules of good governance and transparency
  throughout.




on interconnection monies due to Mobitel19. This transaction remains mired in controversy and
both parties have placed full-page ads in local newspapers presenting their positions (see box).
There are demands for the removal of the Minister of Communications and Transport over the
issues that are emerging. Clearly if the deal breaks down, apart from the adverse impact on the
telecom sector itself, it will send a bad signal to the international community as to the future of
privatization of strategic companies in Tanzania.



18 MSI Cellular has now been licensed by 14 Governments in Africa, representing more than
one-third of the population of the African continent, to operate GSM cellular networks.
Investors include: The CDC Group, IFC, WorldTel, AIG Infrastructure Fund, Citigroup, GE
Capital, Mitsui, Bessemer Venture Partners, and Palio. DETECON is a German based consulting
company operating on a worldwide basis in the fields of telecommunications and information
management. It’s shareholders are: Deutsche Telekom AG, Deutsche Bank AG, Dresdner Bank
AG and Bau- und Handelsbank, which holds 14.6%. See http://www.psrctz.com/
19
   According to MSI, the issue of fraud and bad debts was much larger than previously
recognised and there remains disagreement over the treatment of a $115m debt.


                                                     13
        As part of TTCL’s agreement to maintain its exclusivity on basic wireline and
international connectivity through February 2004, it undertook to increase fixed lines nationally
from 180,000 to 810,000, reaching all 9000 villages in the country by the end of the period. As
hinted above, TTCL has not made any serious attempts to meet its rollout commitments. In fact
through defaulting on those targets it is currently subject to a $6.7 million fine.

Mobile Telephony and the Interconnection Regime
        At the end of 1998 the TCC invited bids for a third mobile operator. Vodacom won the
bid and went into operation in August 2000. The mobile market was transformed and initially
there was a significant drop in prices. Vodacom’s entry into the mobile market also spurred
Mobitel to bring forward by two years its plans to replace its analogue ETACS network with a
GSM system, and to significantly increase its rollout of national mobile coverage.
        As competition grew, so did stress in the industry. Some mobile operators are said to
have bypassed the Regulator and directly approached politicians with complaints on regulatory
issues, confounding efforts by the Regulator to avoid political interference and act professionally
and transparently. By contrast, from industry’s side, there were growing complaints about the
Regulator, with criticisms such as lack of technical know-how, inconsistent application of the
regulations, changing rules, uneven application of the rules, and interference by government
officials. Perhaps as a result of this, the ongoing disputes with Mobitel, and threats of court
action, the Ministry of Communications amended the Telecom Act in 2001 to strengthen
enforcement and empower TCC to reallocate frequencies and impose massive fines on
defaulters.
        Finalizing a set of acceptable interconnection rules was also taking a long time,
presumably delaying further possible reductions in prices for both voice and data. So, the TCC’s
―Interconnection Determination‖ issued in September 2002 was widely acclaimed. It was
expected to resolve some of the nagging issues on competition, fair tariffs and interconnection
rates and disputes, generally leveling the playing field and hopefully reducing prices. It was
hoped that this determination would counteract many of the angry accusations against the
Regulator. Early in October, however, the Regulator suddenly announced a delay in enforcing
the Interconnection Determination until 10th January 2003 citing ―technical reasons‖. This
opaque decision resulted in an outcry and the dust has yet to settle.


Monday, March 3, 2003


                                 TTCL: Dar Now Denies
                                MSI-Detecon Work Permits
By FAUSTINE RWAMBALI
THE EASTAFRICAN


THE TANZANIA government has technically taken over control of the controversy-ridden privatised
Tanzania Telecommunications Company Ltd (TTCL) by refusing to renew work permits for the expatriate
staff of MSI-Detecon.

This move, which effectively replaces the five expatriates with Tanzanians, has come in the wake of an
on-going dispute between the government and MSI-Detecon over delayed payment by the latter of $60
million for the purchase of 35 per cent shares in TTCL.



                                                  14
Four out of the five expatriate staff have already relinquished their offices and the fifth is likely to leave in
May when his term of office expires. The TTCL chief executive officer, who left four months ago, has also
been replaced by a Tanzanian.

Control of TTCL and payment of the delayed $60 million have been at the centre of parliamentary and
public debate ever since MSI-Detecon was given total control of the telephone company even before
paying the total sum of $120 million for its 35 per cent shares.

At the heart of the controversy over the TTCL privatisation is why the government agreed to a "secret"
agreement with MSI-Detecon to cede total control of TTCL when the MSI had only paid for half of the 35
per cent shares it was buying.

The other controversy is that the payment of the other half of the 35 per cent was pegged on the state of
TTCL's accounts for the year 2000. The accounts have been audited and re-audited by different firms and
none of them have been agreed upon by either side. PricewaterhouseCoopers was among the
companies that audited the TTCL accounts. The outcome of the audit will determine the final sum paid by
MSI-Detecon to Tanzania.

In a recent move, the Tanzania government agreed to appoint the International Chartered Accountants
Association (ICAA) of Britain to appoint another audit firm, that is neither Tanzanian, Dutch nor American
to avoid conflict of interest, to audit the accounts.

President Benjamin Mkapa appointed the government's chief secretary Marten Lumbanga negotiator to
talks with MSI-Detecon. Mr Lumbanga said the "new accounts expert" would be required to verify the
financial performance of TTCL for year the 2000.

At the centre of controversy were the accounts prepared by Tanzanian accountant, George Fumbuka,
which showed that TTCL had made a profit in 2000. However, Mr Fumbuka's report was rejected by MSI-
Detecon, which sought the formation of a joint task force to produce a new audit report.

Reacting to these recent developments, Mr Fumbuka, said: "We applied all terms of reference in
accounting and the company showed profit in its 2000 accounts. The same accounts were approved by
an international accounting firm and the government concurred with them. According to the accounts, the
investor is supposed to pay about $58 million (Tsh58 billion) being the second tranche. I do not know the
motive behind this new development," he added.

The chairman of the Parliamentary Economic and Finance Committee, Njelu Kassaka, told The
EastAfrican last week that he was not aware how the decision to re-audit the accounts was reached
because "this was concluded by the formation of a joint task force under which an audit firm was
appointed."

"What I know is that the year 2000 TTCL accounts showed a good profit. So the decision for a new expert
was uncalled for," he said.

TTCL has been riddled with controversy ever since it was privatised in February 2000. In 2001, the
investor "secretly" obtained a court injunction in a London court to restrain the Tanzania government from
taking any further steps on the February 2001 agreement reached between the two shareholders of
TTCL. The London court injunction was on May 28, 2002, served in Dar es Salaam to the Treasury, the
Parastatal Sector Reform Commission (PSRC), the Attorney General and a law firm in Dar es Salaam.

However, in September last year MSI group marketing director Tito Alai said: "The investor was not in
court over the payment of the second tranche, but aimed at protecting the position of the shareholders."




                                                      15
The first tranche was $60 million and the second tranche was to be an equal sum adding up to $120
million for the 35 per cent shares in TTCL. Even the first tranche was given back to MSI-Detecon 2001 as
Tanzania's contribution to the development of TTCL.

"We are not in court over the payment of the second tranche, which could be anything from zero to $60
million," Mr Alai said.

He added: "We have placed an injunction upon the Tanzania government to freeze the shareholding
position to protect the position of our shareholders until negotiations over the second tranche are
completed."

Mr Alai insisted: "We took this step because of our concern that some of the individuals involved on the
government side were not acting in good faith and were preparing to put MSI into an unreasonable
position which would inevitably lead to a breakdown in the process and would open the possibility of a
seizure of the MSI shares."



Institutional Developments in the Public and Private Sectors
         During the competitive phase key actors typically try to create alliances and institutions
to advance their interests and projects, but they also add new policy concerns and prompt
ongoing adjustments. We see this playing out in Tanzania in different ways. For instance the
changes that took place in the Regulatory Authority in 1998 were not the last. When a new
Minister for Communications and Transport (the Late Hon Ernest Nyanda) was appointed at the
end of 1999, he removed the incumbent TCC Commissioners and replaced them with new ones
while the President appointed a new Chairman [We need to know why this happened]. At the
end of 2000 a new Minister (Hon. Mark Mwandosya) was appointed. He retained the TCC team
and decided to actively address the problems facing the sector. In August 2002, the Minister of
Communications and Transport changed the composition of the TCC Commission replacing
some commissioners [was this a new minister?].
         Within the industry, a National Telecom Forum was launched with representation from
many of the groups of actors listed in the Introduction. [Who initiated this? Who participated?
When exactly did it happen? Has this forum been at all active?]. Also the Communications
Operators Association of Tanzania (COAT) came into being, inviting membership from private
sector telecom operators such as the mobile phone companies, data access providers, etc. and
encouraging industry to collaborate in its dealings with government and the Regulator [Who
initiated COAT?]. COAT subsequently spawned the Mobile Operators Association of Tanzania
(MOAT), but both bodies were moribund by 2002, apparently as a consequence of infighting in
the industry. Whatever the reasons, industry appears to have lost an important opportunity to
speak with one voice on critical issues affecting telecom in the country.
         On a more positive note, the participation of civil society in telecom matters received a
major boost in 2000 when an electronic forum ―eThinkTank‖ formed (see box). eThinkTank
continues to play an important role in lobbying government and fostering public participation in
ICT and telecom in particular.




                                                   16
Internet Diffusion
         Central to this case is the Internet, but we have to look to telecomm issues beyond the
Internet itself to appreciate the factors influencing its diffusion. For instance, the various disputes
in the fixed and mobile arena were undoubtedly having their effect. Also TTCL was very slow to
meet its legal obligations and the consequent limited rollout of fixed lines was seriously delaying
access to the Internet in rural areas. Nevertheless, several measures suggest that Internet usage
was taking off during the period. The rapid increase in ISPs from six in 1998 to sixteen in 2000
has already been noted. Published statistics note a leap in dialup customers from 4,500 in 2000 to
20,000 in 2001, and Internet users from 115,000 to 300,000 over the same period.20 Network
Wizard statistics indicate that 2000 was the year of take-off for Tanzania-based Internet domain
names (i.e., .tz hosts) as well. From a base of 218 hosts at the beginning of 2000, exponential
growth kicked in and continued up to the latest figure of 1684 hosts in mid-2002.21




20
     Mike Jensen reference to be confirmed
21
     See www.nw.com.


                                                 17
                          .tz Internet hosts

1800
1600
1400
1200
1000
800
600
400
200
  0
  Jan-97        Jan-98    Jan-99    Jan-00     Jan-01          Jan-02




                         Estimated Internet Users

350000
300000
250000

200000
150000
100000
 50000

           0
               1996      1997      1998        1999        2000           2001




                      Internet Dialup Subscriptions

35000
30000
25000
20000
15000
10000
 5000
       0
               1998        1999        2000             2001            2002




                                                          18
        While cybercafé stats are not recorded anywhere, observers report rapid growth in their
numbers over the same period. Certainly competition has rapidly driven down the charge for
access to a very low 50¢ an hour, a level analysts regard as unsustainable and likely to lead to a
shake-out in that industry. There are conflicting estimates for Tanzania’s international
bandwidth, but it seems that outward bandwidth leapt from about 4 mbps in 2001 to 12-15 mbps
in 2002. The bandwidth of the domestic backbone, if we add up the capacity of all the backbone
links in a country is over 40 mbps. This is thanks to Simunet’s rapid rollout of 2 mbps links to all
twenty-two regional centers in the country over the 2001/2002 period.

CNI #3: Voice over Internet Protocol (VoIP)
Organizations with Internet access are illegally providing VoIP services to consumers

         Through the popularity of Internet cafés, an Internet culture is rapidly developing. Some
say this is due in part to widespread availability of VoIP in the cafés despite the exclusivity on
basic telephony and international voice traffic granted to TTCL. VoIP brings down the cost of
international voice calls by up to a factor of ten.22 The Regulator is well aware of the situation
and has at various times attempted to contain cafés providing VoIP. In early 2001, for example,
he formed a high level task force to examine the options. However, the task force has yet to
report back to the Regulator. This is another issue directly influencing the future of the Internet
in the country. By allowing continuing contraventions of the Telecom Act, distortions in the
marketplace, and disregard for the law, the Regulator is sending the wrong signal to ISPs and
potential investors in the sector.
         The Telecom Act of 1997 accorded TTCL exclusivity on so-called basic telephony
services and international traffic. This exclusivity was reinforced for a four-year period
following the partial privatization of TTCL in February 2000. Cybercafés and other clients of
ISPs, are, however, sometimes blatantly, providing VoIP services well below fixed line or
mobile rates. They often use the TTCL national and international circuits, thereby depriving
TTCL of revenue and contravening its legal rights. TTCL has objected to VoIP and insisted that
the practice be stopped. In response, the Regulator claims to survey cybercafés regularly and has
threatened action against delinquent cybercafés. The only response he has made to those in
violation is to remove their equipment. The eThinkTank forum23 has enabled widespread public
debate on this topic, and there is strong civil society support for consumer access to VoIP.
Regardless of the law, end-users (including members of the Diaspora) continue to make use of
VoIP.
         At issue is whether the regulations make sense in light of convergence of voice and data
communications and the inability of the Regulator to enforce the law. The Regulator
commissioned a Task Force to look into the problem and report back with recommendations by
the end of 2001. The secretary of the Task Force claims that he has not been able to bring anyone
to the table for the planned meetings and therefore has not been able to prepare a report.


22
   Ironically rumour has it that TTCL is using VoIP to switch international calls to local
customers, giving it an unfair advantage over its mobile competitors.
23
   See box on page xx


                                                19
        In the meantime Simunet’s recent roll out of Internet connectivity to all regions will
simply extend VoIP opportunities widely throughout the country over corporate Virtual Private
Networks (VPNs), making policy enforcement even more difficult. Several questions remain: Is
the Task Force indulging in ―benign neglect,‖ waiting for the TTCL contracts to run out, thereby
avoiding legal action, or making the Regulator enforce a ban on VoIP (which would be counter
to international trends). Eventually should VoIP be allowed under some or all circumstances?
Should the Regulator turn a blind eye until TTCL’s period of exclusivity lapses?

CNI #4
Debate over whether to establish a National Internet Exchange Point (IXP)

        Yet another critical issue that is subject to current debate and negotiation in Tanzania is
that of a national Internet Exchange Point or IXP. At present, the different IAPs and ISPs do not
connect locally and have different international landing points, all via satellite into the USA, UK,
France and Norway. As Internet usage and the numbers of IAPs and ISPs has increased, so has
Internet traffic between them and therefore the use of scarce and expensive international
bandwidth to exchange local packets. It is now common practice for IAPs and ISPs within a
country to set up a local exchange point for the express purpose of identifying data packets
initiated at one point in the country and destined for another. Other countries’ experience is that
an IXP improves response times for exclusively local traffic (sometimes dramatically), increases
Internet usage and significantly reduces unit costs of data transmission.24
        An IXP results in clear winners: local ISPs reduce costs and improve service; Internet
cafés, local businesses, government and private users get better service and possibly also reduced
rates; and the country saves foreign exchange. But there are also losers, specifically local
providers of international access who lose revenue and might suffer from excess bandwidth
capacity for a while. This is especially relevant to a monopoly incumbent who stands to lose the
most. There are also other issues: ISPs are well-known for being highly competitive and wary of
collaborations that might require them to reveal numbers of customers or extent of traffic, and
major ISPs and IAPs may feel much less need to collaborate than their smaller rivals . Regulators
may construe an IXP as another Internet business and call for license applications and fees,.
        In Tanzania there has been a war of words around an IXP for a couple of years.
Suspicions and lack of cooperation among ISPs, and between ISPs and IAPs and Simunet, have
blocked final resolution of the issue. Recently a fledgling ISP Association came into being,
comprising nine large ISPs but excluding Simunet. It has agreed to design and implement an
IXP for the exclusive use of its members and has identified premises to house the facility.
Donors have offered to fund any needed construction. The ISP Association has submitted a
formal application to the Regulator, who has had a cautiously positive reaction. The association
awaits a formal response.




24
  The latter is particularly relevant In Africa since the international accounting procedures for
Internet traffic leave African countries paying for both outbound and inbound traffic over the
international backbone.


                                                20
Concluding Comments [More to come]

 Summary
        The period since 1999 saw more and more individuals, groups and institutions deciding
that the Internet was something they wanted to use, own, control or block. Once they engaged,
they mobilized like-minded people to pursue their common goals and strategies through overt
and covert lobbying and negotiations. As other reforms in telco and in society were adopted, one
result was the opening up of all telecom markets in Tanzania (other than landline voice
communications) to vigorous competition under the eye of the Regulator. The country is clearly
enjoying a vibrant and competitive telecom marketplace.
        It is striking that, despite many accusations and counter-accusations, especially in the
mobile arena, court actions and threats of court action, ongoing criticisms of the competence and
evenhandedness of the Regulator, delays in provision of infrastructure, still the telecom industry
advanced rapidly and by many measures Internet activity grew dramatically. It is easy to lose
sight of the fact, however, that most of the action was in Dar es Salaam and more recently in the
major regional centers. If the notion of Internet diffusion is taken to include ―dispersion‖ then
Tanzania has a long way to go. While Internet cafés are starting to appear in smaller towns, there
is almost no evidence of Internet usage in schools or medical facilities. Affordability is one
factor, availability of infrastructure another. So Tanzania has a long way to go if the Internet is
to be more widely accessible and benefit the population as a whole. The planned opening up of
the fixed line marketplace by 2005 is an important step in bringing down basic telecom costs, a
ruling on the legality of VoIP is awaited as is the formation of a local Internet Exchange Point.
Importantly the announced Interconnection Determination must be implemented.




                                               21

				
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