31 August 2012

Tanzania: NICTBB Crashes National Backbone Wholesale Prices for the Second Time in Five Months

London — Tanzania's plans for a national fibre backbone and fibre connections to all of its neighbours is finally being realized. The Government-run NICTBB has completed Phase 2 of its roll-out plans and is connected to all of its neighbours.

The second phase was the southern ring which connects Mtware, where oil has been discovered. The third phase is building the western side of the western ring from Tunduma to Biharamulo. The Phase 2 routes are DSM-Lindi - Mtwara- Songea - Makambako - Mbeya - Tunduma - Sumbawanga - Kigoma - Manyovu - Biharamulo -Bukoba - Mtukula and Nzega - Tabora. All regional centers are now connected to the national backbone.

In terms of connecting to its neighbours, the network now reaches border points for Uganda (Mutukula), Kenya (Sirari, Namanga and Horohoro), Rwanda (Rusumo), Burundi (Kabanga and Manyovu), Zambia (Tunduma), and Malawi (Kasumulo). A further connection point to Mozambique will soon be added.

This will give Tanzania better connectivity with its neighbours than the next door Kenya, which has yet to establish these vital connections, particularly with its northern neighbours. (Although plans are afoot for South Sudan - see Internet news below) Furthermore, it will be a vital piece in creating sub-regional fibre rings. For example, if several of Kenya's international fibre routes were cut (as they were recently) they would be able to send traffic via Tanzania. But it means cross-border network operators need to be able to reach swop agreements on this kind of redundant capacity.

Peter Nogota, Head of NICTBB said:"Our network enjoys a reliability rating of 99.8% compared to the region average of sub-70%. This will enable us to develop fresh revenue streams. We have also reviewed down the IRU tariff structure by 33% for 10,15 and 20 Years to stimulate the uptake of the capacity services to expand operators' business horizons at less investment cost, hence make affordable costs for end users across the country and beyond the national boundaries and contribute significantly towards accelerating socio-economic development in Tanzania and to the neighboring countries".

NICTBB has focused this second round of price cuts on the more long-term fibre commitments, clearly in an attempt to forestall the kind of price erosion that is happening to international fibre prices on both the east and west coasts of the continent. For example, we heard of a customer being offered US$70 per mbps on high volumes in West Africa.

The price reductions cover 10, 15 and 20 years but in today's volatile price climate, only the 10 years is worth looking at. All prices are in USD and are for IRUs:

Capacity   Old Tariff    New Tariff

STM1       540,000      360,000

STM4      1,296,000    864.000

STM16    3,110,400   2,073,600

STM64    7,464,960   4,976,640

There are two additional charges: 5% for all capacity drops and 5% for Operations and Maintenance. In other words prices are 10%+ on what is shown above. The cheaper STM 1 will allow ISPs to get cheaper bandwidth (a shade over US$193 per mbps on the headline figures) but it will lock them in and prices may yet go lower.

That said, NICTBB will need to constantly review these prices if it is to attract cross-border business from those who are already using existing routes via Kenya or South Africa. So the overall impact should be to make the whole region much more competitive for cross-border rates.

To follow the exchanges about this news, you need to be on Twitter. Follow us on @BalancingActAfr

A bumper crop of video clips this week on Balancing Act's You Tube channel:

Doron Ben Sira, CEO, SkyVision on its acquisition of Afinis

Envir Fraser, Convergence Partners on investment opportunities in ICT

Tayo Oviosu, CEO, Paga on the mobile money market in Nigeria

Nigerian ICT blogger Loy Okezi
e on Nigeria's online successes

Victor Dibia, CEO, Denvycom.com
 on his games portfolio and plans to monetize

Oluseye Soyode-Johnson, consultant to Maliyo Games
 on the business model

A special for Balancing Act readers:

Kristine Pearson shows how the Lifeplayer, an MP3 player for rural education, works

Mobile learning Steve Vosloo on how m-learning can support teaching

Steve Vosloo on edutainment and interactivity in mobile learning, the Yoza mobile story project and other examples of m-learning in Africa

South African Niall Murphy, Marmalade on multi-platform software distribution for apps based on the ARM chipset

Copyright © 2012 Balancing Act. All rights reserved. Distributed by AllAfrica Global Media (allAfrica.com). To contact the copyright holder directly for corrections — or for permission to republish or make other authorized use of this material, click here.

AllAfrica publishes around 2,000 reports a day from more than 130 news organizations and over 200 other institutions and individuals, representing a diversity of positions on every topic. We publish news and views ranging from vigorous opponents of governments to government publications and spokespersons. Publishers named above each report are responsible for their own content, which AllAfrica does not have the legal right to edit or correct.

Articles and commentaries that identify allAfrica.com as the publisher are produced or commissioned by AllAfrica. To address comments or complaints, please Contact us.