Tanzania’s NICTBB crashes national backbone wholesale prices for the second time in five months

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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 

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