Tanzania’s “digital economy” needs 4G

March 24, 2015

The Tanzanian government’s big idea is to pull the country into the digital age with its “digital economy”. To do this it needs to lay the groundwork by making the internet accessible to all its citizens no matter where they live be it in Shinyanga, Lindi, Handeni or Gongo La Mboto and in order for this to happen, it needs to open more spectra for mobile data use, specifically for 4G. This will be good news for mobile players mainly Tigo, Vodacom, Zantel and Airtel, who will benefit from higher average revenue per user. Already offering 4G, Smile Communications is ahead of the game and is thus top dogs in town.The digital economy is defined as an economy based on digital technology and is also known as the Internet Economy. While new for Tanzania, it has long been known in other countries like Finland, Australia and generally in the West but what is different now is the mode of internet access.The old-style digital economy that was common in Britain, France, US and Canada required computers to access the internet but today more people in regions like Latin America, Asia and Africa are using other, more mobile devices such as smartphones and tablets.This means wireless broadband and 4G are crucial if a digital economy is to become a reality in a country like Tanzania.More spectra needed to support long term data traffic growth. The cost of making calls in the country according to available statistics has dropped by 57 percent, Internet services are now 75 percent cheaper, Internet users have grown from 3.4 million in seven years ago to 10.2 million as of January 2015 while mobile customers have increased from 2.96 million in ten years ago to 29 million today.The growing importance of wireless broadband in the digital economy and the faster speed offered by 4G is 100 times faster than 3G which means that if President Jakaya Kikwete’s government truly wants a digital economy, it must open up spectra to service providers, making an auction vital.

Initially, there were plans of putting up just the 1800MHz and 900MHz for bidding for 4G but due to growing demand there’s need for a new idea that could mean having 2.6GHz spectrum and auction it to local and international bidders. This will offer bandwidth of about 140MHz, far more than the 25MHz for 1800MHz and 20MHz for 900MHz, making it more practical for 4G, which requires more bandwidth.Although your blogger see no reason, the United Republic of Tanzania government cannot shouldn’t reclaim this spectrum, as it will take time. And I want to laud the government of not insisting on a single auction for everything but the industry do expect an auction for 4G but I see it taking place after the upcoming generation elections slated for October this year. Whole industry to benefit from 4G. The industry as a whole will benefit from getting more spectra. Despite the fact that internet access via mobile is now primarily for social networking, it still led to a surge of 25-40% in data revenue growth over a period of two years according to studies conducted elsewhere. This suggests that if the Tanzanians digital economy can, as planned, stimulate greater online trade transactions, data revenue growth could continue to step up strongly for many years to come. In addition, it will be Average Revenue Per User accretive, since mobile operators like Zantel, Airtel, Vodacom, Tigo as well as Smiles Communication can charge more for 4G but me thinks, it is far too early in the game to even attempt to quantify it.

Contador Harrison