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2007 MozambiqueTelecommunications

Sector Performance Reviewaa ssuuppppllyy ssiiddee aannaallyyssiiss ooff ppoolliiccyy oouuttccoommeess

AMÉRICO MUCHANGA & FRANCISCO MABILA

This Policy Research Paper Series is madepossible through the support of the International Development Research Centre (IDRC)

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mozambique country profile alt 1.qxp 2008/04/27 03:05 PM

2007 Mozambique

Telecommunications Sector Performance Review

a supply side analysis of policy outcomes

Américo Muchanga & Francisco Mabila

10. mozambique.qxp 2008/04/27 02:53 PM Page 1

MMoozzaammbbiiqquuee

2 2007 Telecommunications Sector Performance Review

SERIES EDITOR:

Alison Gillwald

Other country studies in this series are available on

www.researchICTafrica.com.

Proof reading: Beki Nkala

This research is made possible by the support of the Independent Development Research

Centre, (IDRC), Ottawa, Canada.

Senior Programme Manager:

Heloise Emdon, [email protected]

South Africa

For further information contact the RIA! coordinator Beki Nkala on

[email protected] or go to www.researchICTafrica.net

! Benin: Augustin Chabossou

! Botswana: Sebusang Sebusang, MP Makepe and TD Botlhole

! Burkina Faso: Pam Zahonogo

! Cameroon: Olivier Nana Nzèpa and Robertine Tankeu

! Côte d'Ivoire: Arsene Kouadio

! Ethiopia: Lishan Adam

! Ghana: Godfred Frempong

! Kenya: Tim Waema

! Namibia: Christoph Stork and Mariama Deen-Swarray

! Nigeria: Ike Mowete

! Rwanda: Albert Nsengiyumva and Annet B Baingana

! South Africa: Steve Esselaar and Alison Gillwald

! Tanzania: Ray Mfungayma and Haji Semboja

! Uganda: FF Tusubira, Irene Kaggwa-Sewankambo, Apolo

Kyeyune, Ali Ndiwalana, Annrita Ssemboga

! Zambia: Sikaaba Malavu



32007 Telecommunications Sector Performance Review

RESEARCH ICT AFRICA!(www.researchICTafrica.net)

Research ICT Africa! (RIA!) fills a strategic gap gap in the development

of a sustainable information society and network economy by building the ICT policy and regulatory

research capacity needed to inform effective ICT governance in Africa.

The establishment of the Research ICT Africa! network emanates from the growing demand for data and

analysis necessary for appropriate but visionary policy required to catapult the continent into the infor-

mation age. Through network development RIA! has started to build an African knowledge base in sup-

port of ICT policy and regulatory design processes, and to monitoring and review policy and regulatory

developments on the continent.

The research, arising from a public interest agenda, is made available in the public domain and individ-

uals and entities from the public and private sector and civil society are encouraged to use it for teach-

ing, further research or to enable them to participate more effectively in national, regional and global ICT

policy formulation and governance.

RIA! seeks to extend its activities through national, regional, continental and global partnerships. It is

part of the research and training collaborative LIRNE (www.lirne.net) and peers with other networks in

the South, specifically LIRNEasia (www.lirneasia.net) and DIRSI (www.dirsi.net) in Latin America.

The network currently consists of nodal members from 17 African institutions:

Benin – CEFRED, Université d'Abomey Calavi

Botswana – University of Botswana

Burkina Faso – CEDRES, University of Ouagadougou

Cameroon – University of Yaounde II

Côte d'Ivoire – CIRES, l'Université Nationale de Côte d'Ivoire

Ethiopia – University of Addis Ababa

Ghana – STEPRI of CSIR

Kenya – University of Nairobi

Mozambique – Universidade Eduardo Mondlane

Namibia – Namibia Economic and Policy Research Unit

Nigeria – University of Lagos

Rwanda – KIST (Kigali Institute of Science, Technology and Management

Senegal – CRES

South Africa – LINK Centre, University of Witwatersrand

Tanzania – Tanzania Communications Regulatory Authority

Uganda – University of Makerere

Zambia – University of Zambia

East Africa Regional Manager: Dr Lishan Adam

West Africa Regional Manager: Dr Olivier Nana Nzépa




List of Abbreviations and AcronymsADSL Asymmetric Digital Subscriber Line

ANE Administração Nacional de Estradas

ASP Application Service Provider

CD-ROM Compact Disc Read Only Memory

CIUEM Centro de Informática da Universidade Eduardo Mondlane

CMC Community Multimedia Centre

DETECON Deutsche Telepost Consulting

DSSS Direct Sequence Spread Spectrum

EDM Electricidade de Moçambique

FHSS Frequency-Hopping Spread Spectrum

ICT Information and Communication Technology

IDRC International Development Research Centre

INCM Instituto Nacional das Comunicações de Moçambique

IP Internet Protocol

ISDN Integrated Services Digital Network

ISM Industrial Scientific and Medical Band

ISP Internet Service Provider

ITU International Telecommunications Union

Kbps Kilobits per Second

Mbps Megabits per Second

KBps Kilobits per Second

MBps Megabits per Second

mCel Moçambique Celular

MINED Ministério da Educação e Cultura

MT Metical

MTC Ministério dos Transportes e Comunicações

NGO Non-Governmental Organisation

POP Point of Presence

PSTN Public Switched Telephony Network

RM Rádio Moçambique

RTK Rádio Televisão Klint

SADC Southern Africa Development Community

TDM Telecomunicações de Moçambique

TMM Telecomunicações Móveis de Moçambique

UEM Universidade Eduardo Mondlane

UNESCOUnited Nations Education, Science and Culture Organisation

US$ US Dollar

USAID US International Development Agency

UTICT Unidade de Implementação da Política de Informática

VoIP Voice over Internet Protocol

VSAT Very Small Aperture Terminal

Wimax Worldwide Interoperability for Microwave Access

WAN Wide Area Network

WLAN Wireless Local Area Network

WLL Wireless Local Loop




TABLE OF CONTENTS

Executive Summary 7

International Ratings and Indices 9

Market Structure, Policy and Regulatory Frameworks 10

National Backbone Infrastructure 18

National Mobile Operators 28

Preparing for Next Generation Networks 32

Broadcasting 35

Internet Development 38

Conclusion 44

References 45




This report is a profile of the Mozambican situation with regard to infor-

mation and communication technology in general and more specifically

with regard to the telecom sector. The report looks at the current situa-

tion of fixed and mobile telecommunication, as well as other media of

communication such as radio and television, against the regulatory

framework developments in the country, the region and globally.

Telecommunication networks and services are an important factor in the

development of national economies. Not only do they now provide tradi-

tional communications but they have also been integrated into the pro-

duction processes of business, organisations and individuals. For this

reason telecommunication indices such as those developed by Research

ICT Africa! (RIA!) are important to assess the level of economic develop-

ment of countries.

With the introduction of mobile services in Mozambique in November

1997, the country experienced a dramatic growth in access to telecommu-

nication services. However, these services are still limited to urban areas

or along the main roads to South Africa, Swaziland and Zimbabwe, and

some sections of the main roads connecting the Mozambican provinces.

With the adoption of the 1999 telecommunication law, the sector was par-

tially liberalised. The liberalisation enabled competition in the mobile

sector which until then had comprised a monopoly run by TDM. As a

result, in December 2003 Mozambique inaugurated a second mobile

service provider, Vodacom Mozambique, with the major stakeholder

being Vodacom South Africa. Recent figures indicate that Vodacom

already has more than 500 000 subscribers, with the total figure of

mobile subscribers in the country close to 3 million.

In the fixed-line network Mozambique has joined the list of countries in

which the number of fixed-line subscribers as well as the traffic in the

fixed-line network is declining. For instance, between 2003 and 2004 TDM

lost 14 063 subscribers, although it had a 21% increase in leased lines to

MozambiqueExecutive Summary




1 304 lines. Further, the financial performance is showing a very modest

growth. However, TDM launched a fixed pre-paid service late last year,

and in March 2006 an ADSL service. It is expected that these services will

boost both the sales of leased lines for Internet access as well as regain

the fixed-line voice market that has continuously been in decline.

In 1999 the Government of Mozambique approved a new telecommunica-

tion law through Decree 14/99 that laid the ground for the liberalisation

of the telecommunication sector. The law stipulates that the incumbent

telecom operator should be privatised within three years and the private

company would be given a period of three to five years of operation as a

monopoly, in preparation for full competition. This period has been

revised in a new amendment that is still pending approval by Parliament.

Under that amendment the exclusivity period would be for a maximum

of three years. The law has allowed for full competition in mobile teleph-

ony, liberalised data communication services and has made provision for

the creation of a universal access fund.

In 1992 the Government established the Instituto Nacional das Comuni-

cações de Moçambique (INCM) as a separate regulatory body, though it

still reports to the Ministry of Transport and Communication. INCM then

created the bylaws and other instruments that regulate the telecommuni-

cation sector. Some of the most notable decrees are the regulation for

interconnection between telecommunications operators and one that reg-

ulates the universal access fund. The interconnection decree was recently

tested with the entrance into the mobile market of Vodacom Mozambique.

The universal access fund is still not yet operational, although discussions

indicate that it might come into effect as early as next year.

The regulatory body is still weak and technically understaffed, but it has

enough freedom to be effective in its area of responsibility, and it has

tried to handle several issues correctly. Several other issues remain

unregulated or unclear, notably, the issues relating to the use of wireless

in the ISM bands used by IEEE 802.11a,b,g standards, as well as the issue

of VoIP. A regulation for ISM band is under way but nothing is happening

with regard to the legalisation of VoIP by service providers other than

TDM. Security and protection of the public is another area that remains

unlegislated in Mozambique.

Another important development in the Internet market has been the

deployment of an Internet exchange since 2002. This has helped service

providers save costs in the international links, which are mostly based

on satellite technology which has had a dramatic impact on the Internet

usage in the country.




International Ratings and Indices

Mozambique is ranked 120 on the ITU Mobile Internet Index. It is well-

positioned when compared with some countries in the region, but is low-

ranked if compared with countries such as South Africa, Malawi, Angola

and Botswana; it has fared very poorly on the infrastructure and usage

rank, although it appears to have a good market rank. The ITU indices

show that a lot still has to be done in terms of improving access to basic

telecommunication services in Mozambique.

Source: ITU 2002 internet report, taken from South African TSR report of 2003




Market Structure, Policy and Regulatory Framework

The Public Switched Telephony Network Service (PSTN) in Mozambique

currently comprises a monopoly by the national incumbent operator,

Telecommunications of Mozambique (TDM). The Telecommunication

Act approved in December 1999, opens up a possibility for competition

in both fixed and mobile telephony.

The mobile service is already liberalised, with a second operator

licensed in 2002 that started operating in December 2003.

The act envisaged that TDM would be privatised in two years, after

which the private company would be granted between three and five

years of monopoly operation in preparation for full competition. This

period has been fixed now at three years in a revision to the Act recently

approved by the Parliament of Mozambique. However, the same Act also

includes a provision according to which the TDM period of exclusivity

expires in December 2007 irrespective of the privatisation process.

In June 2007 the national communications regulator (INCM) will com-

plete a study on the telecommunication market with the aim of advising

the government about the feasibility of introducing new operators in the

mobile and fixed telecommunication services.

Value added services such as ISP or ASP and other data communication

services are allowed, and self-provisioning is possible. In fact no licence

is required in order to become an ISP, but an application has to be

approved by the Mozambican National Institute of Communications

(INCM).

Provided that the communication networks are to be used for services

other than voice traffic, self-provisioning is allowed for both national and

international services. For example, it is possible to establish a WAN for

data communication and VSAT communication links connecting sites in

Mozambique and abroad, for instance to the US and Europe.

INCM was established as an independent regulatory body in 1992 under

the umbrella of the Ministry of Transport and Communications (MTC).

INCM holds several responsibilities, including licensing, spectrum man-

agement, formulation and interpretation of sector policy, international

relations, and defining and monitoring compliance with the performance

targets of the sector. It is independent in the sense that it has an admin-

istrative autonomy and can take independent decisions, but it still

reports to the Ministry of Transport and Communication.




As a result of the new telecommunications law, new statutes were estab-

lished and approved in November 2001 by Decree 32. The decree pro-

vides INCM with a different administrative board and more power to take

independent decisions.

VOIP REGULATIONINCM has taken firm steps in establishing regulations in its areas of con-

cern, but there are still many aspects that require appropriate regula-

tion. Some of the areas for which the regulation is still not clear, or has

not yet been approved, are VoIP and the use of the ISM spectrum.

The telecommunication law does not always take into consideration the

integration between computing and telecommunication. Most signifi-

cantly, the law defends that the fixed voice communications is a TDM

monopoly and that data communication is open to full competition. The

distinction between voice and data in a digitalised environment, which

reduces data to bits, is artificial, therefore it is currently unclear whether

VoIP would be allowed or not. None of the ISPs we interacted with

acknowledged use or provision of VoIP as a service to customers. This is

probably because the overall perception is that their VoIP offering would

be considered by INCM and TDM as a violation of the law that grants

TDM monopoly for fixed-line voice communications.

INCM has started a study in order to regulate the use of VoIP efficiently,

which will be completed in July 2007. Whether the study will lead to the

opening up of the VoIP market is not yet known. However, since the

period of exclusivity of Voice Service to TDM expires in December 2007,

it is likely that VoIP will be allowed after this date anyway.

WIFIINCM is currently developing the regulation for use of WiFi under the ISM

spectrum. Until this regulation is in force, the use of this technology, espe-

cially in WAN, is restricted. However there are several institutions that

today provide services or use this technology to connect sites belonging

to their institution. Examples of the latter are the Eduardo Mondlane Uni-

versity and the national electricity company. Tropicalweb and INTRA Lda

are two companies operating ISP services using this spectrum.

A broadband service based on WiMax was recently introduced by Tele-

data, an ISP jointly owned by TDM and Portugal Telecom. WiMax today

provides coverage in the Maputo metropolitan area, but it is expected

that the service will be deployed in other Mozambican cities.

INCM says that since there is as yet no approved regulation, they simply

register those who request authorisation to use this spectrum. They do

not issue licences or written authorisation, but also do not forbid the use

of the spectrum. At the moment no operating fees are payable. In April




2007 INCM will complete a study toward regulating the use of WiFi or

related technologies.

VSAT SERVICESVSAT-based services are allowed in Mozambique. There are two compa-

nies that offer this as a service to customers. Most of the ISPs operate

their own gateways to the Internet using VSAT technology. The cost of

the licence is US$3 500 per annum.

INTERCONNECTIONMozambique is one of the few countries in the SADC Region that has

already developed specific legislation for interconnection. The regula-

tion for interconnection was published through Government Decree No

34/2001, of 06 November.

Although the regulation has been in place since 2001, interconnection

was not an issue until 2003 when the second mobile operator entered the

market. The previous situation was such that mCel, the first mobile oper-

ator, was a subsidiary of the national incumbent, TDM, which has a

monopoly position in regard to fixed telephony.

Liberalisation of the sector in terms of the new legislation has forced the

Government to split TDM and mCel, which was one of the pre-conditions

in order to reach an interconnection agreement between both mobile

operators and TDM. One of the major aspects of the policy on competi-

tion is based on the principle of no cross-subsidies.

At the moment there is only one PSTN operator, but given that there are

more than one mobile operators, PSTN interconnection of all operators

is legally required. Operators can agree on interconnection fees but, the

law states that in a situation in which operators cannot agree on fees,

the Regulator should intervene to broker an acceptable solution to

involved parties. In this situation tariffs and tariff limits can be set by the

Regulator.

A study looking at a cost-based model for interconnection is under way

and is expected to be completed by May 2007. The current benchmark

model is perceived as inappropriate by the operators involved, generat-

ing a number of disagreements between them.

NUMBER PORTABILITYThe lack of number portability is perceived as a major factor in compe-

tition in mobile services. The Regulator will also complete in May 2007,

a study towards the introduction of number portability in telecommuni-

cation services.




PREPAID USERS AND SECURITYIn 2006 Mozambique approved a new telecommunication strategy. One of

the issues dealt with in the strategy raises the issue of mobile pre-paid

phones being used for criminal activities such as blackmail and organ-

ised crime communications. As such the strategy recommends a need for

an investigation into the introduction of a mechanism to identify prepaid

users.

E-LEGISLATIONThe Government has contracted a consultancy firm to develop e-legisla-

tion for Mozambique. The process is being coordinated by the technical

unit of the ICT Policy Commission (UTICT). It is expected that the legis-

lation will be approved during 2007.

TELECOM REGULATORY ENVIRONMENTASSESSMENTAs part of a comparative analysis, an assessment of the Telecom Regu-

latory Environment (TRE) was conducted for VANS, mobile and fixed,

covering the following categories:

! Market Entry

! Scarce Resources

! Interconnection and Facilities

! Tariff Regulation

! Regulation of Anti-Competitive Practices

! Universal Service Obligation (USO)

The initial sample of respondents should involve about 100 people from

the different groups. However, only 16 have completed the questionnaire.

Therefore, the positive score that Mozambique has earned in the com-

parative analysis may have been strongly influenced by this fact. An

interesting aspect was the fact that the Regulator was among the 16

respondents.

According to the questionnaire, the respondents were requested to make

their assessments of the telecom regulatory environment for the period

2002 to 2005 for the fixed, mobile and VANS sectors on a scale from 1 to

5, with 1= Highly Ineffective and 5= Highly Effective.

The graphs below illustrate the responses given by the different respon-

dents to each of the six research items. In some cases, there was more

than one respondent within the same entity, eg, “Incumbent (respondent

I,II or III)” means that, three different people from the incumbent have

individually completed the questionnaire. The results are therefore sim-

ply indicative of the perception of the regulatory environment and are in

no way representative or even comprehensive.




MARKET ENTRY

FIG. 1: MARKET ENTRY

This graph indicates a generally positive perception of respondents in

regard to “Market Entry”, with the majority evaluating the effectiveness

of the regulatory environment between 3 and 4. Only one ISP believed the

regulatory environment was “highly ineffective”. This is not surprising,

considering the strongly protective behaviour that has characterised

INCM and government relations during the period analysed, in respect

to fixed and mobile telephony.

SCARCE RESOURCES

FIG. 2: SCARCE RESOURCES




The Regulator has done positive work in relation to the management of

“Scarce Resources”, especially on numbering. The biggest weakness

here is lack of effective control of the frequency spectrum. INCM has no

technical means for inspection and detection of radio frequency abuse

and misuse.

NTERCONNECTION AND FACILITIES

FIG. 3: INTERCONNECTION AND FACILITIES

Following the award of the second mobile licence to Vodacom in 2002,

both mobile operators failed to agree on interconnection fees and shar-

ing of towers and other facilities. This situation has clearly forced the

Regulator to arbitrate, leading to the signing of an agreement.

However, the intervention of INCM in regard to interconnection between

fixed and mobile as well as VANS has been nearly zero. One of the rea-

sons is the fact that the incumbent has a strong influence on the Regula-

tor, since historically some of the senior staff (including the Director Gen-

eral) moved from TDM.

TARIFF REGULATION

As this graph clearly shows, the Regulator does not regard “Tariff Reg-

ulation” as part of its mandate. This issue is seen as the responsibility

of the operators. The fact that the market in Mozambique is still rela-

tively small and weak, contributes to the price disparities cultivated by

stronger players, such as TDM and Mcel (M or mCel?).




FIG. 4: TARIFF REGULATION

REGULATION OF ANTI-COMPETITIVE PRACTICES

FIG. 5: REGULATION OF ANTI-COMPETITIVE PRACTICES

The positive score on “Regulation of Anti-Competitive Practices” is not

entirely accurate, because there are fewer examples of positive interven-

tion by the Regulator than the reverse. In fact, one of the reasons that may

have influenced the perception of the respondents was the split requested

by the Regulator between the incumbent and its mobile company mCel,

which was clearly meant to cut cross-subsidisation and was also held as

one of the pre-conditions for launching the second mobile licence.

On the other hand, a good example of unregulated anti-competitive

behaviour was the refusal by mCel to share the towers with the new

entrant Vodacom, which resulted in this company having to invest heav-

ily on infrastructure to be able to compete nation-wide. Consequently,

Vodacom needed to establish a high level for its investment recovery




plan and the company tried without success to convince mCel to increase

tariffs in order to accommodate the feasibility of such investment recov-

ery. As a result, during the first three years of operation Vodacom has

reported huge financial losses, to the extent that the company had to

request Government intervention against mCel’s predatory low price

policy. At that stage, local analysts were already indicating the strong

possibility of Vodacom’s collapse.

UNIVERSAL SERVICE OBLIGATION (USO)

FIG. 6: UNIVERSAL SERVICE OBLIGATION (USO)

The general perception of respondents is that the Regulator has done

very little on “Universal Service Obligation”. In fact, INCM has talked

about this for many years, but only recently hired technical consultants

to formulate a policy proposal; some public discussions were conducted,

however the process has not yet been concluded.

Source: Esselaar, Gillwald and Stork (2007)




Clearly the relatively positive comparative position of Mozambique

reflects the limited response to the questionnaire and the generally

uncritical attitude of industry to regulation. There are clearly several

areas in which the lack of regulatory environment is in need of serious

attention and which reflects the continued dominance of the incumbent

over the sector and even over the Regulator. The regulatory environ-

ment, of course, is determined not only by the Regulator, who is simply

the implementer of policy, but by the policy itself which determines the

market structure, the institutional arrangements and therefore the pow-

ers of the Regulator to intervene.

National Backbone Infrastructure

The national incumbent is Telecomunicações de Moçambique (TDM) and

was created in 1981 as a result of the split between post and telecommu-

nications.

The basic telecommunications network infrastructure is managed and

operated by TDM and owned entirely by the State. However, the owner-

ship of infrastructure for complementary or value added services is open

to both the public and private sectors.

The PSTN infrastructure consists of a national backbone, covering about

79.7% of the country, including all provinces up to district level. This net-

work is based on a combination of different technologies such as VSAT,

wireless loop, copper cable and most recently a marine fibre optic cable

along the coast.

Within the main cities the telephone switches/exchanges are linked via

optical fibre networks and copper is used for connecting the end-users

to the secondary network.

Mozambique has a teledensity of about 0.461

, one of the lowest in the

region. TDM’s Annual Reports indicate that the available capacity in

telephone lines is 127 902, but the number of subscribers has declined

since 2000. One of the main reasons for such negative growth is limited

purchasing power, especially in the rural areas, together with the rapid

expansion of the mobile network.

Notwithstanding the ongoing privatisation process, TDM is investing

heavily in the expansion and modernisation of the telecommunications

infrastructure. The Government justifies this position as a way of

strengthening the company in preparation for competition in a liber-

alised market.

1 Source: www.infopol.gov.mz/simposio/politica/politica.doc




The National ICT Policy Implementation Strategy presents a long list of

short, medium and long term projects in the telecommunications sector

with a total budget of US$144 246 000.

Figure 7 below illustrates the current and planned telecommunication

network infrastructure of TDM:

FIG. 7: MOZAMBIQUE’S INFRASTRUCTURE AND ACCESS

TDM COMPARATIVE PERFORMANCEAlthough TDM has always been considered financially, to be one of the

top-ranked of the top 100 companies in the country, the introduction of

mobile telephony has slowed or even stopped the growth of the company

in terms of fixed-network services.

While the fixed national traffic from 2001 to 2002 declined by 21%, mobile

traffic has increased by 142% as shown in the graph below, which was

the major factor that contributed to the tremendous growth of the gross

revenue of the company.

The mobile component is missing for the last two years of the current

analysis, because in 2003 mCel was separated from the mother company

TDM, as a result of the entrance of the second mobile operator in the

market and the enforcement of the competition law.




FIG. 8: FIXED AGAINST MOBILE REVENUES AT TDM (103MT)

Source: www.tdm.mz (TDM Annual Report 2004) Why no mobile in ’03 &’04?

(Exchange Rate: 1US$=MT25)

The following tables illustrate the comparative performance of TDM

using different indicators namely, infrastructure, telecommunications

services, traffic, quality of the service and finance over the period

between 2001 and 2004.

TABLE 1: INFRASTRUCTURE

INDICATOR UNIT 2001 2002 2003 2004 02/01 03/02 04/03

INFRASTRUCTURE

Installed Capacity

on Telephone

Switches Lines 127 902 138 482 133 587 131 967 8% -4% -1%

Capacity of

the National

Interconnection

Network Circuits 27 150 29 070 969 1 748 7% 1% 80%

Capacity of the

External Network

Primary Network

Pairs 150 129 151 510 154 489 155 089 1% 15% 0%

Secondary Network

Pairs 198 259 199 309 200 639 200 639 1% 17% 0%

Digitalisation

Index in Telephone

Switching % 100 100 100 100 0% 0% 0%

Digitalisation

Index in

Transmission % 98 98 98 98 0% 0% 0%




TABLE 2: TELECOMUNICATIONS SERVICES

INDICATOR UNIT 2001 2002 2003 2004 02/01 03/02 04/03

TELECOM-

MUNICATIONS

SERVICES

Increase of Telephone

Lines per Year Unit 3 774 -5 749 -6 163 -7 900 -252% 7% 28%

Total Number

of Lines Unit 89 488 83 739 77 576 69 676 -6% -7% -10%

Pay Phones Unit 1 826 2 460 4 903 5 671 35% 99% 16%

Card Public

Phones Unit 1 279 1 581 1 419 5 671 24% -10% -3%

Leased Lines

for Private Use Unit 968 1 158 1 082 1 304 20% -7% 21%

Total Active

Mobile Cards Unit 152 652 254 759 67%

ISPs Connected

via TDM Unit 7 7 7 - 0% 0%

TABLE 3: TRAFFIC

INDICATOR UNIT 2001 2002 2003 2004 02/01 03/02 04/03

TRÁFFIC

National

Telephone

Traffic

(fixed network) 103 776 180 611 314 589 53118 709 704 -21% -4% -

Impulses

International

Telephone

Traffic

(fixed network) 103 21 997 22 954 22 357 18 868 4% -3% -16%

Minutes

National

Telephone

Traffic

(mobile network) 103 177 858 430 538 - 142% - -

Minutes

International

Telephone

Traffic

(mobile network) 103 7 179 12 846 - 79% - -

Minutes




TABLE 4: QUALITY OF THE SERVICE

INDICATOR UNIT 2001 2002 2003 2004 02/01 03/02 04/03

QUALITY OF SERVICE

Teledensity Units 0.51 0.46 0.34 0.31 -9% -26% -10%

Average Waiting

Time for

Telephone

Installation Month 6 2 10 9 -67% -24% -1%

Number of

Reported Faults

by 100 Main

Service Units Unit 80 70 65 66 -13% -7% 2%

Faults

Repaired in

< 72 Hours % 92 93 93 93 1% 0% 0%

Billing

Complaints

by 1000 Main

Service Units Unit 161 140 146 84 -13% 4% -42%

Complaints

Solved in

< 30 Days % 65 82 67 66 26% -18% -1%

TABLE 5: FINANCE

INDICATOR UNIT 2001 2002 2003 2004 02/01 03/02 04/03

FINANCE

Operational

Income 106 2 452 432 3 039 655 2 262 084 2 336 527 24% -26% 3%

MT

Operational

Costs 106 2 189 309 2 717 757 2 128 461 2 346 856 24% -22% 10%

MT

Net Income 106 115 521 183 098 170 099 193 545 58% -7% 14%

MT


Source: www.tdm.mz (TDM Annual Report 2004)

The figures below show the growth tendency of national traffic for both

fixed and mobile networks at TDM, ie before the liberalisation of the

mobile market.




FIG.9: NATIONAL TRAFFIC (FIXED NETWORK)


FIG.10: NATIONAL TRAFFIC (MOBILE NETWORK)


The number of telephone lines also decreased between 2001 and 2002.

The next graph shows that the figures in 2002 were even lower than

those registered in the year 2000.

FIG. 11: FIXED LINES (GROWTH TENDENCY)


LEASED LINESTDM offers both analogue and digital leased lines. The speeds for digital

lines vary from 64 KBps to 2 MBps.

The price of the monthly service depends not only on the speed, but also

on the distance from the customer location to the next telephone

exchange. The installation is charged separately. The cost structure for

each category is shown in the following tables:




TABLE 6: ANALOGUE LEASED LINES

DESCRIPTION Installation fee Monthly fee

(MT) (MT)

Local Analogue 2-wires circuit

From 0 to 1 000 metres 6 730.00 815.50

From 1 001 to 2 500 metres 6 730.00 1 048.50

From 2 501 to 5 000 metres 6 730.00 1 514.50

From 5 001 to 10 000 metres 6 730.00 2 330.00

From 10 001 to 20 000 metres 6 730.00 3 495.00

Temporary Circuit 6 730.00 * *

Local Analogue 4-wires Circuit

From 0 to 1 000 metres 8 749.00 1 304.80

From 1 001 to 2 500 metres 8 749.00 1 677.60

From 2 501 to 5 000 metres 8 749.00 2 423.20

From 5 001 to 10 000 metres 8 749.00 3 728.00

From 10 001 to 20 000 metres 8 749.00 5 592.00

Temporary Circuit 8 749.00 * *

Equipment Leasing To be determined case To be determined case

by case by case

* * First day – 20% of the respective monthly fee and the following days – 33.3% of the monthly fee

Note: 17% VAT Not included


Source:www.tdm.mz

TABLE 7: LOCAL DIGITAL LEASED LINES 64KBPS TO 2MBPS (USING COPPER

AND OTHER TECHNOLOGIES EXCEPT FIBRE)

DESCRIPTION BANDWIDTH

64KBps 128KBps 256KBps 512KBps 1MBps 2MBps

(MT) (MT) (MT) (MT) (MT) (MT)

Installation Fee 5 680.00 5 680.00 5 680.00 5 680.00 5 680.00 5 680.00

Monthly Fee

from 0 2 726.10 4 361.80 7 197.00 11 515.20 18 424.30 20 060.00

to 2 500 m

from 2 501 3 844.50 6 151.15 10 149.43 14 620.00 20 750.00 24 743.50

to 5 000 m

from 5 001 to

10 000 m 4 776.50 7 642.43 11 365.72 16 150.00 25 840.00 30 744.50

from 10 001

to 20 000 m 7 013.30 10 100.00 14 830.00 20 750.00 33 200.00 45 152.00

from 20 001

to 50 000 m 12 708.72 15 493.99 22 286.03 30 457.03 48 731.25 81 848,53

Temporary Circuit: Installation fee + 20% of the montly fee, on the first day.

On the following days: 3,33% of the monthly fee per day.



Source:www.tdm.mz




TABLE 8: COST OF ISDN LEASED LINES (BASIC, PRIMARY AND SHARED ISDN

ACCESS)

DESCRIPTION Installation Fee Monthly Fee

(MT) (MT)

BASIC ISDN ACCESS

Individuals 1 162.00 660 48

Corporate customers 1 162.00 660.48

PRIMARY ISDN ACCESS

Corporate customers 30 750.65 5 759.99

SHARED PRIMARY ISDN ACCESS

Corporate customers 30 750.65 2 879.99

EXTRA ACCESS POINT 110.00 50.00



Source:www.tdm.mz

Due to the high costs of bandwidth, leased lines (analogue) and ISDN

services are primarily requested by commercial companies, such as

banks, ISPs and Internet cafes. The installation fee for a four-wire ana-

logue leased line costs MT8.749.00, which is equivalent to about US$360.

The monthly fee depends on the distance. Between 0km and 20km of a

four-wire analog leased line the fee can vary from MT1 304.00 to MT5

592.00, which corresponds to about US$50 and US$230 respectively. An

analog leased line will give you on average about 33 KBps.

TABLE 9: LOCAL ISDN CIRCUITS FROM 64 KBPS TO 2 MBPS

DESCRIPTION BANDWIDTH

64KBps 128KBps 256KBps 512KBps 1MBps 2MBps

(MT) (MT) (MT) (MT) (MT) (MT)

Installation 5 680.00 5 680.00 5 680.00 5 680.00 5 680.00 5 680.00

Monthly Fee

From 0 to 2 726.10 4 361.80 7 197.00 11 515.20 18 424.30 23 600.00

1 000 metres

From 1 001 3 098.90 4 958.20 8 181.00 13 089.60 18 870.00 26 820.00

to 2 500 metres

From 2 501 3 844.50 6 151.20 10 149.50 14 620.00 20 750.00 29 110.00

to 5 000 metres

From 5 001 4 776.50 7 642.40 11 370.00 16 150.00 25 840.00 36 170.00

to 10 000 metres

From 10 001 7 013.30 10 100.00 14 830.00 20 750.00 33 200.00 53 120.00

to 20 000 metres

Temporary Circuit: Installation fee, first day – 20% of the respective monthly fee and

the following days – 33.3% of the monthly fee



Source:www.tdm.mz




The cost of ISDN lines follows the same structure as the analogue. Con-

sidering a 64 KBps link, the installation fee would be MT5 680.00 and the

monthly charge would vary between MT2 726 00 and MT7 013.00 for the

same distances as above. A 1MBps ISDN link for distances between10-

20km would be about MT33 200.00.

Compared with other countries in the region, the prices of leased lines in

Mozambique, especially ISDN, are very high, which explains why most of

the potential users of this technology are currently migrating to wireless

or even VSAT solutions.

TDM also offers ADSL services with speeds ranging from 128K/64K

(download and upload) and 2MBps/512K (download and upload). How-

ever, the prices of ADSL links follow a different structure, whereby the

customer is given a limit of traffic capacity for each contracted speed,

above which they must pay an extra fee.

The following table presents the tariffs of ADSL services:

TABLE 10: ADSL TARIFFS



Source:www.tdm.mz

PRICINGIn the past, tariffs for local calls were subsidised by TDM at three cents

per minute. Under rebalancing schemes to bring down costs for interna-

tional calls that were surcharged to cover local calls, local call rates were

increased to nine cents per minute (for calls of less than 50km). However,

since 2005 TDM has decided to charge a flat rate for all national calls

regardless of distance, as illustrated in Table 10, unlike the previous sit-

uation where there was a clear differentiation in price between local and

inter-urban calls, i.e. calls for distances above 50km were considered

long distance calls and charged accordingly.

International tariffs were reduced by 8% and national calls increased by

38% last year as part of an effort to rebalance tariffs with costs. High

telephone call costs are one of the major complaints revolving around

Internet usage.

TDM has had many cases of withdrawal of fixed lines; for every three




lines, two are suspended because of unpaid bills. The cost of a line is

US$10 plus a US$40 application fee – a sizeable amount in relation to

Mozambique’s per capita income of US$200. The potential market of peo-

ple who can afford telephones – 140 000 – is essentially covered. 20 000

lines are installed per year, but subscriber growth is less than 10%

(about 2 000).

TABLE 11: COST OF NATIONAL CALLS (FIXED NETWORK)

Days of the Week National Calls National Calls

(fixed to fixed) (fixed to mobile)

Price in US$/Hour Price in US$/Hour

Monday to Friday from 6:00 am to 7:00 pm 7.2 36

Monday to Friday from 7:00 pm to 11:00 pm 4.97 20.57

and Saturdays, Sundays and Public Holidays from

6:00 am to 11:00 pm

Everyday from 11:00 pm to 6:00 am 3.43 18.5

NB.: Prices are VAT inclusive


RESIDENTIAL, BUSINESS AND TARIFFREBALANCINGUniversal access will be achieved through increasing teledensity at

affordable prices. The telecommunication law mandated TDM to re-bal-

ance its tariffs to make them a product of their operational costs. Tariff

balancing by TDM is a result of its attempt to have a rate in line with

operational costs as well as to rebalance the cost of international calls

compared with local and national calls. TDM previously used interna-

tional calls to subsidise local national calls. The tariff balancing has still

to be approved by the Government but an annual rebalancing period has

been agreed between TDM and the government.

There is no difference between the cost of a one-minute call for residen-

tial and businesses, and on average the cost of a local call in Mozambique

is low when compared with rates in the region. However, due to the low

income per capita in Mozambique, telephone call rates are perceived as

being very high.

The connection fees for both the residential and the business market

decreased by 37% between 1996 and 2000, but the monthly subscription

fee has been increased by 23% in the same period and is now fixed at

US$8.63 for both residential and business services.

Due to annual tariff rebalancing the cost of a local fixed-line call has

increased while the cost of international calls has decreased.


2Source: www.mcel.co.mz



Early this year the Government approved a fixed tariff for dial-up Inter-

net access, ie email users can dial into any ISP in the country paying the

same tariff, regardless of the distance. That tariff is lower than the tar-

iff applied for voice.

National Mobile Operators

There are two mobile operators in the country, namely, mCel (Moçam-

bique Celular), which is the brand name for Telecomunicações Móveis de

Moçambique (TMM), and Vodacom Mocambique, owned by Vodacom

South African and EMOTEL. mCel was established in 1997 as a result of

a joint venture between TDM and DETECON GmbH (Deutsche Telepost

Consulting GmbH), a subsidiary of Deutsche Telekom, holding 74% and

26% of shares respectively2

. In 2004 TDM bought Detecon’s stake, and is

now the sole owner of mCel. Vodacom was awarded the second mobile

licence in 2002 and started operating in December 2003.

The geographical coverage of both mCel and Vodacom networks is still

limited to the main cities and surrounding areas, as well as the main

roads and the development corridors linking the coast with the hinter-

land regions and neighbouring countries. However, the network cover-

age is being gradually extended to smaller towns in the rural areas, with

priority given to those located in strategic regions of economic develop-

ment or tourism.

Maps of mCel coverage indicate that mCel covers nearly 60% of the three

main regions: South, Center and North. Although coverage has increased

steadily, many people within the geographical coverage area do not in

fact use the mobile services. If these services were in fact utilised, the

capacity would be greatly increased to offer a reliable service.

The second mobile operator, Vodacom, still has fewer subscribers than

mCel, which increased the number of its subscribers from 2 500 in 1997

to over 1.5 million in 2006. This growth was mainly due to the introduc-

tion of the pre-paid system under conditions of monopoly. However, Voda-

com has also increased its geographic coverage, and its number of users

is now beyond 700 000 subscribers. The total number of mobile sub-

scribers is now reported as 2,7 million.

Because of the high costs of the standard contract package, most mobile

subscribers have joined the pre-paid modality. A good number of them

are the so-called “beepers”, meaning those who normally buy the cheap-

est SIM card, not for calling but for sending “beep” calls requesting a

call-back. A free “please call me” SMS service has also been introduced

as an easier form of helping the beepers to request a call without block-

ing a channel as happens in a normal beep call. This phenomenon is com-

mon among people with low financial resources, for whom the service is




still very expensive, even though mCel has lowered the price of some of

the services in the last 12 months. A new service introduced earlier in

2005 is the ability to buy airtime through one’s own account and share it

with others.

This is a promising service as it has the potential to be used as a form of

banking service for subscribers located in areas without a bank. It is

technologically conceivable that a person could walk to a shop to buy

goods and effect the payment in a form of “airtime” that he sends to the

number associated with the shop.

The price of mobile handsets is also dropping, mainly because of the

strong competition in the local market. However, the majority of the pop-

ulation still cannot afford such products. The cheapest brand name

phone costs on average about US$75, which compared to the average

income of a Mozambican family, is still very expensive (the minimum

salary is about US$50 per month). This is why many people prefer to buy

a non-brand, or even second-hand handsets.

Using an OECD method to establish the cost of a basket for low mobile

users (which would be more aligned to African mobile usage than their

middle or high user baskets) RIA!’s comparative analysis of pricing

across several African countries demonstrates that prices in Mozam-

bique are in the mid-range as can be seen in the tables below. But when

nominal prices are adjusted for purchasing power parity, which is the

real measure of affordability in the country, Mozambique then shows the

second highest combined mobile prices of the 17 countries reviewed.

TABLE 12A: COMPARATIVE ASSESSMENT OF MOBILE PRICING ACROSS 17

AFRICAN COUNTRIES


7Telecommunications Policy for Botswana, December 1995




TABLE 12B: COMPARATIVE ASSESSMENT OF MOBILE PRICING ACROSS 17

AFRICAN COUNTRIES


ROAMINGmCel provides roaming facilities in more than 100 countries and in each

of them to all or more than one mobile operator, but tariffs are iniquitous.

When making calls in a roaming zone, an mCel subscriber pays an equiv-

alent of the roaming tariff of that particular operator plus 25% of the

roaming charge charged by mCel, which bears no relation to mCel’s own

costs. When receiving a call while in the roaming zone, the call is charged

according to mCel’s international tariff, which is calculated as TDM

international unit cost plus mCel international unit cost. The effect of

this method of pricing is that when you receive a call in a roaming zone

you pay as though you were calling yourself, using the fixed phone and

cellphone simultaneously. The cost will obviously be dependent on the

country where you are located. The following tables extracted from

mCel’s website illustrate the mechanism to calculate the cost of a call

while in roaming mode.

MCEL TARIFFSThe following tables show the two types of tariffs charged by mCel for the

different categories of calls.




TABLE 12: EXECUTIVE PACKAGE

Connection fee: free

Monthly tax: 509.00 MT

Utilisation cost per minute (MT)

Tariff National and International Calls within

local calls calls mCel network

Normal tariff: (Monday to Friday 5.10 5.10 plus 2.95

from 7.00 am to 7.00 pm) TDM charges

Reduced tariff: (Monday to Friday 3.00 3.00 plus 2.45

from 7.00 pm to 7.00 am) TDM charges

Saturdays, Sundays and holidays

Super reduced tariff: (Everyday 2.50 2.50 plus 2.00

between 00.00 to 6.00 am) TDM charges

SMS 1.00


Source: www.mcel.co.mz

TABLE 13: ECONOMY PACKAGE

Connection fee: free

Monthly: 226 000 MT

Utilisation cost per minute (MT)

Tariff National and International Calls within

local calls calls mCel network

Normal tariff: (Monday to Friday 6.95 6.95 plus 3.95

from 7.00 am to 7.00 pm) TDM charges

Reduced tariff: (Monday to Friday 3.50 3.50 plus 2.75

from 7.00 pm to 7.00 am) TDM charges

Saturdays, Sundays and holidays

Super reduced tariff: (Everyday 2.75 2.75 plus 2.00

between 00.00 to 6.00 am) TDM charges

SMS 1.00


Source: www.mcel.co.mz

International tariff: mCel tariff plus TDM charges

Roaming Tariffs:

Calls made while in roaming Tariff of the visited operator + 25% of that tariff

Calls received while in roaming International mCel tariff




Preparing for Next GenerationNetworks

BROADBAND DEVELOPMENT Although ISDN has been available in Mozambique since 2002, with the

high prices associated with access there are as few as 723 subscribers

in total, of which 641 subscriptions are basic, allowing only two channels

from the infrastructure, and 82 are primary, allowing 30 channels.

As previously mentioned, an ADSL service was launched by TDM late in

2006, as an alternative to leased lines and ISDN, especially for corporate

users. The speeds vary from 128KBps to 2MBps (see Table 10).

Early last year INTRA, one of the ISPs in Mozambique, launched the first

Broadband Wireless Internet in Maputo.

In 2003 proposals for a new Telecommunications Policy were drafted, as

well as a new Telecommunications Law which will replace the 14/99 Act.

Issues such as the role of Government in the telecommunications sector,

the reinforcement of the regulatory authority, defence of competitive-

ness, quality of service, consumer protection and universal access and

service are addressed in this proposal. The proposals address the infra-

structure development and technology convergence, market liberalisa-

tion and competitiveness, tariff regulation, universal service policy, and

the sector organisation and regulation. The regulations and policies will

allow for a competitive environment and hence improvements in services

provision and market expansion.

UNDERSEA CABLEThe national telecommunication network includes a marine fibre optic

cable, with a 2.5 GBps capacity per pair of fibres. The first phase of the

project was launched in 2001 and covers an extension of nearly 1 000km

between Maputo and Beira, with intermediate connection points in Xai-

Xai, Inhambane and Vilanculos.




FIG. 12: PLANNED NATIONAL TRANSMISSION NETWORK COVERAGE INCLUDING

ELECTRICITY AND ROADS NETWORKS

The fibre cable is expected to reach the remaining coastal cities of Que-

limane, Nacala and Pemba by 2007 as a land rather than a marine link.

Additionally, three terrestrial fibre optical links will be completed in the

same period, the first between Manica, Tete and Songo, the second

between Quelimane, Cuamba and Lichinga, and the third between

Cuamba, Nampula and Pemba (see Figure 12 above).

This project constitutes an important step towards the desired provision

of infrastructure to support broadband applications all over the country.

To complement the marine cable project, other links connecting the

coast and the hinterland should be gradually established.

The map in Figure 7 also shows the networks that are planned by other

institutions such as the electricity company (EDM), as well as the

national roads authority (ANE). While EDM has a clear plan to include

fibre in its high voltage transmission lines, the ANE is still deciding

whether or not to include the fibre in its projects. If fibre were to be

included in these links then a much larger broadband network could be

deployed in the coming five years.




WIFIWifi is a popular technology that offers broadband access in places where

the fixed- or mobile-infrastructure is not available or cannot provide such

bandwidth at acceptable costs. This technology is currently used in

Mozambique to provide connectivity between sites belonging to the same

institution or to connect clients permanently to ISPs. Among the heavy

users of this technology are the Eduardo Mondlane University (UEM)

which currently has more than 32 wireless point to point links running at

both 3 and 11 MBps using FHSS and DSSS, and the electricity company

which interconnects several points of sales through wireless. UEM also

uses this technology to provide micro-cells of WLAN Internet access in

students’ residences and for users on the main campus.

As stated before currently there is no approved regulation in regard to

the frequency band (ISM) used in most of these connections.

There are, however, two companies that currently offer commercial serv-

ices using this frequency. The first is INTRA,, which provides Internet

access using this technology. They have deployed several access points

in Maputo city that provide almost complete coverage using WLAN. The

bandwidth offered ranges from 64 KBps to 256 KBps; however the qual-

ity of the signal depends on the current location of the subscriber and the

proximity and line of sight to the base station. The second provider is

Tropicalweb, which uses this technology to provide point-to-point links

to subscribers. The bandwidth offered is 11 MBps.

SATELLITESince the approval of the new telecommunication law in 1999, an increas-

ing number of private companies have been registered as telecommuni-

cations operators or telecommunications service providers. Some of

these companies are using wireless technologies for the provision of

Internet access, for example, the use of VSAT and fixed- wireless local

loop by INTRA to provide Internet access. VSAT networks are also being

installed within the TeleMoz project framework, implemented by Vircon.

SatCom provides telecommunication infrastructure and services, com-

bining VSAT, WLL (Wireless Local Loop) and other wired technologies.

It has already installed a number of private networks for some public and

private institutions with divisions or branches in the provinces.




Broadcasting

RADIOMozambique has a number of radio stations, the most important ones

being Rádio Moçambique (RM), Rádio Miramar, RTK, Rádio Terra Verde,

RTPAfrica (Portuguese Radio). There are also community radios, which

play an important role in the remote areas in the context of information,

education, culture, health and civic campaigns.

The radio network covers approximately 60%-70% of the population

throughout the country, with Rádio Moçambique by far the most

advanced and with the largest geographical coverage3

(RM is the only

radio that covers every province). Radio Moçambique is a public radio,

broadcasting in Portuguese, English and the major local languages spo-

ken in each province.

The table below shows the full list of both local and foreign radio stations

and their respective points of presence along the country:

TABLE 14: LIST OF RADIO STATIONS IN MOZAMBIQUE

Local radio stations

Name of Radio Station Location/coverage

Rádio Moçambique Beira, Chimoio, Dondo, Inhambane, Lichinga, Maputo,

Matola, Nampula, Pemba, Quelimane and Tete

Radio e Televisão Klint – RTK Maputo

Radio Miramar Beira, Maputo and Nampula

Radio Maria Maputo

Radio RTV Maputo

Radio Terra Verde Maputo

Radio Trans Mundial Maputo, Mocuba

Radio Cidade Beira

Foreign radio stations

RDPAfrica Maputo

Voice of America Maputo

BBC Maputo

RFI Maputo

Source: SCAN–ICT Mozambique, 2002

3 Miller, Jonathan and James, Tina. Preliminary Report: A Country ICT Survey for Mozambique,

prepared for SIDA, September 2001




COMMUNITY RADIOBesides the radio stations listed above, there are 59 community radio and

TV stations spread over the country. Of those, 17 belong to the so called

Multimedia Community Centres (CMC) Project, which results from the

combination of the traditional Telecentre’s initiative and the community

radio component; 24 are sponsored and supervised by the Government.

The rest belong to different associations (eg church, NGOs, etc).

TELEVISIONThe first national TV station to be established was Televisão de Moçam-

bique (TVM) in 1980. More than 10 years later, the Radio Televisão Klint

(RTK), a private radio and television broadcasting company, was cre-

ated. Today, TVM shares the market with Rádio Televisão Miramar, STV

and RDPAfrica. TVM is a public company that benefits from a Govern-

ment budget for institutional capacity building as well as for network

expansion. While the other TV stations are more or less limited to

Maputo and Beira, TVM has points of presence in all 10 provinces, with

different ranges of broadcast. STV is aggressively expanding its cover-

age, recently introduced services in many provincial capitals and was

expected to have complete coverage of all provincial capitals by the end

of 2006. However, the global coverage by national television serves only

15% to 17% of the population.4

Satellite TV is available all over the country, but due to the high cost, the

number of subscribers is low and mainly concentrated in the main cities.

Cable TV is only available in Maputo and Matola, offering a total of 52 tel-

evision channels and five radio channels through a metropolitan net-

work owned by TVCabo, one of TDM’s subsidiaries. The company uses

the same infrastructure to provide Internet access to its TV subscribers

through its subsidiary, NetCabo.

The subscription fee for the basic Cable TV package is US$85 and US$20

per month.

The price of TV sets has dropped in the last five years, but for the major-

ity of the population TV continues to be a luxury item. A 20-inch brand

name television set costs an average of US$250. A comparative study in

the framework of the SCAN ICT initiative shows that out of 121 intervie-

wees 52% have radios at home, while 46% have TV sets. It appears that

the two indicators may reflect the real situation, but the percentage

shown of people who have TV sets at home can only be valid for urban

and semi-urban areas. In the rural areas the figures are much lower, not

only because of the limited purchasing power of the people, but also

because of the poor coverage of the television broadcasting and electric-

ity networks.

4 Miller, Jonathan and James, Tina. Preliminary Report: A Country ICT Survey for Mozambique,

prepared for SIDA, September 2001




The local TV channels broadcast in Portuguese, English and occasion-

ally in Shangana, one of the local languages spoken in the southern

region of the country.

Table 15 presents the list of the existing TV stations and their territorial

distribution/coverage:

TABLE 15: LIST OF TV STATIONS IN MOZAMBIQUE

Local TV stations

Name of TV Station Location/Coverage

TVM, Maputo, Beira, Quelimane, Pemba, Nampula, Ilha de

Televisão de Moçambique, Lichinga, Mandimba, Maxixe, Xai-Xai, Tete,

Moçambique Songo, Vilanculos, Marromeu, Namialo, Chiúre, Ulónguè

and Chimoio

9TV Maputo

Miramar Maputo

STV Maputo, Gaza, Inhambane, Sofala

Foreign TV stations

RTP Africa Maputo

Source: SCAN–ICT Mozambique, 2002

http://www.paginasamarelas.co.mz/

http://www.tvm.co.mz

http://www.stv.co.mz

TVCabo infrastructure was built using the most recent technology of

750MHz with feedback loop. The signal generated by the different chan-

nels is sent through a fibre optical cable to the distribution cell center.

Each distribution cell incorporates 1 500 to 2 000 houses and in Maputo

City there are 15 cells, which cover around 22 500 to 30 000 houses.

There is an expansion plan with a provision to cover the Beira area;

Beira is the second largest city in Mozambique.




Internet Development

The provision of e-mail and Internet services in Mozambique was initi-

ated by the Eduardo Mondlane University Informatics Centre (CIUEM)

in 1993.

In 1997, through the Leland Initiative, USAID supported the establish-

ment of five new ISPs, sharing a 128 KBps gateway hosted by TDM.

There are currently more than 10 operational ISPs in Mozambique, the

most significant being Teledata, CIUEM, Tropicalweb, Vircon, Emil,

TDM, CFMnet, TVCabo, Intra, Dataserv, SATCOM, and GSTelecom.

Because Internet service provision is not subject to licensing and

requires registration formalities only, there are more ISPs that are

registered at INCM than those currently providing services. With the

exception of Teledata, TDM and Virconn, none of the above-mentioned

ISPs have POPs outside Maputo.

The high subscription fees undoubtedly limit the number of e-mail sub-

scribers. Most ISPs charge on average between US$30 and US$40 per

month for a dial-up connection. Using other technologies such as leased

lines (analogue), ISDN, wireless and cable TV to access the Internet

becomes even more expensive.

In the provincial capital cities, especially in Maputo, the number of Inter-

net cafés is beginning to grow after a long period of initial stagnation,

apparently caused by the high fees charged. On average the Internet

cafés in Maputo now charge between MT30.00 to MT60.00 per hour,

which is equivalent to about US$1.20 and US$2.50 respectively. In the

local context, the prices are simply too high, and it is worth comparing

them with the prices in other SADC countries such as Tanzania, where

Internet cafés charge on average Tshs500 (equivalent to US$0.50) per

hour and appear to be far more widely used.

There are about 18 companies that are registered by INCM as Internet

Service Providers (see Table 16 below). Teledata, Tropical Net and Vir-

tual Connection are the only companies that provide only Internet serv-

ices. Most of the companies listed in Table 2 combine their ISP services

with other business and some of them, although registered as ISPs,

either do not provide public services and use the services only for their

own business, or do not retain the services at all. All these companies

registered as ISPs conduct their main operations in Maputo. There are

also around 18 POPs5

, at least one in each province, through which Inter-

net access is made available to the public. These POPs in the provinces

are mostly owned by Teledata.

5 POP’s: Points of Presence




TABLE 16: LIST OF INTERNET SERVICE PROVIDERS

Internet Service Bandwidth Location

Providers (ISPs)

EmilNet Download: 256KBps (TDM) Maputo

Upload: 256KBps (TDM)

Tropicalnet Download: 256KBps (TDM), Maputo

64-128KBps (own VSAT)

Upload: 256Kbps (TDM)

Teledata Download: N/A Maputo

Upload: N/A

Virtual Connection, Lda Download: 1.2Mbps Maputo

(own VSAT), 128Kbps (TDM)

Upload: 1.2 Mbps (own VSAT), 128Kbps (TDM)

TV Cabo Download: 2 Mbps Maputo

Upload: 512Kbps

CIUEM Download: 6Mbps Maputo

Upload: 2.5Mbps

CFM-Net Download: 64Kbps (TDM) Maputo

Upload: 64Kbps (TDM)

INTRA Download: N/A Maputo

Upload: N/A

GSTelecom Download: N/A Maputo

Upload: N/A

SATCOM Download: N/A Maputo

Upload: N/A

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As in most developing countries, it is very difficult to assess the number

of Internet users. In Mozambique, however the total number of e-mail

subscribers in the country is estimated at about 60 000, with more than

50% of all subscribers and users in Maputo.6

However, even if reliable

telecommunication facilities and POPs now exist in most provincial cap-

itals, unreliable electricity supply, high costs and lack of skills limit the

Internet use outside of the capital.

6 None of the sources could indicate with certainty the size of the existing user market but, accor-

ding to the BMI-TechKnowledge Handbook 2001, estimated numbers were as high as 14 267 for

2001.




The Internet Cafés were first established in Maputo several years ago

and are now appearing also in a number of provincial capitals, despite

the access fees of US$1.20 per hour and a dial-up charge of

US$30/month. Several of the better hotels in Maputo offer free Internet

access to their guests. Teledata operates Internet cafés in Maputo, Beira,

Nampula provinces, and have POPs in all provincial capitals except Xai-

Xai (Gaza Province).

TVCabo offers Internet access in limited residential and business areas

of Maputo with a minimum cost of US$75/month.

Some telecommunications operators and service providers registered by

INCM provide Internet using wireless technologies. For example, INTRA,

which uses bushmail solutions for internet access, covering Maputo and

Matola cities; CIUEM uses wireless network to provide Internet access

to some departments within Eduardo Mondlane University and other

external entities such as the Ministry of Education; SatCom offers Inter-

net access using a combination of VSAT technology and Wireless Local

Loop (WLL) or other type of fixed wireless.

A number of programmes are being held, aligned with the country’s

objectives to broaden Internet usage in urban areas and expand Inter-

net acess to communities living in suburban and district areas. These

programmes include the Telecentres and Multimedia Community Cen-

tres project, both managed by CIUEM, the Digital Agencies managed by

TDM and the SchoolslNet program managed by Ministry of Education

(MINED) and FDC.

In May 2002 Mozambique established the first Internet exchange, hosted

by CIUEM, which currently connects the major Internet service

providers, namely CIUEM, TVCabo, Dataserv, EmilNet, Intra, TDM,

Tropicalweb, Virconn, Soluções, Microsis and mCel.

TELECENTRES AND MULTIMEDIA COMMU-NITY CENTRES (CMCS)Telecentres are seen as one of the options to improve connectivity in the

country, especially in the rural areas.

The concept of “telecentre” is used in many countries to designate dif-

ferent models of public access points, ranging from a simple public phone

to the most sophisticated multi-purpose community centres. In the

Mozambican context, a “telecentre” is defined as follows:

“It is a centre that facilitates, promotes and provides a variety of serv-

ices of public interest, through the use and application of ICTs, defend-

ing and safeguarding Universal Access principles and contributing to

local socio- economic development”.7

However, it is important to note that the availability of computers and

connectivity is a basic condition for such community centres to merit the

7 Mabila, Francisco and Gaster, Polly (2002). Projecto Telecentros, (Prepared for the ICT Policy

Commission)




designation of “telecentres”. In this regard, the telecentres can be con-

sidered as an important complement to the country’s connectivity

efforts.

In 1999 IDRC funded the pilot phase of the first two telecentres, which

were established in the towns of Namaacha and Manhiça respectively.

This project was part of the Acacia Initiative and was implemented in

partnership with CIUEM. Also funded by IDRC was the initial phase of

the telecentre in Inhambane (City).

The services offered by the telecentres include the following:

! E-mail and Internet access

! Basic computer skills training

! Access to computers and CD-ROMs

! Information dissemination

! Telephone

! Word processing and design

! Printing

! Photocopying

! Scanning

! CD-writing

! Binding

! Access to a small library with selected literature.

The phone charges differ from telecentre to telecentre. However, on aver-

age the cost of a local phone call is MT2.50 (about US$0.10) per

“impulse”, which is a time unit equivalent to about one and half minutes,

and MT45 (almost US$2.00) for 30 minutes’ Internet usage. TDM has

recently introduced a unique Internet fee for the whole country, which is

lower than the rate of a local call and as mentioned before, all calls within

the country are charged at a flat rate.

Taking into account the fact that most of the telecentres have to make an

inter-urban call to access their ISPs, and that the quality of the telephone

lines is very poor, which often leads to timeouts and consequent discon-

nections, when considering the low purchasing power of the local users

it becomes clear how important the lower rate is for the sustainability of

this kind of initiative. In practice research shows that Internet use at the

telecentres is still very low, with cost cited as the main barrier.

The Community Multimedia Centre (CMCs) concept results from the

incorporation of a community radio component into the telecentre.

Currently CIUEM is finalising the implementation of 17 CMCs, located all

over the country, with the funding from UNESCO and the Governments

of Mozambique and Switzerland.




DOMAIN NAME REGISTRATIONSCIUEM is the administrator of the country’s top-level domain “.mz”.

There are about 3 000 registered domains in the different categories:

companies,.co.mz; organisations, .org.mz; government agencies,

.gov.mz, and academic institutions, .ac.mz.

The fee for domain registration is US$100 for a period of two years.

Yearly renewals, changes and updates cost US$50.

INTERNET PRICINGLocal telephone costs are one of the highest deterrents to the use of the

Internet in Mozambique. A local telephone call costs US$1.54 per hour. If

the Internet were to be used for one hour a day, this would imply tele-

phone costs of US$565 per year (US$394), beyond the country’s per

capita income! Coupled with the average Internet subscription fee of

US$20/month (or US$240/year), it is quite obvious that the Internet is a

luxury item in Mozambique.

There are no special tariffs for dial-up connection, and ISPs are cur-

rently hoping to persuade the government to designate a lower tariff for

Internet dial-up access as opposed to a voice phone call. One study con-

ducted by an ISP showed that those who provide the services to the pub-

lic in Mozambique generated US$4 million worth of phone calls/month in

2000. If the rate for a dial-up call were to be reduced, this would encour-

age more people to go online and existing customers to spend more time

on the Internet, thereby generating more income for both TDM and the

ISPs. This would also be a good factor for knowledge development.

Dial-up Internet connectivity costs an average of around US$30 for 20

hrs/month. However, there are several hotels8

that offer free Internet

access to their residents, who dial up to PBX’s from hotel rooms – an idea

initiated by one of the private ISPs. These hotels are connected to the ISP

via a 33.6 KBps leased line connection or through a cable connection pro-

vided by TV Cabo.

The costs of Internet services in Mozambique differ a lot, and are pack-

aged in several formats. Some provide services in which they allow e-

mail access only and others allow e-mail that is dependent on the amount

of mails sent or received in megabytes. To start with, Internet access in

Mozambique is gained over satellite links, with the exception of Teledata

which has a leased line to South Africa that is provided over the

microwave link that TDM uses for telecommunications purposes. Tele-

data does, however, have a satellite link to Portugal.

The costs of satellite links are different as well, but they are all within

the current ranges of satellite pricing.

8 These are Polana, Rovuma, Avenida, Terminus, Monte Carlo and VIP hotels.




Table 17 shows the pricing structure; where multiple costs apply. The

minimum cost is shown. For leased lines we have assumed the cost of 64

KBps even if more bandwidth options are available. The cost of web host-

ing has also been assumed for the minimum allowable size.

TABLE 17: COST COMPARISON OF INTERNET SERVICES IN MOZAMBIQUE FOR

FIVE MAJOR ISPS

Service TropicalNet TVCabo Intra CIUEM Teledata

E-mail access only US$11 US$84 US$9 US$15 US$15

+TDM +TDM +TDM +TDM

Full Internet dial-up line US$23,4 US$110 US$43 US$25 US$30

+TDM +TDM +TDM

Full Internet in leased US$468 S$110 US$43 US$200 US$680

line for 64Kbps +TDM +TDM +TDM

Full Internet wireless ptp link US$468 N/A US$43 US$200 N/A

Web hosting US$35 US$25 US$43 US$50 No Info

Mail hosting with own domain N/A N/A US$43 N/A N/A

MySQL database hosting N/A US$600 US$17 N/A N/A

Server hosting (non-ISP) N/A US$600 US$214 N/A N/A

Net hosting (for ISPs) N/A US$600 N/A N/A N/A

According to the information provided by the five ISPs listed above for

the purpose of a comparative analysis, the minimum cost of access to

Internet for email purposes only is US$9 plus the telecom charges, and

the average would be around US$15. On top of that, one would have to

add the dial-up costs of TDM. The cost of a local telephone call during

peak hours is 12.5 US cents. This value only drops during off-peak hours

for regional calls, to which a different tariff applies. This cost is calcu-

lated per minute with a minimum duration of three minutes.

If you dial an ISP with the objective of having full access to the Internet,

which means the possibility to surf all websites, the minimum cost is

US$23.4.

Full access to the Internet using a permanent link is expensive, with the

best case being US$43 when a wireless point to point (ptp) link is used.

If the link is obtained from TDM then US$215 must be added for TDM

charges for leased lines within a radius of 1Km.

Access to Internet in a cybercafé in Maputo varies from US$2 per 30 min-

utes to US$3 an hour. In other provinces this figure is as high as US$5

per hour.

Many ISPs did not disclose the number of dial-up subscribers, but a good

estimate is that bigger ISPs have an average of 2 000 dialup accounts,

totalling 20 000. If we add the users of smaller ISPs, the aggregated fig-

ure is close to 17 000 dial-up accounts.




Today many companies have permanent access to the Internet, so the

real number of users with access to the Internet is higher than the figure

indicated above.

Conclusions

From this profile it can be seen that Mozambique has liberalised the

mobile services sector, resulting in a positive impact in mobile services

offered. However, costs remain high and there is a long way to go to

extend services to the majority of the population. There are areas that

still require appropriate and effective regulation. Some of these areas

are VoIP, WiFi and universal services.

The Internet service sector continues to be poorly developed, therefore

appropriate measures are necessary to spread the use of Internet, espe-

cially in rural sectors that are still very underserved.

The prices of Internet services as well as of leased lines are still high

when compared with countries in the region.

The fact that the liberalisation of the fixed market will take place at the

end of this year gives the incumbent a dominant position in regard to

fixed telephony services, especially with regard to pricing and competi-

tion. For example, the fact that the prices of leased lines, including those

based on fibre links, are much higher than VSAT, discourages many

potential users (eg ISPs, banks and higher education institutions). This

situation has a negative impact on consumer prices and limits the range

of technological choices on the reseller side, with obvious consequences

on the economy.

Another important aspect to consider is the clear trend of financial loss

experienced by TDM, year after year. This situation has become worse

after the split of mCel and the other subsidiary companies from the

incumbent in 2003.

The Regulator has increasingly improved its performance, especially

over the last three years. However, some areas of concern are still weak.

One of those areas is the ability to resolve disputes relating to tariffs, or

to ensure that the tariffs that are in use in the market are reasonable for

the users. Other areas of concern are related to legislation for new serv-

ices such as VoIP, or new technologies such as WiFi and WiMax. How-

ever, it has been indicated that INCM is undertaking a number of studies

that will lead to a regulation in all those areas. "




References:Esselaar, S Gillwald, A and Stork, C (2007) Telecommunications Sector Performance in 16 African coun-

tries: a supply side analysis of policy outcomes, RIA!, LINK Centre, University of the Witwatersrand,

http://www.researchICTafrica.net


Towards an

African e-Index 2007Telecommunications Sector

Performance in 16 African countries

a supply side analysis of policy outcomes

STEVE ESSELAAR

ALISON GILLWALD

CHRISTOPH STORK

This Policy Research Paper Series is madepossible through the support of the International Development Research Centre(IDRC)

For further information see http://link.wits.ac.za

Tel:+27 11 7173913

Fax:+27 11 7173910

LINK Centre

Graduate School of Public Development Management

Witwatersrand University

Johannesburg

Box 601, Wits, 2050

http://link.wits.ac.za

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