Cost-based pricing in Tanzania
Incyte Consulting assisted the Tanzania Communications Regulatory Commission (TCRA) with the development of a long-run incremental cost (LRIC) model so as to complete the 6th regulatory determination on interconnection charges in Tanzania. Incyte’s work included extensive industry consultation and support to the Panel of Inquiry established by TCRA. The work comprised separate cost models for fixed, mobile and national broadband backbone networks.
Incyte’s analysis extended the downward trajectory of interconnection charges that has been apparent since TCRA first established cost-based rates in 2003. The major factor behind recent cost reductions has been the migration to data traffic, and this trend is expected to continue as 5G networks are rolled out across Tanzania in the coming years. Cost-based voice termination rates are now so low that zero-rating becomes a possibility for future review periods. At the same time the increasing emphasis on data services has led TCRA to impose a price floor on retail mobile data prices. The Incyte mobile network cost model allows TCRA to refine this regulation based on the true costs of data services, using both LRIC and average avoidable cost (AAC) methodologies.