Why Vumatel charges a R999 connection fee when you switch ISPs

Vumatel clients recently took to the MyBroadband forum to ask why the fibre infrastructure provider charges a connection fee when users change Internet service providers.

Certain providers pass the fee onto users, which is usually set at R999. Others waive the fee, though this may come with conditions attached.

While certain ISPs will absorb the cost completely with no strings attached, others require you to stay with them for a minimum of 12 months.

Should you cancel your fibre service during that period, you will be charged the R999.

The reason ISPs charge a connection fee is because Vumatel charges Internet service providers R876 (ex VAT) to provision a client on the fibre network – even if they are an existing subscriber switching ISPs.

Vumatel explains

Vumatel CEO Niel Schoeman said that before launching in 2014, they investigated the market to see which models would work.

There were a number of things they wanted to do differently compared to traditional models, with the aim of benefitting the ISPs and users on its network.

Vumatel wanted to not only bring high-speed FTTH to users for “ADSL prices”, but also break the IPC model to reduce any upfront risk and give a more level playing field to the ISPs.

The company also aimed to create flexibility by offering all line rental fees on a month-to-month basis, make the process of changing a service provider easy, and eliminate fees for changing services.

Vumatel also anticipated that it would buy fibre networks that might not use the same system as it does, so it had to be as flexible as possible.

To build a network which could support this, Vumatel invested heavily in Active Ethernet technology and provisioning systems.

Vumatel took the decision to recover the costs of its investment in the architecture of its network through a connection fee.

Schoeman said they felt it was appropriate to recover these costs by charging the ISP a once-off fee to activate a customer, rather than build it into the monthly cost to the ISP.

This prevents the user from being billed for this cost indefinitely.

It is common practice in the industry for ISPs to either blend this cost into their pricing or pass the charge onto the customer directly.

“In an open market, it is entirely up to them to decide how they wish to manage this fee,” said Schoeman.

Now read: Vumatel acquires Fibrehoods

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Why Vumatel charges a R999 connection fee when you switch ISPs