Fibre price increases – Cool Ideas hits back at Openserve criticism

Cool Ideas recently announced fibre price increases on the Openserve and Vumatel networks which will come into effect from 1 March 2020.

Cool Ideas explained that all of the fibre networks that they offer products through operate on an open-access principle where ISPs lease the line from the fibre network at a wholesale price.

The ISP said that it was forced to increase the prices of several Openserve packages due to increased prices and package changes from the fibre network operator.

“Unfortunately, annual price increases and package changes from Openserve are a reality, and not something we control, and this year we are forced to increase some of our subscriptions,” Cool Ideas told customers.

This explanation did not go down well with Openserve, which released a statement questioning Cool Ideas’ communication to subscribers.

“The statement is misleading and incorrect as it leads readers and Cool Ideas’ customers to believe that Openserve has been increasing broadband access prices annually and that that is the reason for the price increases effected by Cool Ideas,” Openserve said.

“Openserve would like to categorically state that it has never increased the price of fibre lines (OFB) to Cool Ideas.”

“Openserve has, on the contrary, effected several instances of automatic speed upgrades – at no cost – as well as a number of price reductions.”

“Cool Ideas’ statement to its customers is therefore fallacious and disingenuous in that they seek to blame their own price increases on Openserve when this is in fact not the case,” Openserve added.

Cool Ideas hits back

Cool Ideas responded to Openserve’s criticism, saying the operator is correct in claiming that the cost of a line (OFB) has not increased.

However, Cool Ideas said, it is important to consider the cost of OpenServe’s IP Connect in this matter.

“Openserve did provide free upgrades from 2Mbps to 8Mbps, and 4Mbps to 10Mbps as they claim. However, free is not always free,” the ISP said.

“Whilst the basic input cost of the naked fibre line itself to Cool Ideas has not changed, the increased lines speeds provided for ‘free’ by Openserve require additional IP Connect capacity.”

Cool Ideas said it had to upgrade its IP Connect capacity to cater for the 200% increase in line capacities provided for “free” by Openserve.

The company highlighted that the IP Connect price itself is a portion of the “broadband access” price, as without it, it is not possible to provide a service.

“Thus, as a direct result of Openserve’s actions, Cool Ideas’ costs have in fact increased, and our bill from Openserve has increased,” Cool Ideas said.

It added that it is disingenuous for Openserve to claim that the price to Cool Ideas has not increased, considering that one has to evaluate the total cost of service delivery – i.e. Line Fee + IP Connect – when determining the cost price of a product.

“Whilst we have carried the impact of these increased costs from Openserve for over 18 months, we have been forced to adjust our pricing in order to keep the Openserve fibre products viable,” Cool Ideas said.

It added that it respects Openserve as a “valuable and active fibre partner and looks forward to a viable glide-path for the decrease of the IPConnect service fee” so that ISPs can deliver profitable services on their network.

Now read: Openserve killing ISP profits with R135,000-per-Gbps IPC charge

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Fibre price increases – Cool Ideas hits back at Openserve criticism