Vumatel’s high fibre prices under fire

Vumatel is facing criticism for its high fibre prices, but the company says it is necessary for a sustainable business model.

Fibre prices made headlines after Openserve implemented free speed upgrades and price cuts on its wholesale fibre and copper products.

Internet service providers (ISPs) were quick to pass these benefits to subscribers who now enjoy higher speeds and, in some cases, lower prices.

Fibre-to-the-home prices have fallen to below R400 for an uncapped 25Mbps service – never seen before in South Africa.

These prices are, however, only available to people using Openserve’s infrastructure. If you are on Vumatel, your cheapest option is R749 for a 10Mbps service.

Vumatel, which used to be seen as a consumer champion, is now far more expensive than any other large fibre network operator in South Africa.

An analysis of the latest ISP fibre prices reveals that fibre products using Vumatel’s network are significantly more expensive than similar products from Openserve, Frogfoot, and Octotel.

A 100Mbps fibre-to-the-home service over Openserve, for example, cost R917 from Afrihost. The same service using Vumatel costs R1,247.

So significant is the price difference that many ISPs are actively prioritising Openserve over Vumatel in areas where both operators have coverage.

One ISP executive, who asked not to be named, said Vumatel’s wholesale prices are out of sync with the rest of the industry.

Another executive told MyBroadband Vumatel has higher installation fees than many network operators and has an additional R1,000 activation charge.

The company also forces ISPs to sign up to its “Automation Exchange”.

“Nobody really gets much value for this extra cost. It is basically just an additional layer with no value to ISPs or consumers,” he said.

He added that there are more overhead when dealing with Vumatel, like having to provide a large amount of IPv4 space which doesn’t get used.

This raises the question of why consumers don’t just move to a more affordable fibre operator like Openserve or Frogfoot.

The easy answer is – they can’t.

Because of the high cost to deploy fibre networks, there is typically only one provider operating in a neighbourhood.

Consumers can therefore not choose between fibre networks. They have to take what they can get.

Vumatel has a fibre monopoly in many neighbourhoods, which means these residents are paying higher prices than other fibre subscribers. And there is not much they can do about it.

Vumatel users hoping for a price cut in the near future should also not hold their breath. The company may, in fact, increase prices.

The operator was planning to hike prices at the beginning of 2020 but suspended this plan following the state of disaster and national lockdown.

This price freeze will remain in effect until such time as the Disaster Management Act is halted. After that Vumatel is free to implement its previously planned price increases.

MyBroadband asked Vumatel why its fibre prices were more expensive than other operators, but it did not directly answer this question.

Instead, it said, “making sure we make a meaningful contribution to getting as many, if not all homes online, with fibre, and doing so sustainably is not easy”.

“It has been our aim over the last seven years to give our customers the best quality infrastructure and to do so in the most sustainable way possible.”

Fibre network operator pricing comparison

Now read: Telkom launches new uncapped fibre products, starting at R399