MetroFibre’s strange fibre price changes — big announcements coming soon

Fibre network operator (FNO) MetroFibre has a few strange changes in the pipeline for its reseller packages but has assured MyBroadband that the reasoning behind its plans will soon be revealed.

MetroFibre notified resellers of the changes, which will take effect from 1 May 2023, in recent emails seen by MyBroadband.

The latest adjustments to reseller pricing differ from the new packages and prices for ISPs revealed earlier this month.

It is important to understand that Internet service providers (ISPs) and resellers are distinctly different businesses.

The former includes the likes of Afrihost, Axxess, Cool Ideas, RSAWeb, Mweb, Telkom, and others who package and sell the FNO’s services.

The role of the ISP is not only to facilitate the sale of the package but to act as an intermediary between the customer and the FNO for as long as they have the product.

That includes providing support for any issues around billing, account management, or technical performance, backed by their own network equipment and software systems.

For ISPs, MetroFibre has reduced the prices of the 500Mbps and 1Gbps packages and plans to increase the prices of its 50Mbps and 100Mbps packages later this year.

It also doubled the speeds of the 200Mbps package, which has been scrapped, to 400Mbps at no additional cost to ISPs.

While a reseller also markets and sells services to customers, they have different responsibilities when it comes to after-sales support.

In the FTTH space, resellers repackage products offered by FNOs but don’t buy or maintain their own capital-intensive equipment for technical or general support.

That means while they also act as an intermediary between the customer and FNO, they often don’t offer the same level of support.

Although resellers are also getting substantial price cuts of 21% and 41% on the 500Mbps and 1Gbps packages, their 50Mbps costs are going up by around 30%.

The increased cost will make it difficult for the resellers to sell the product at a price competitive with major ISPs.

In addition, the costs of the 100Mbps and 200Mbps packages will increase by 18% and 6%, respectively. When the increases kick in, they will have the same wholesale cost as the 500Mbps package.

To profit from each package sold, resellers would have to hike the prices of 100Mbps and 200Mbps packages substantially.

If they worked purely on a “cost-plus” model, the prices of 100Mbps, 200Mbps, and 500Mbps packages would be equal — a strange situation to be in.

The price difference between the 500Mbps and 1Gbps packages has also decreased from roughly 51% to just 12.5%, making the jump to the top-end package even more alluring.

These changes seem like a heavy incentive for resellers to upsell customers rather than focus on affordable packages that match their needs.

The table below shows by how much MetroFibre will be changing its reseller package prices from 1 May 2023.

Resellers are concerned that these changes will hit the pockets of those customers who can only afford the prices of the mid-tier packages.

They could still technically offer all the packages and add smaller profit margins on the 100Mbps and 200Mbps packages to give customers more choice, but the pricing will not be competitive with ISPs.

Fortunately, it does not appear that MetroFibre is planning to change or scrap its 20/20Mbps option at this stage, so entry-level customers won’t be impacted.

MetroFibre told MyBroadband that it was planning a large-scale overhaul of its products and services in 2023, with exciting changes to be announced in March.

The FNO is implementing adjustments in a staggered approach to ensure a “smooth transition for both new and current customers”.

MetroFibre also pointed out that resellers are getting a special option for their 50Mbps, 100Mbps, and 200Mbps customers.

Between 1 March 2023 and 30 April 2023, customers on these reseller packages can upgrade to 500Mbps for free.

In addition, MetroFibre will make a “very compelling” offer to current 50Mbps reseller customers once the promotional period ends.

MetroFibre said that resellers might remove the 100Mbps and 200Mbps packages from their product suite but said no immediate price changes were necessary.

“We will inform our resellers well ahead of May about any further changes which are also relevant to this group of valued customers,” MetroFibre said.

The FNO stated that its 20Mbps product remains an excellent entry-level option.

“However, with the changes that will be launched shortly in the market, we are confident that customers and our valued partners will derive exceptional value and access to real fibre speeds,” MetroFibre said.

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