Stop forced fibre speed upgrades
The Internet Service Providers’ Association of SA (ISPA) has cautioned fibre network operators (FNOs) against forcing fibre upgrades on consumers.
“While upgrades advertising ‘more for the same price’, for example, are indeed good news for most consumers, FNOs shouldn’t assume forced upgrades make sense for everyone,” the association said.
Its statement comes after several FNOs announced speed upgrades and price changes in recent weeks, including Metrofibre, Openserve, Frogfoot, and Octotel.
“In today’s challenging economic climate, not all consumers want (or need) a faster service,” ISPA said.
“Some consumers would prefer to experience the same speed service they previously enjoyed and to simply pay less for it.”
ISPA said increasing fibre line speeds often erode Internet service providers’ profit margins.
“FNOs can therefore directly influence the financial viability of ISPs and the competitive market which has taken decades to construct,” ISPA warned.
On open access or mostly-open access networks like Openserve, Vumatel, Frogfoot, Metrofibre, and Octotel, the FNO provides the wholesale service. ISPs then package and sell end-user products.
“A healthy competitive market is beneficial for consumers as market players compete on price and features, trying to offer consumers the best value,” said ISPA.
“FNOs might claim the upgrades are free, however, it can be argued that this is effectively eroding away ISP competition and margins.”
ISPA cautioned this could be a path to fostering an environment where vertically integrated FNOs and ISPs cooperate to push out the competition.
The association said forced upgrades disproportionately impact smaller ISPs.
“This is due to their often limited budget and capacity in provisioning their network for the increased capacity, support and operations for such upgrades,” it said.
“Many ISPs create and offer cost-effective services for consumers on a limited budget, and it is often those consumers who are casualties of forced service upgrades,” said ISPA.
“A ‘free upgrade’ is not always free to the customer, or the ISP.”
Besides possible price increases, speed upgrades could require some consumers to replace existing equipment with higher-performing gear that can support the faster speed.
“This upgrade could entail a site visit, equipment cost, and provisioning downtime,” said ISPA.
Downgrade fees
“Worse, if a customer isn’t happy with the automatic upgrade, and wants to downgrade back to the same speed as before, many FNOs will charge a fee because the customer has (in their view) now downgraded to a slower service.”
ISPA said this practice is unfair and hurts those consumers who are already under financial pressure.
“ISPA encourages all FNOs to consider the impact of forced upgrades on all their fibre consumers, not only on those consumers who can afford it,” the association said.
“If an upgrade is going to be made automatically to any customer’s service, then there must be no charge levied if that customer does not want to take advantage of the forced upgrade and does not want to upgrade.”
FNOs also need to remember that consumers should have the right to choose between getting more for the same price, or paying less for the same service, stated ISPA.
“Internet access has become a necessity for everyone and is no longer a luxury,” it said.
“Many consumers would still welcome the chance to pay less for a service that they have.”
ISPA also warned that fixed-line operators should not take South Africa’s high mobile data prices for granted.
“Due to high mobile data prices, consumers are often forced to use fixed access last mile services like FTTH or ADSL,” it said.
“Should mobile prices drop to similar levels to that of emerging markets like India, consumers could pay around R3,20/GB. This could make mobile data a competitive and viable alternative for consumers.”
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