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Vumatel is being accused of anti-consumer and anti-ISP behaviour as part of a fibre speed double-up promotion which turned into permanent “forced” upgrades.
The fibre network operator (FNO) first started offering the promotion in June 2022, and it was initially supposed to run until the end of August 2022.
In October 2022, it made the changes permanent.
The promotion was great news for most customers, who were upgraded to the next-best package at no extra charge, resulting in the following speed increases:
- 20/10Mbps —> 50/50Mbps
- 50/50Mbps —> 100/100Mbps
- 100/100Mbps —> 200/200Mbps
- 200/200Mbps —> 500/200Mbps
- 1,000/200Mbps —> 1,000/250Mbps
But an industry source with knowledge of how the promotion worked told MyBroadband it involved “rather sinister” behaviour on Vumatel’s part.
He explained the FNO had announced an optional incentive programme in September 2022 that would give Internet service providers (ISPs) R500 for every customer who upgraded to a higher speed.
The downside was that participating ISP would also have to pay Vumatel a R500 penalty for each customer who downgraded to a lower-end package.
A month after launching the incentive programme, Vumatel made the promotional speed upgrades permanent.
It did so without the permission of the ISPs or any customer-initiated requests.
As a result, ISPs were not given a chance to upsell their customers to higher-end packages before Vumatel automatically upgraded them.
Simply put, Vumatel made it more difficult for participating ISPs to upsell customers while punishing them for downgrades.
“The incentive was optional, but Vuma’s action after implementing the incentive made it near impossible for ISPs to earn the incentive,” the source said.
To illustrate the big problem with this approach, one can consider a customer on a 100/100Mbps package with Afrihost as an example.
That customer would have been automatically upgraded to the 200/200Mbps product — while paying the same R927 for their old package.
For the ISP to get the upsell incentive, it would now have to convince the customer to upgrade to the next-largest package — a 500Mbps service for R1,197 per month.
That would be R300 — or 32% — more than the customer used to pay.
After the double-up promotion ended in early 2023, the customer was kept on the 200Mbps package but at a higher price of R1,047.
If they choose to downgrade back to 100Mbps, Vumatel will slap the ISP with a R500 penalty.
The ISP would then be left with one of two options — pass the cost onto the customer or absorb it.
The source said Vumatel left it open for consumers to downgrade, knowing that ISPs would be unfairly penalised.
“Affordability is currently more important than additional speed, hence the downgrades,” the source said.
“Due to the current economic state and customers being happy with the speeds they were previously using, many decided to downgrade back to their original speeds and receive a discounted monthly price.”
“For the ISP, this means lower monthly revenue/gross profit, as well as paying a downgrade penalty, for an upgrade it never requested.”
Vumatel claims most participating ISPs benefitted from promo
MyBroadband asked Vumatel for comment on the automatic upgrades and R500 downgrade penalty.
The FNO said the incentives package included material financial rebates, which some ISPs chose to pass on to their customers through better pricing and value.
“The vast majority of participating ISPs have significantly benefited from it,” Vumatel said.
Vumatel acknowledged the programme came with terms and conditions, including penalties, but also said it offered a “massive number” of benefits. It did not divulge the benefits.
The FNO emphasised that it did not force ISPs to use the incentive programme.
However, it did not directly address the fact that its forced speed upgrades would significantly lower the odds of participating ISPs benefiting from the programme, while also increasing the likelihood of customers requesting downgrades that trigger a penalty.
Another major FNO — Frogfoot — recently also implemented a R750 downgrade fee after increasing its packages’ speeds and wholesale prices.
In that instance, the company said that changing speeds and other services required changing terminal equipment at the customer’s premises and some administration on Frogfoot’s portals, which might result in some downtime.
Upgrading does not incur a charge, despite also requiring these changes.
English (US)