- It is common for fibre network operators to automatically upgrade speeds for all users, but this could be a mistake.
- According to ISPA, this practice risks lessening competition among ISPs.
- Furthermore, end users could be burdened with unforeseen costs following a forced upgrade.
While the prevailing logic may be that customers want faster internet and are willing to pay the same price for that, fibre network operators should be careful of making assumptions like this.
These words of caution come from the Internet Service Providers’ Association of South Africa (ISPA).
Why wouldn’t everybody want faster internet? Well as ISPA points out, faster internet could potentially mean that end users have to upgrade their equipment. Why pay for a 200Mbps internet connection if you can’t or won’t be taking full advantage of it.
Worse still, if customers don’t want this upgrade, FNOs may charge them a fee to downgrade. Furthermore, an upgrade could cost an end user time as they could be subject to a site inspection, downtime for provisioning and even a need to replace equipment.
For internet service providers (ISPs), a forced upgrade from a fibre network operator (FNO) could cost the ISP more than it helps.
“Oftentimes, the faster FNO service comes at the cost of margins ISPs operate on. FNOs can therefore directly influence the financial viability of ISPs and the competitive market which has taken decades to construct,” ISPA says.
The end result of this could see a select group of FNOs and ISPs working together to effectively eliminate competition in the space.
ISPA notes that FNOs should at the very least give customers the option of staying on their current package. The association further notes that consumers, “should have the right to choose between getting more for the same price or paying less for the same service.”
“While Internet access has become a necessity for everyone and is no longer a luxury, many consumers would still welcome the chance to pay less for a service that they have. Due to high mobile data prices, consumers are often forced to use fixed access last mile services like FTTH or ADSL. 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,” writes ISPA.
FNOs then need to walk a tightrope in order to make sure that they are keeping all customers happy, whether that be ISPs or end users.