I think that the situation is a little more nuanced, and is perhaps just poorly communicated (not a first for VM).
Previously, you could just request a Hub 3 to replaced earlier hubs, and get one at no cost. This free and on request change has been paused because somehow VM have FUBAR'd their own supply chain for new hubs. So if you're on a speed of 100 or 200, then because the SH2 can cope, they won't change it UNLESS it is faulty, and even then there looks to be a risk you'll get somebody else's SH2 to replace it, as VM are now asking customers to return those for "recycling and reuse".
If however, you upgrade to 350 or higher, then they need to send you a Hub 3 because the SH2 can't deliver those speeds. But you should only be paying the new contract speeds, not any hub upgrade fee or activation cost (well, I wouldn't). And if you opt for a 1 Gig contract then you'll get a Hub 4, because the Hub 3 can't deliver that speed.
So if it is faulty, explain the fault here, and the staff can sort that out for you. If it's not faulty, and you don't want higher speeds then just sit tight, wait a month or three for VM to sort their stuff, and it will probably return to free "upgrade" on request.
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