Cell C ad campaign backfires

Johannesburg, 21 Feb 2014

Cell C's latest provocative ad has turned out to be an own goal on social media platforms.

An advertising campaign by Cell C vilifying rival operator MTN, in a bid to win over customers, has backfired, with consumers blasting the "consumer champion" on social media platforms for what they say is poor network coverage.

This comes after Cell C yesterday launched a widespread online and on-air campaign in the wake of MTN's High Court application against the Independent Communications Authority of SA's (ICASA's) new Call Termination Regulations, introduced at the end of January to increase competition in the mobile market and give smaller players a leg up.

Apart from an advert on all the major radio stations, Cell C also posted a video on YouTube - "Change to the network that's on your side #TalkIsCheap" - both of which include tacit, but obvious references to MTN as a highly-profitable - and greedy - entity that is fighting lower prices for the consumer.

Using the referenced hashtag, Cell C has also taken to Twitter to make MTN a bitter taste in consumers' mouths, with tweets like: "Do you think the giant cellular networks really want to bring call prices down?"; "Do you feel that the big cellular networks are making obscene profits?" and "Are the giant cellular networks too greedy?"

Boomerang effect

In its ads, Cell C urges consumers to harness the "power in their hands" and stop supporting profit giants: "You can either sit there, do nothing and help them because - hey - perhaps you don't mind all this, or you could change to the network that cut call rates long ago, because it is the right thing to do. You can change to Cell C."

However, the overall reaction on social media was not one of convinced consumers, but one of subscribers discontented with the service they receive from SA's cut-rate network operator. Many said they are, in fact, happy to support a higher-priced network if it can give them quality connectivity.

Cell C's Facebook page was abuzz yesterday with comments like: "Cell C, you might have the lowest call rate, but your signal sucks so much that at the end of the day you pay just as much as the other networks as you have to make two or three calls just to have a conversation. I'd rather pay more and be able to make the call than have the lowest call rate and not be able to make the call." (sic)

Dialogue from Cell C's YouTube video:

"The national regulator has ordered cellular networks to reduce interconnect rates. These are the fees networks charge each other when you and I make calls from one network to another. Now, if interconnect rates are reduced this will mean more competition in the industry and ultimately could result in lower prices for you.
"However, not everyone is happy about this. In fact, one of South Africa's biggest and most profitable cellular companies is taking the regulator to court to fight this.
Here's what South Africa had to say. [vox pop inserts featuring South Africans using words like "corporate greed", "selfish", "stop stealing our money", "you are going to lose customers", "SA is not stupid - we know there are options"].
Cell C then asks, "Is your network treating you fairly?", concluding: "Maybe you should change to the network who's on your side."

"Cell C is affordable. The only problem is their poor network coverage."

"I would rather pay more and know I have signal."

"Calls are cheap coz the Cell C service is Cheap. You pay for what you get. I never had a single problem with MTN in six years. But Cell C is a day to day struggle." (sic)

The company drew criticism from Twitter users, too: "@CellC I would pay more to be connected"; and "@CellC at least we have a connection that works".

Cell C responded on Facebook yesterday, thanking commentators for their feedback, and saying: "We continue to invest in our network and we have rolled out an additional 300 sites for the first half of 2014 with more to follow in the second half of the year."

Pending war

With the termination rate issue so hot on the telecoms agenda at the moment, South Africans can brace themselves for a full-on marketing war, says Democratic Alliance shadow minister of communications Marian Shinn.

"It is Cell C's objective to snatch MTN's customers by 'painting [MTN] as the bad guys'." In a development that is good for consumers at the end of the day, Shinn predicts this kind of advertising is going to become a lot more robust.

Cell C's radio ad, being aired on all of SA's major radio stations:

"Everyone wants to pay less for their cellular calls right? Well, perhaps not.
"You see, one of SA's biggest and most profitable cellular companies is taking the regulator to court over a regulation that says they have to lower their interconnect rates. If those rates are reduced then call rates could be lower too.
"So their lawyers are going to try get the regulator to change the regulation it has already made. And where will they get the money for these lawyers? Well if you are on their network, every time you make a call or text or surf the net, part of the money you pay could be given to the lawyers who are trying to stop these lower rates.
"So you have a choice. You can either sit there, do nothing and help them because hey perhaps you don't mind all this, or you could change to the network that cut call rates long ago because it is the right thing to do. You can change to the network that offers the lowest guaranteed flat call rate in SA. You can change to Cell C. Because after all, the power is in your hands."

For the time being, MTN has seemingly turned the other cheek as far as a marketing counter-attack - which the industry is no stranger to - with its local CEO Zunaid Bulbulia choosing not to comment specifically on Cell C's aggressive campaign.

Indistinct information

Bulbulia did submit his thoughts to media houses in the form of an opinion piece, which delves into MTN's already public stance on the issue of termination rates - the fees operators pay between themselves to carry calls on each other's networks.

"MTN fully expects termination rates to go on falling. But this fall must be informed by a transparent and credible cost study that reflects the costs incurred for all players in the market, including smaller players.

"MTN's concern is that there is no cost basis for the new mobile termination rates and more concerning, MTN has not been provided with any insights into the methodology or the cost data that was used by the authority to compute its new rates," says Bulbulia.

Shinn says she cannot comment on the merits or probable success of MTN's legal argument, but concedes ICASA was not clear to the portfolio committee on how it determined the new termination rates.

"I am not convinced that an asymmetric rate is necessary, coupled to the steep new glide path. Telkom and Cell C are hardly new entrants to the communications market and the rate cut alone could be sufficient to introduce robust competition to the market."