The Advertising Standards Authority (ASA) has upheld a complaint by MTN against a radio advertisement flighted by Cell C last month, in reaction to the yellow operator's attempt to halt new termination rate regulations.
This comes amid an inter-operator wrangle over the Independent Communications Authority of SA's (ICASA's) latest mobile termination rates (MTRs), which favour smaller operators Cell C and Telkom Mobile. Top market shareholders Vodacom and MTN have both launched legal action against the regulator in a bid to have MTR asymmetry reviewed.
ITWeb reported last month on Cell C's anti-MTN campaign, which failed to strike the desired chord with consumers. The ad, which started being broadcast before Vodacom filed court papers against ICASA, urged consumers to change to Cell C, "the network that offers the lowest guaranteed flat call rate in SA" - rather than support "one of SA's biggest and most profitable cellular companies" in its legal case against new MTRs.
Partial claims
MTN subsequently lodged a complaint with the ASA, saying the radio commercial "implies MTN is greedy and corrupt with no regard for the interests of its customers".
The complaint goes on to say consumers are "manipulated by the emotive and factually incomplete manner in which Cell C is portraying MTN's review of the 2014 regulations to believe that MTN wants to exploit the consumers for the benefit of making money".
MTN argued that, in its ad, Cell C failed to mention that it would be "the primary beneficiary of the change in the regulations".
Cell C, in turn, denied saying MTN was motivated by greed, or unfair to consumers, adding: "It is a fact that MTN is paying high legal fees for the litigation, as the legal team that is working on the litigation include their attorneys, two senior counsel and one junior counsel. There is nothing indicating that these astute legal minds are acting pro bono.
"It is also most likely that, like every company, the money to pay lawyers comes from the company coffers. In the case of MTN, the company coffers are funded by cellphone and data usage charges paid by their customers."
Cell C also argued it was part of its company vision and positioning that, despite being a smaller player, "it will grow by serving rather than exploiting the consumer".
"[Cell C] believes it has a duty to ensure consumers are being told the truth by the industry. With this in mind, it decided to inform the public of the expensive litigation that is currently under way and that has the ultimate potential outcome of keeping all costs up."
At the end of the day, however, the ASA ruled in favour of MTN, saying Cell C's advertisement in essence communicated to consumers that MTN did not want its call rates to be reduced, that it was trying to stop the reduction of call rates, and that it was doing this by using lawyers that are funded by its customers.
The ASA ruled that Cell C's radio ad be withdrawn and not used again in its current format.
For the full MTN versus Cell C argument and ASA ruling, click here.
The script
Cell C's radio ad aired on all of SA's major radio stations from 20 February:
"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."
Rate wars
Termination rates are the fees operators pay each other to carry calls on their networks. According to ICASA's new regulations, MTRs will drop from the current 40c per minute to 20c (which the smaller players will pay Vodacom and MTN to carry calls on their networks), while Cell C and Telkom Mobile will be able to charge their larger counterparts 44c per call terminated on their networks.
A thee-year glide path will see MTRs reach 40c for Cell C and Telkom Mobile, and 10c for the two dominant players in 2016. Because of the legal action currently under way, the new MTR regime will kick in as of 1 April, rather than the initial date of 1 March.
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