The Advertising Standards Authority (ASA) has ruled that Cell C must withdraw a radio advertisement that takes aim at rival MTN and its decision to take communications regulator Icasa to court over its final regulations on call termination rates.
Cell C began flighting the ad on 20 February, soon after MTN filed papers against Icasa at the high court in Johannesburg challenging the regulations, which determine what operators charge each other to carry calls between their networks.
Icasa is lowering the rates and introducing “asymmetry” that favours Cell C and other smaller market players in an effort to force down retail prices and increase competition in South Africa’s mobile sector.
Although the radio ad doesn’t name MTN specifically, it’s clear it’s the company Cell C is referring to.
The radio ad, which can be heard below, states: “Their [MTN’s] lawyers are going to try and get the regulator to change the regulation it has already made. Where will it get the money? Well, if you’re 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.”
However, the ASA has found that Cell C omitted part of the truth about the Icasa regulations and that its ad “paints an incomplete picture of the status quo” and creates a “misleading impression” among consumers.
The ad, it said, is “framed so as to exploit the lack of knowledge of the consumer, and misleads the consumer by omitting material facts about the regulations and by misrepresenting [MTN’s] actions”. Because it this, Cell C must withdraw it with immediate effect.
In its complaint to the ASA, MTN, through its advertising agency, argued that termination rates have “nothing to do with rates charged to consumers”.
“Consumer pricing is affected by the sum of many other complex factors, such as competition, capital investment (or the lack thereof), network quality, quality of experience and device subsidies, etc. The radio commercial gives the false impression that the Icasa regulations will lead to lower prices. The effect of the regulations is to reduce the interconnection charges … and is in no way linked to the consumer’s call rates.”
It said that the Cell C ad implies that MTN is “greedy and corrupt with no regard for the interests of its customers” and that its decision to take Icasa to court is “motivated solely by greed”.
“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,” it said in its complaint.
“MTN is portrayed as not being fair to the consumer, and consumers are therefore encouraged to leave MTN for Cell C.”
The ad fails to explain that Cell C will be the primary beneficiary of the change in the regulations, and so misrepresents Cell C’s reasons for being in favour of the regulations, it added.
Listen to Cell C’s radio ad:
In response, Cell C, through its agency, argued that Icasa’s “express intention” with the new termination rates is to reduce retail prices and increase market competition.
It said, too, that it is “a fact” that MTN is paying “high legal fees” for its lawsuit against Icasa given that its legal team working on the case includes its own attorneys, two senior counsel and one junior counsel. “There is nothing indicating that these astute legal minds are acting pro bono,” Cell C said.
“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 said it “has a duty to ensure that 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 underway and that has the ultimate potential outcome of keeping all costs up.”
Cell C denied that its ad described MTN greedy and corrupt, or that it had no regard for the interests of its customers. It also denied saying, among other things, that MTN is motivated solely by greed and that it wants to exploit consumers for the benefit of making money.
“While the overall impression of the commercial does not make MTN look very good, this is because the objective facts do not make MTN look very good,” it said. — (c) 2014 NewsCentral Media
