Cellular7.03.2014

Cell C ad exploits consumer ignorance: ASA

By Staff Writer

MTN has lodged a successful competitor complaint with the Advertising Standards Authority of South Africa (ASA) against a Cell C radio advertisement which takes aim at MTN (Cell C ad available here).

The Cell C radio advertisement insinuates that MTN’s decision to institute legal action against the new “call termination regulations, 2014” is aimed at keeping mobile rates high.

The advertisement further advises consumers to move from MTN to Cell C, partly because the money paid to MTN is funding its legal action against the regulations.

MTN complaint against Cell C ad

MTN lodged a complaint with the ASA, arguing that its decision to institute the court challenge is its view that the process undertaken by ICASA in finalising the 2014 regulations does not pass muster in terms of administrative law.

MTN further said that there is no link between termination rates and consumer pricing, as indicated in the Cell C advertisement.

Cell C responds

Cell C responded to MTN’s complaint, saying that the express intention of Icasa is to lower the interconnect rates to reduce the costs to communicate in South Africa.

“Icasa links interconnect rates to retail rates and to this end, it refers to the concept of “pass-through”,” Cell C said.

Cell C added that it is a fact that MTN are paying high legal fees for the litigation. “In the case of MTN, the company coffers are funded by cell phone and data usage charges paid by their customers,” Cell C said.

“We have a duty to ensure that consumers are being told the truth by the industry,” said Cell C. With this in mind, Cell C said that 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.

ASA ruling

The ASA found that Cell C’s commercial creates the misleading impression that “the regulations have reduced the interconnect rates across the board to lower call rates, and that unlike Cell C, who is doing the right thing by lowering its call rates, MTN is trying to prevent call rates from being lowered by challenging these regulations”.

“Cell C’s radio commercial 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,” the ASA said.

The ASA upheld MTN’s complain, and ordered Cell C to withdraw its commercial with immediate effect, and not use it again in its current form.