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Ethics | Habza.pl

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Play Mobile: When your marketing strategy costs you more than expected

I had been thinking about this entry fro some time, but sou know how it is – lack of time. Today, the company about which I am about to write will have a press conference where they may address issues mentioned here. I just wonder how misplaced my guesses will be ;-).

Play Mobile is a Polish cellular telecommunications provider, known also as simply P4. As you can read on their English about page, they have began their operations in Poland in 2007.  Their introduction was a significant event for the market dominated, and almost equally divided among three networks (W3, the Big Three). As for today, the market is estimated to look something like that (number of SIM cards without distinction to postpaid/prepaid):

Total no. of 44,9602 mln SIM cards.

I will not go to the details., enough to say, that Play was the first network to introduce few breakthrough features:

  • an equal rate per minute to all networks – 0,29 PLN (~0,07 €)
  • huge data transmission packets
  • most currently free calls in the network, after a condition of purchasing 30 PLN (~7,6 €) worth credit once every 30 days. Whole credit can be spend on other services.

There are many more, but Play offer is not the point of this article.

To distinguish themselves from the competitors Play is communicating that they are a network with clear and simple rules. No ‘stars’ in the commercials indicating that there are some exceptions from the communicated message. The flat rate to all of the networks is an anchor of they offer. They’ve also used comparative advertising, something uncommon in Poland (whole series of ads with simple visuals where competitors were x-rayed).

Prześwietlenie Simplus from blogplay.pl video – PLAYTV on Vimeo.

So what would you do when your marketing strategy turns against you?

How is that possible? All because of the little thing called Mobile Termination Rate (MTR) – it is a fee paid by the network from which the call is being made to the destination network (where the call is terminated).  The regulatory body, Office of the Electronic Communications (UKE) is responsible for setting this fee. To put Play in the privileged position, calls terminated in that network have a significantly higher MTR – all because Play, in difference to MVNOs, does build their own network (transmitters), and to provide the nationwide reach is forced to use roaming where they are lacking their own transmitters. This difference is intended to cover the years of advantage W3 networks had. The fee was higher, but as for today it is 0,1677 PLN (~0,04 €) for W3, and 0,379  PLN (~0,10 €) for Play (the fee is being systematically lowered). That’s why rate per minute from W3 to Play is something around 0,72 PLN (~ 0,18 €). Such high fee is also intended to discourage people to call to Play, weird strategy, which can easily backfire – people can easily move their number to the different network, whole operation takes just 24h. Postpaid clients are bounded with contracts, but these also have an expiration date… Many commentators are pointing out that this is the main reason why the fees in Play offer are so competitive, and that instead of using this advantage to build their own network, they are fighting for new clients, or rather, as the market is already divided – for the clients of their competitors.

New player shows up…

CenterNet is a new network which, just as Play, is intending to build their own network of transmitters. They were granted with a generous MTR of 0,65 PLN (~0,17 €), and currently are the operator (though working on the basis of roaming mostly) for a relatively small network wRodzinie. I’m not having the exact data, but I can recall that wRodzinie does have something like 50k of active SIM cards.

If you have not counted that yet dear reader Play is loosing aprox. 0,40 PLN (~0,10 €) for every minute of a call made to wRodzinie network. This is not a problem for the W3, who will charge simply more for calls in that direction, but what should do a company for which a flat rate of 0,29 PLN per minute to all of the networks is a core part of their marketing strategy? They’ve chosen the simplest solution – disabled the ability to call to wRodzinie. For all their clients.

Now, you may point out that such action was childish, and they were not prepared that a new network may receive higher MTR. Nope, as the press secretary is pointing out on the official blog the difference in MTRs was not the reason of disabling the connection, as calls to the Cyfrowy Polsat network, which does have higher MTR than the W3 (99% sure it is the same as Plays), is still available. Abuses, and lack of responsibility for them was the reason – CenterNet does not want to be responsible for the artificially generated calls. UKE is currently taking care of this matter, and will most likely force the operators to cooperate.

Play made such drastic move because of such artificial traffic increased significantly, probably also Fixed Cellular Terminals were used to make the whole proceeder easier (a device to which you can put many SIM cards and use the advantage of the variety of the tariff plans among network operators. VoIP providers sometimes use them.).

How should they react for these abuses?

There are few options, the easiest would be a resignation from a flat rate model, and an introduction of ‘stars’ and small lettered messages saying – the rate is applied to all networks, except one. By doing so, you are loosing your main advantage, and also a reputation – you have promised not to introduce ‘stars’. Until the formal agreement will be made, temporary measures should be enforced. I’ll name them from the less-to create a negative impact to the worst. I do not have sufficient data to say at which point should such company stop. In my recognition, disabling the possibility for making a call for all of your clients was the worst move possible.

  • Manpower. We are speaking about a really small network, and calls were made to probably small variety of phone numbers. Create a system for analyzing suspicious behavior among the clients, then use the manpower to double check the suspicious cases (hours long calls to few numbers). Try to contact these numbers. I’m not sure how a FCT works, but it rather does not allow to response for calls, and even if it would – you would be most likely talking with one and the same person all the time… An obvious abuse – disable the abusing SIM.
  • Modify your fair usage policy.  This is a common practice among telecommunication operators, like i.e. Skype with their ‘unlimited’ calling plans, which are de facto limited to 10k minutes per month. introduce a point in your TOS that numbers which are being extensively used i.e. for more than 1k minutes per month can be a subject of further investigation, and if an abuse is suspected – SIM card can be disabled. In my opinion a ‘star’ for such conditions would not be needed – exceeding a 1k (or any other chosen) does not mean an imminent SIM card deactivation – you are just being investigated, and an operator does have the basis for an action.
  • Allow for calls to the wRodzinie network only for registered clients. We are beginning to hurt our own clients here, but it is still a better option than a complete termination. Majority of the abusing calls were made with unregistered newly bought prepaid cards. Why not enforce registration if someone would like to call that specific network? There could be a voice message while making such call, saying – ‘because of abuses we are forced to allow only registered users to call’. What if registration would be made while using false details? Well, this is already a significant hinder for a potential abuser, also there are always first two points…
  • Play had chosen the most severe option. Why? Maybe because they’ve calculated alternatives, and decided that verification on a number by number standard would consume too many resources.  Building a brand image is a hard and longly task.  It is really easy to sow the seed of doubt in the minds of current and potential clients. I’ve not mentioned that earlier, but Play is an ‘expert’ in this area. Their own network does not work properly yet, there are significant problem with the signal reach. They’ve also made some marketing mistakes in the past, like stripping the MIX clients (MIX is a combination of prepaid and a postpaid contract in which you are promising to buy specific amount of credit in a specified timespan, and are allowed to buy a cheaper phone, like in the postpaid deals) of the packets, announcing the termination of a free number promotion something like two hours before the termination on the company’s blog etc. The general message is a lack of security and stability. Their promotions mostly do not have an ending date, and can be terminated at any time, as the free number had been. Sure, after some time it was replaced with something even better (free calls in the whole network), but the impression remained – I can not be sure and feel secure, my promotion can be canceled at any given moment, without a warning. You should not abuse the possibility to cancel your promotion without a warning. Always give a warning, let’s say a week – it really does look much better. Naturally, do not allow for an existence of a vacuum – if one ends, another should be replacing it (Play did not followed that rule). The ‘youth’ network image also does not help. These were not crucial mistakes, but still – there is a doubt in the minds of the clients. Lower price can turn it off, but it will remain there.

This story is universal. Such abuses do happen in many sectors. Not always it is directly connected with a monetary gain of a third party (at this point I would like kindly remind that only the position of Play had been well represented in the media, that’s why the tone of this post is what it is. Personally I do believe that both companies are to be blamed for the situation).  Sometimes system is abused just to create losses by your competitor. That’s why it is always important while creating some promotions/offer which will cost us money, to prepare a stop-loss, or at least limit-loss mechanism. Such mechanism should be also as gentle for the rules obeying clients as possible.

Inspiration: O telekomunikacji w IV RP ;-)

HSBC: Integrity is as important as money

HSBC: Integrity
Uploaded by Habzapl.

This is an eternal problem. What is the true goal for a financial institution. To make money (hopefully also for their clients) you might say. True, but this has to be done in an ethical manner. Especially when we are speaking about mature market, where consumer awareness is high, details, as code of conduct, moral values etc. become important. Is this commercial dangerous? One may interpret it as a lost chance for major earnings, not necessary a thing you want to communicate when you are a financial institution. In the other hand, it does show that HSBC, just like the paparazzi does have higher standards, moral values and will not act in the gray-morale area.  Integrity is important in an institution – client should be aware, that if an organization does use the moral-doubtful earning occasions, one day, it may act in the same way on him.

Inspiration: Blindspot