Johannesburg — CELLPHONE groups may have thrown away their last chance to devise lower call fees that will not prove too onerous for them, with the collapse of roundtable talks leaving the industry regulator able to enforce its own bigger cuts.

MTN and Vodacom said last week they would cut the fee consumers pay for cross-network calls 19%. This could be misleading as it affects off-peak calls as well as the highly inflated peak rate fee of R1,25 a minute. Despite operators pitching the 19% cut as relief for consumers, callers would save very little if most of their calls were made in working hours.

More crucially, rival operator Cell C has broken ranks and dismissed the proposed 19% cut as cosmetic tweaking. Cell C's role as a dissenter is vital as it isolates MTN and Vodacom and paints them as not genuinely interested in lowering the punitive fees.

Cell C CEO Lars Reichelt said the proposal offered no significant change to the current rate regime, and suggested a far more substantial cut of 40% to 75c.

The way forward is still uncertain with more clashes likely between the regulator, Parliament's portfolio committee on communications, Communications Minister Siphiwe Nyanda and operators. Nyanda ordered the Independent Communications Authority of SA (Icasa) to slash rates consumers pay by November 30, by cutting the cross-network charge to what the service costs.

Yet, after meetings between the operators and Icasa collapsed on Friday, Icasa issued a statement that made no mention of following the minister's directive to cut fees next month. Instead, it plans to continue a long legal process to end only in March. That could put Icasa under more pressure from Nyanda, the portfolio committee and the politicians who have made much noise about their determination to make calls more affordable as fast as possible.

MPs are demanding a drastic cut to 60c with further annual drops until the cross-call fee is just 15c. Nyanda's policy directive did not specify a rate, but said it must be cost-based.

Documents held by Icasa show that linking a call between networks costs no more than 40c. The operators claim it is considerably higher, but are reluctant to disclose their figures.

What is clear is that the 19% cut offered by Vodacom and MTN to create a "blended" interconnection rate of 78c is not generous. It would cut the R1,25 peak rate to R1,01 a minute and the 77c off- peak rate to 62c.

To arrive at the 78c Vodacom said would be the average, you had to "blend" the two figures and assume 60% of calls happened off- peak, said John Holdsworth, CEO of private telecoms player ECN.

"This is a complex calculation, which at best is a token acknowledgment that interconnection charges are too high, but at worse is a manipulative public relations exercise designed to mislead and confuse the public," he said. The true cost of linking a call could be as low as 25c a minute. Calls from community service phones are linked for just 6c, and he doubted they were operated at a loss.

Another commentator said the proposed "blended rate" price cut made him nervous as operators could cut the off-peak rate to almost nothing and leave the peak rate close to where it is.

Icasa was also angry at the operators' inflexibility, saying they "had nothing to put on the table as they could not come up with an agreed mobile termination rate among themselves". As moral pressure had failed, it would continue a regulatory process of developing a framework for competition and cost- based pricing.

Icasa had already identified interconnection fees as a priority in need of regulation, but must assess the competitiveness of the market before imposing pro-competitive remedies. "The conclusion of its regulatory work, as outlined in the law, remains the most optimal way to the resolution of this matter," it said.

Councillor Robert Nkuna said Icasa was putting extra resources into completing the regulatory process as fast as possible. The minister's policy directive was issued to expedite things. Icasa was "working on its response" to that directive. He did not say if it would be implemented, but did not rule out a substantial rate cut by November 30.

That may further infuriate the minister and MPs, who will view it as more procrastination by a regulator they have condemned as incompetent. They are likely to put pressure on Icasa to obey the minister's policy directive instantly, or to enforce regulations that have lain dormant for five years, which stipulate that the fees must be cost-based.

Nyanda, who has met the operators personally to persuade them to lower their fees, could not be reached for comment.