The note has also sought the Cabinet's approval to allow migration effective from August 1, for basic and cellular operators, from the present licence fee regime to a revenue sharing arrangement under the National Telecom Policy of 1999 announced in March earlier this year. The note, however, has mentioned that this transition should be allowed only under some given conditions, as mentioned by the Attorney General in his opinion on the subject.

DoT has also proposed the setting up of a Telecom Development Fund (TDF) for enabling theGovernment to set up communications links in remote areas of the country.

The Cabinet note mentions some conditions under which the transition may be allowed for private companies in cellular, basic, paging and other value added services such as voice mail, E-Mail etc. The conditions that it mentions are that all private companies will have to repay 15 per cent of their pending licence fee dues by August 15 and the remaining 85 per cent by January 31, 2000.

The note has suggested that the transition from the present regime of licence fee would be done through the introduction of multiple operators in the field of cellular and basic services. The note says that ``early steps'' would have to be taken to prepare for issue of new licences. The note has suggested that the ``new selection criteria'' for the introduction of new players should be finalised by the Government after recommendations of the Telecom Regulatory Authority of India (TRAI) have been obtained by July 31.

The note states that till theTRAI's suggestions are received, the Government may consider an interim revenue share percentage as 15 per cent of the gross revenue earned by an operators which could be later adjusted as per the TRAI's recommendations.

In the field of cellular services, the note says that DoT and MTNL would be allowed to enter in the field of cellular services. However, the entry of the fourth operator would be done on the recommendation of the TRAI and availability of the frequency spectrum.

The note also states that the amount paid so far by these private operators be adjusted against an entry fee which will be applicable for all future entrants whose bids would be judged on the basis of an entry fee plus revenue share offer.

The note specifies a five year lock-in period during which present promoters would be banned from selling any part of their equity. However, the Cabinet note has placed before the Cabinet, minutes of the meeting with financial institutions held with the Government where the FIIs had suggestedthat while the sale of equity by the present promoters could be frozen, the expansion of the equity base to invite fresh investments should not be barred.

The note mentions that ``advance notice'' of the Cabinet note has been sent to the Ministries of Law and Finance and any further discussions by these ministries could be included in the Cabinet meeting itself. It is learnt that the Finance Ministry may oppose the shift in effective date from the presently suggested six month period to a three month period. The note has pegged loss of revenue to the Government at Rs 1,443.58 crore for a six-month shift in effective date and Rs 2,156.70 crore if this date is extended by nine months.

If the Cabinet resolves the issue tomorrow, the telecom sector could move from a two year period of intense lobbying and usher in a new era of investment ad healthy growth in the sector.

The telecom package