Sources said that even though the group on telecommunications (GoT) had recommended a one time entry fee for fixed service and cellular mobile service providers, "the proposal has been dropped after considerable objections from the ministries of telecommunications and finance".The GoT, headed by external affairs minister Jaswant Singh will submit final recommendations to Prime Minister Atal Behari Vajpayee within this week, added sources.

Sources said that the policy would not be implemented with retrospective effect and existing cellular and basic licence holders would have to honour their licence agreements.

Earlier in the day, communication minister Jagmohan said in the Rajya Sabha, "We will enforce the terms and conditions of the licence agreement as they have been signed before."

Telecom industry sources expressed concern overthe move to drop the one time entry fee and revenue share proposal. Top industry members, who met on Wednesday to finalise their strategy said that the proposals were dropped following sustained opposition from the ministry of communications over allowing existing operators to move over to revenue share in lieu of licence fees.

Jagmohan said that the government was firm on enforcing the licence agreement, which the operators had willfully entered into. He said the plea that the former had violated licence agreement by giving last mile linkage to Internet Service Providers (ISPs) was totally "untenable".

ISPs have been given the right only for data transmission, while basic telecom operators have been given the right for voice transmission, the minister added. He also denied that there was pressure from Prime Minister's office (PMO) on department of telecom (DOT) on the issue of licence fees. The move to drop revenue sharing comes at a time when the Union Budget for has made a downward revision in thetelecom licence fee collections for 1999-2000 to Rs 1,793.63 crore as against the revised estimates of Rs 2,832.13 crore for 1998-99. The receipts mainly relate to the licence fees for basic, cellular telecom services and of the wireless planning and coordination organisation (WPC).

Sources said the finance minister's move to reduce estimated receipts by as much as 36 per cent over the past year figure of Rs 2,832 crore apparently signals his nod to the concept of revenue sharing for telecom companies.But, this was to be formally confirmed by the group on telecom (GoT), which dropped the entire plan after Jagmohan ruled out revenue sharing on retrospective basis.