While in principle, the recommendations comply with the PM's announcement to allow free entry and do away with bidding, they deter entry of competition by coming up with recommendations that will be unacceptable to everyone and will give no choice to the consumers, say telecom operators, who are upset at the decisions taken at the full TC meeting held on Wednesday to finalise the policy regarding NLD.

For one, the recommendations say that the NLDOs cannot carry intra-circle traffic. According to telecom companies, this does not make sense, because the recommendations also say that the infrastructure providers will anyway have to lay down a network that goes up to the tehsil level, or else pay a penalty of Rs 100 crore: "So, if we are to go to tehsil level anyway, let us provide basic services as well."

Moreover, since only four of the six companies who were provided licences to operate basic services have done so, it makes sense to let us carry intra-circle traffic and thereby provide basic services, they add.

Another point irritating the telecom operators is that DoT recommends that the consumer not be given the choice of selecting an NLDO. This effectively means that free competition will not be allowed.

The telecom operators are also opposed to recommendations exempting DTS from paying any licence fee in the form of revenue share for their social obligations as directed by the Government. The DTS also wants to be subsidised by the finance ministry, say industry sources.

However, private operators are opposed to this, because according to them, DTS will anyway also get funds from the Universal Service Obligation (USO) fund for setting up VPTs. As TV Ramachandran, COAI director-general says, "They can't have the cake and eat it too."

As far as the entry fee goes, according to the note prepared for the consideration of the TC, on July 31, a one-time entry fee of Rs 500 crore will be paid before signing the licence agreement. Of this, Rs 100 crore will be non-refundable and Rs 400 core will be refundable on the basis of roll-out obligations.

It also suggests an annual licence fee of 10 per cent plus Universal Service Obligations (USO) fund, with a cap of revenue sharing, including the USO at 15 per cent.

The paid-up capital of the companies entering the NLD has been finalised to Rs 500 crore. TC has also decided that the networth of the applicant should be at least Rs 2,500 crore, and only the networth of the promoters who have more than 10 per cent stake should be counted. The recommendations also say the partner may be permitted to be replaced by another partner with equal or more networth. DoT also recommends that partners with 30 per cent equity in the applicant company should have experience in the telecom sector. The recommendations add that the foreign equity in the licencing company should not exceed 49 per cent of the total equity at any time during the licence period.