In 2001, he was appointed to the Communications ministry under controversial circumstances. The earlier telecom policy of the government, formulated in 1994, had allowed private participation in cellular telephony after open bidding, on payment of a license fee determined through the bidding. However, after winning the contracts the telecom companies found themselves unable to pay the fixed license fees, supposedly because the victors fell victim to the Winner's curse. The then Minister for Communications, Jagmohan attempted tough action against the defaulting companies, but was sacked. After this, Prime Minister Vajpayee himself took over the cabinet portfolio (with Ram Vilas Paswan as minister of state) and oversaw the formulation of the New Telecom Policy of 1999. The policy replaced fixed license fees with a revenue sharing agreement, a move that was widely criticized for changing rules midway and causing loss of revenue to the government. Mahajan, who succeeded to the post in August 2001, after a cabinet reshuffle (that also merged the department of Information technology with the Telecommunications portfolio) had the task of implementing this policy.