Sources said the committee will forward the reference to the AG by the end of this week. The committee comprises senior officials of the Department of Telecommunication (DoT) including JR Gupta deputy director general (DDG) value-added services, Sadhna Dixit, DDG licensing & finance, and P Parmeshawaran, DDG basic services, among others.

The committee will prepare the reference on the basis of the recommendations by the group on telecommunications (GoT). The GoT has recommended "that the most appropriate course of action to be followed is an incremental approach wherein the existing basic and cellular licensees may continue under the existing contracts and newlicensees are brought into the vacant circles under the new telecom policy".

A note submitted to the Cabinet by the GoT while formulating the new telecom policy (NTP), says that as and when the circles occupied by existing licensees are vacated either by expiry of the existing period, surrender through mutual consent or otherwise, new licensees should be appointed under the new policy regime.

According to the note, the rationale behind this recommendation is to allow the implementation of the new policy without litigation or controversy and enable the entire country to be covered under the new telecom policy regime over a period of time.

Sources said the committee will formulate its reference on the basis of this recommendation.

However, the GoT had discussed three courses of action before making this recommendation. One option evaluated was to terminate/revoke all the existing licences and thereafter bring in a new set of basic and cellular licensees in all circles in accordance with the NTP.

Thesecond was to let existing basic and cellular licensees continue in accordance with the terms and conditions of the licence granted to them, while appointing new licensees in the vacant circles.

The third option was to appoint new licensees in vacant circles and simultaneously renegotiate the contracts with existing licensees to shift them in an appropriate and legally tenable manner to the entry fee/revenue sharing regime.

Of the above three options, the proposal to renegotiate existing contracts is the most desirable option for private telecom players. Having quoted absurdly high licence fees, the industry is grappling with a number of other issues like low growth in volume and revenues and lack of finance.

However, it remains to be seen as to whether the AG will come up with a solution to the problems of the operators.

It may be recalled that the GoT had requested the AG in December 1998, to give his opinion on the issue of operators seeking a roll over in payments till March 31, 1999 and if achange to a revenue sharing model would be morally and legally tenable.

Based on that reference, the AG had suggested that the grant of indulgence to the defaulting operators should be conditional and that the Government's action should not transmit any signal or message that licensees can break licence conditions and remain in arrears.