In case licenses are not de-linked, there will be rollout obligations. Some analysts suggest penalties to be enforced, like taking away extra/unused bandwith for spectrum that is not used optimally. According to Kunal Bajaj, MD, BDA Connect, “Open auction will remove all these problems. Adequate spectrum will be allocated to the best player. However, there should be local benchmarks like existing players should get the first right of refusal.” According to Malik, “There should be no restriction on services as this inhibits competition. In fact, licenses should be given free, as they are meaningless without spectrum. After trading or auctions, those players who have enough spectrum should be allowed to use it the way they want.”

In this scenario, Tata Teleservices has suggested the formation of a spectrum pool, wherein players can pool their extra spectrum and trade it in a free and fair market. Furthermore, it is argued that currently a large chunk of the spectrum is being wasted as each operator requires start-up frequencies as well as guard frequencies to ensure that there is no interference between networks. “The concept of introducing a single radio frequency (RF) network based on the maximum available spectrum and controlled by an independent body will address this problem of scarce spectrum. It will provision the RF network in such a way that the complete spectrum is available to operators a on-required basis. This will resolve all the contentious issues related with spectrum, and provide an efficient RF network to all the existing as well as future service providers. This concept will drastically reduce the capital expenditure and operating expenditure of individual operators, and result in the most efficient use of the available spectrum,” it said on its official website.

Malik explains, “I am in favor of re-sale of spectrum. However, it depends on the micro market structure of pool for resale.” However, according to Satyen Gupta, “Whatever spectrum you can afford to put in a pool should be de-linked from license, as this procedure cannot work while being linked to a license.”

The new TV regulatory regime introduced surreptitiously as regulations under an archaic 1982 Act will to put a stop to many of these plans, if the government manages to defend it from its many opponents and the difficult-to-predict Supreme Court. Dialog for example may have to exit the satellite and terrestrial TV businesses altogether, because only public companies with majority Sri Lankan ownership can even apply for these licenses.

Even if one can apply, the issuance of the license is at the discretion of the Minister. He may also exercise broad discretionary powers to suspend, cancel, or renew/not renew licenses once granted. And unprecedentedly, the duration of the license is one year. So those who get these pieces of paper will have to be very confident about their friendship with the Minister or the President before they make significant investments.

Five of the major telecom operators are majority foreign owned, so it appears that their only option will be to allow majority Sri Lankan owned license holders to provide services over their networks. In the case of Dialog, they have to apply for a new license by November 10th, 2008, which does not even leave them time to restructure the TV business units. This may mean an enforced firesale, which sends a terrible signal in terms of foreign investment.

Of course, there is the alternative of ignoring the whole thing. There is no mention in the regulations or in the parent act about the offense of engaging in TV broadcasting without a license. And absent a definition of broadcasting, it may be possible to argue that the cable headend or the satellite uplink is not a TV broadcasting station, which is the anchor for all the definitions.