NEW DELHI: Taking a cue from the e-auction of 3G which had gone without a hitch and not resulted in the kind of scams or controversies associated with 2G, the Information and Broadcasting (I&B) Ministry had early this year announced adoption of the mechanism and even tried it out successfully with the e-auctions for Doordarshan's free to air DD Direct Plus platform.

Carrying forward its decision to e-auction the third phase of 839 FM Channels, the Ministry has now decided to take the help of the Empowered Group of Ministers (eGoM) that finalized the rules for the 2010 3G spectrum auction and slated 2G frequencies.

The eGoM will also reconsider the total number of channels to be auctioned after the recommendation of the Telecom Regulatory Authority of India (TRAI) on 19 April to reduce the gap between channels to 400Kkz from the existing 800Khz.

The eGoM will be responsible for the request for proposals to select an e-auctioneer as well as to decide on the fee for migration of Phase II FM licencees to Phase III.

Headed by Finance Minister P Chidambaram, the eGoM includes Defence minister A K Antony, I and B Minister Ambika Soni, Telecom Minister Kapil Sibal, Law Minister Salman Khurshid, Minister of State in the Prime Minister's Office V Narayanasamy and Planning Commission Deputy Chairman Montek Singh Ahluwalia.

Unlike Phase II in which licences were issued for a 10-year-period in 2006, Phase III licences will expire after 15 years.

But some potential broadcasters feel that with e-auction, the base price for some cities may be too high. The base price for new channels in existing FM Phase II cities will be the highest bid amount received for that city in the last auction. In the case of cities being newly bid, the reserve price will be the highest bid price received during Phase II for that category of cities in the region.

The radio industry grew 15 per cent in 2011 to Rs 11.5 billion in revenue from Rs 10 billion in 2010.

According to the 2012 media and entertainment industry report by Federation of Indian Chambers of Commerce and Industry and KPMG, the radio broadcasting sector is expected to grow at a compounded annual growth rate of 16 per cent till the Phase III stations begin operations by mid-2013. After the Phase III stations start, the industry is expected to grow by 22 per cent CAGR. The radio industry's media ad spends too are estimated to increase to 5 per cent in 2016 from around 4 per cent currently.

The report estimates that the government will earn around Rs 15 to Rs 17 billion from the third phase. Phase III is expected to cover 227 new cities, in addition to the current 86.

In the four metros, only Kolkata will not get a new FM channel. Mumbai will get two while Delhi and Chennai will get one each.

Under the current Phase II, 245 FM channels are operational in 86 cities, with a population of over 300,000 or more each.