MUMBAI: The roll out of highly awaited FM Phase III auctions is slowly and gradually reaching its destination. The infant radio industry has overcome major challenges and is on its way of expansion.
After witnessing months of speculation over different issues, the Union Cabinet approved the decisions of the Empowered Group of Ministers (EGoM) regarding amendments in the policy guidelines for expansion of FM radio broadcasting services through private agencies.
The auctions will now be held according to the approved methodology of ascending e-auctions of 839 channels in 294 cities. The new FM radio frequencies will be opened for cities with a population of above one lakh. Currently, 86 cities are covered by FM radio services.
Finance Minister P Chidambaram told media persons in Delhi that, the decision is part of amendments in the policy guidelines for the Phase III expansion of FM Radio broadcasting services through private agencies.
He said the migration fee will be charged from existing operators on their migration from Phase II to Phase III and the amount of migration fee would be decided after consultation with Telecom Regulatory Authority of India (Trai).
Also, as per the Ministry’s statement, the policies approved were the proposed specific departures from the Requests for Proposals (RFP) followed in DoT for auction of 3G and Broadband Wireless Access (BWA) spectrum, the authority to make any other minor changes in RFP would be delegated to the Ministry of Information and Broadcasting and that the additional channels that may become available due to reduced channels spacing to 400 KHz could be considered subsequently after feasibility studies are completed.
Ministry sources told Radioandmusic.com that the auctions are now imminent and the month of May will witness the call for consultations and technical bids being opened up, as the government is ready to go ahead with the long awaited auctions. Moreover, the auctions might take in phases in different cities, so it is likely to commence by August and run till November.
The source also mentioned that the statement considering channel spacing at a later stage was not a very wise move by the government as the players will now not know how much are they actually bidding for. However, more clarity is stated to be provided in the tender, which will be released by end of May, inviting applications for bidding from broadcasters.
As per a report conducted by the BECIL, the aspect of reduced channel spacing was not considered feasible due to lack of proper infrastructure development for the same. The move has been put on the back burner as the interests of the players need to be protected now.
A source said, “Lots of pressure was put on the government for channel spacing, but the reports did not turn out in its favour. It is practically impossible in most cities now and the government may consider it later in the long run as it requires a dedicated infrastructure development.”
However, the move was welcomed by major broadcasters like Big FM and Radio One, who stated that the e-auction process should ensure transparency that will increase value.
Association of Radio Operators for India (AROI) president Anurradha Prasad welcomed cabinet's decision to commence the auctions. "We hope that this will be the first step forward amongst the many required to make the radio industry in India robust and free. We expect that now the much awaited implementation of phase III policy will actually happen and all benefits of the new policy will also be made available to existing operators at the earliest, including the revised 15 year license period," she said.
Ecstatic on the development, Red FM COO Nisha Narayanan said, "It is a great news and was long overdue. The timing is very right as the progress of FM radio over the past 2-3 years has largely been from small towns. The moment these frequencies come in, there will be more potential for growth. It will also enable frequencies being opened up in towns which do not have any radio stations."
Narayanan is very positive about the e-auctions which was a major issue for a long time for players. However, she noted that licence and migration fee still remain a major snag.
"Moreover, the e-auctions will be a good way and we just need to educate ourselves. We are hoping it will be a transparent process so we will also be able to bid wisely. The important thing is to have a healthy balance sheet and good product which has been difficult due to high license fees and more. But the larger issue here is the extension of licenses and migration fee. Today, existing players are unsure about the future as they do not know the amount of expenses that will be incurred for the migration fee. This needs to be addressed so players can make their business plans and ensure a healthy bidding from new and existing players," she added.
Representing the radio station of smaller towns, My FM CEO Harrish M Bhatia said, "I am happy but I am not sure if the auctions can happen as it is not viable due to the high entry fees. I do not see it viable for C and D category towns as there will be no investors in these towns and the ads are also not easily coming in due to the same. These issues need to be resolved soon by the government."
Reliance Broadcast Network Ltd CEO Tarun Katial said, “We welcome the move and look forward to a fair and transparent e-auction process that will result in greater value for our stakeholders. Our investment decisions will be driven by payback and IRR (internal rate of return), and the future projected growth of key markets.”
Radio One MD and CEO Vineet Singh Hukmani said, “The Cabinet clearing FM Phase III is great news. 839 new FM radio stations will make radio the most dominant medium in the country. The government has done its job in instituting e-auction which is a transparent process and it is up to players to bid wisely. The reserve price needs to be looked into to take into account a slow economy. The most critical issue is extension of existing players’ licenses from 10 years to 15 to be on par with Phase III licenses. This will ensure existing players will bid confidently as their current businesses will be secure.”