Monday, March 12, 2012

Delink FM Radio licences, spectrum: Review panel

The committee to review spectrum usage charges has recommended FM radio frequencies be auctioned by the department of telecommunications (DoT) after being delinked from the broadcast licence of the ministry of information and broadcasting (MIB).
The proposal is aimed at expediting the third phase of expansion in the FM radio industry by bringing about greater clarity in the roles and assets of the two ministries. A senior MIB official said the ministry was looking into the issue.

Farokh Balsara, leader (media and entertainment practice), India, Europe, West Asia and Africa, Ernst & Young, said, "What is happening because of the spectrum issue is expansion in the radio industry is getting held-up. Once licences are delinked from the spectrum, the auction process would be expedited."

The delinking would clear the cloud over the valuation of radio spectrum and the distribution of auction proceeds that the current system of auctioning FM broadcast licences (inclusive of radio frequency) by MIB is likely to result in.

In July, the government had cleared the policy for the third phase of expansion of FM radio by approving e-auctioning of 839 new private radio stations — the highest number of stations and cities ever offered. The auction is expected to help the government earn about Rs 1,733 crore through auction fees in 227 cities. The MIB has indicated it would award all licences by 2015.

In the last two phases, the government had offered 250 stations to the private sector across 86 cities. The policies for phases I and II resulted in revenue accrual of around Rs 1,733 crore through one-time entry fees, migration fees and annual fees.

The radio industry in India, which has around 36 FM radio operators, is estimated at Rs 1,200 crore. Once all the licences are sold, stakeholders say revenue would double and the number of stations would rise to over 1,000 centres.

"The inter-frequency gap in FM radio currently stands at 800 Hz, which is twice the figure globally. Once spectrum is delinked from licensing, it would be easier for the DoT to reduce the gap and make available a larger number of frequencies for bidding. The increased supply may help in addressing concerns about e-auctioning irrationally raising spectrum/licence prices in the industry," said an industry expert.

The FM phase III policy is crucial, as it would help the medium enter new geographies. It would also help improve the radio industry's share in the advertising pie from five to about 7.5-8 per cent by 2017. In markets such as the US, this share stands at around 10 per cent. (business-standard 11/3)