TRAI invites comments on radio paper

BY ninan| IN Law and Policy | 19/04/2004

Consultation Paper No. 8 /2004

                   Telecom Regulatory Authority of India

Consultation Paper On Licensing Issues Relating to 2nd Phase Of Private  FM Radio Broadcasting New Delhi

 April 14, 2004

 Preface

 Keeping in line with the policy of liberalization and reforms followed by

the Government since 1991, the Government during the Ninth Plan period

allowed fully owned Indian companies to set up private FM radio stations on a

license fee basis. However, the progress of operationalising FM Radio was

very slow. In May 2000, the Government auctioned 108 frequencies in the

FM spectrum across 40 cities in the country through an Open Auction Bidding

process. Out of this, services started in only 14 cities. A total of 37 licenses

were issued out of which 24 are operational (of which 2 have been granted

deemed operational status, pending commencement of actual broadcast).

2. The result of the first phase of liberalization of FM radio broadcasting in

India has thus not been very encouraging. Most of the broadcasters were

finding the projects commercially unviable primarily due to very high amount

of license fee, which they have to pay for the Government. The private

players in the FM industry reported heavy losses that are likely to continue for

some time.

3. The Working Group on Information and Broadcasting Sector for the

Formulation of the Tenth Five Year Plan group felt that treating these services

as source of revenue for the Government is counter productive as they hinder

the growth and quick roll out of the services to the people. As such suitable

corrective policy measures should be taken, so that, in future growth of these

services is accelerated and substantial private investment is attracted to

supplement the efforts and investment of All India Radio.

4. The Tenth Five Year Plan emphasized the need for substantially

enhancing FM coverage from the present 30 per cent population coverage to

60 percent by the end of the plan. One of the thrust areas of the Plan was to

encourage private participation in providing quality services and replacing the

existing system of bidding for licenses with a revenue sharing mechanism.

5. As such the Government decided to reformulate its policy for the

second phase of licensing of the FM Radio and subsequently constituted a

Radio Broadcast Policy Committee on 24.7.2003 to make recommendations

for radio broadcasting for phase - II. The Committee was headed by Dr. Amit

Mitra, Secretary General, FICCI and it submitted its Report in November

2003. The Committee found that the broadcast industry appears to be

unviable under phase-I licensing regime and, therefore, recommended

restructuring of the FM broadcast industry and the phase-I licenses. It

recommended, inter alia, revision of license fee structure and migration of the

license terms from fixed license fee basis to a one time entry fee with an

annual revenue sharing arrangement.

6. The Government notified broadcasting to be a telecommunication

service under Section 2 (i) (k) of TRAI Act On 19th January, 2004. On

February 12, 2004, the Ministry of Information and Broadcasting, Government

of India sent the report of the Radio Broadcast Policy Committee to TRAI for

making appropriate recommendations.

7. Subsequently, on February 24, 2004, the Government referred the

representation made by five private FM broadcasters for deferment of the

Annual FM License fee, till the Government takes a decision on

implementation of the FM Radio Task Force recommendations. Since this

issue was linked to the recommendation on phase II licensing and TRAI was

in the process of preparing a consultation paper on the same, which was

likely to take time, TRAI issued an interim recommendation on 5th April 2004.

It gave the option to the phase I licensees to defer their next installment of

dues subject to the condition that they would pay this amount, after the issue

is decided by the Government, with interest as may be decided finally.

8. This Consultation Paper is based on the extensive analysis and also

comprehensive inputs received from various stakeholders in meetings held

with them. The accounts of the phase I licensees were called for and these

are being scrutinized. Inputs were also received from Ministry of Information

and Broadcasting. Dr. Amit Mitra, Chairman, Radio Broadcast Policy

Committee, gave a presentation on its Report to the Authority on 8th March

2003. The objective of this Consultation Paper is to examine the various

licensing, regulatory and level playing field issues in enabling the issue of 2nd

phase of FM Private Radio Licenses.

9. We are hopeful that this paper would provide the necessary platform

for discussing the important issues relating to issue of licenses for the 2nd

phase of Radio FM Private Broadcasting. The paper has already been placed

on TRAI’s website (www.trai.gov.in)

10. Written comments on this Paper may be furnished to Secretary, TRAI

by 7th May, 2004. For any further clarification on the matter, Secretary TRAI

or Advisor (B&CS), may be contacted at trai07@bol.net.in (Ph.No.26167448)

and rkacker@trai.gov.in(Ph.No.26713291) respectively.

(Pradip Baijal)

Chairman, TRAI

 The consultation paper can be found at: 

http://www.trai.gov.in/April142004%20Final%20Consultation%20Paper%20FM.pdf