Trai okays 26 % FDI for FM radio, ban on news stays for present

NEW DELHI/MUMBAI: Broadcast and cable regulator, Telecom Regulatory Authority of India (Trai) has set the ball rolling for the second phase of privatization of FM radio and said that there should be migration to revenue share of four per cent annually and that up to 26 per cent foreign investment could be allowed, subject to government review of the existing policy that bars any foreign investment in this sector.

On the issue of allowing news and current affairs (N&CA) programming on private FM radio stations, the regulator has recommended that the existing restriction be reviewed by government and lifted after incorporating adequate safeguards. This means that till the review is done, the existing bans stay in place.

On the contentious issue of FDI, Trai has said in its report to the government, "The FDI policy should be reviewed along with the policies in other segments of the media sector to make the whole policy consistent. Similarly, there should be a conscious policy decision on cross media ownership as part of the comprehensive media policy. Pending a decision on these issues by the government, there should be no change in the policy for Phase II and formulation of these policies should not delay Phase II. A

suitable time frame should be laid down for licensees to comply with the new guidelines, wherever dilution is found necessary."

ASome of the other major recommendations of Trai include the following:

# A new licensing regime consisting of one time entry fee and a revenue share of four per cent.

# Migration of Phase I licensees to the revised Phase II regime should be allowed in case they are successful in the bidding for Phase II, provided they pay all dues, withdraw all pending litigation and also not be in default of any license condition.

# A low entry fee has been recommended with a view to maximizing the number of players so as to afford the widest possible competition.

# Allowing maximum number of frequencies possible in metros like Hyderabad and Bangalore. A minimum of two frequencies to be offered even at the smallest town in order to ensure competition, variety of programming and keeping the entry cost low.

# Allowing flexibility in technical conditions to optimize the technical specifications.

# Networking should be permitted but only between stations located in different cities. No networking should be permitted within the same city.

# Amend clause 7 of the license under Phase II to allow data broadcasting, including services that are under the jurisdiction of Department of Telecommunications. This will enable the licensee to fully harness the potential of FM infrastructure.

# Government should come out with a policy on uplinking of satellite radio channels and the downlinking process.

# Cross-media restrictions and caps on number of licences that can be acquired by a company also suggested to avoid creation of monopolies

# Co-location of transmitters favoured, but execptions could be made in some cases.

A government official said that the information and broadcasting ministry would study the recommendations of Trai on the second phase of opening of the FM radio and cautiously added that the recommendations need not necessarily mean that all of them would be accepted in full by the government.

Trai's role is recommendatory and the government will take the final call on all the issues.


Touching on the issue of multiple licenses, Trai has said that it has to be seen in the light of the objectives of the policy. The objective of securing variety in programmes can be achieved both by dispersing ownership and by allowing multiple licenses. If there are a large number of owners it is possible that each will bring to the market their own distinctive brand of news, current affairs and entertainment, Trai has observed, adding that on the other hand, it can be argued that with dispersed ownership there would be a tendency for each to maximise their market share and focus on those type of programmes that have the maximum appeal. This would lead to a sameness of the programmes and offer little variety.

Trai has said that after considering all the arguments, it is suggested that there should be some 'limited restriction on ownership' that the number of licenses that one entity can hold in one city will not be more than three or one third of the licenses of that city, whichever is less.

'Such multiple licenses can be given only in cities where there are at least six licenses, including the Phase I licenses. Similarly the Authority is in agreement with the recommendation (of an expert committee on FM radio policy) that there should be a cap at 25 per cent on the extent to which one entity can hold licenses nationally. This recommendation flows from the need to prevent concentration of ownership,' Trai has pointed out.

The I&B ministry on 12 February 2004 sent a report of the Radio Broadcast Policy Committee to TRAI for making appropriate recommendations. Dr. Amit Mitra, secretary general of FICCI, headed the committee. Subsequently, five private FM broadcasters had submitted a representation requesting for deferment of the annual FM license fee till the government took a decision on implementation of the report of the Radio Broadcast Policy Committee.This representation had been referred to TRAI, for its recommendations, by the government on 24 February 2004.

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