Govt looks set to nix revenue-sharing model for FM

NEW DELHI: The government is unlikely to accept a recommendation of the broadcast and cable regulator that a revenue-sharing model be adopted during the second phase of FM radio in the country.

It would also make it mandatory for licence holders in metros to obtain a licence in smaller cities. This step is likely to be taken with an aim to spread the FM radio coverage in the country.

Government sources also said that there will be no review of the existing ban on news and current affairs on private FM radio stations, though Trai has said that the government may go in for a review of this policy.

Keeping news out of bounds for private FM players is a way to ensure that All-India Radio, now having sole prerogative to broadcast news on FM frequencies, does not get financially hit or its development stymied.

Telecom Regulatory Authority of India (Trai), in a comprehensive set of recommendations on radio broadcast policy earlier this week, had said that the government should go for a one-time licence fee with an annual 4 per cent revenue share in place of auctioning off FM licences.

According to government sources, non-acceptance of this suggestion owes its genesis to the financial implications that it would have on government's revenue collection.

Pointing out that adequate monitoring was difficult in the radio FM sector, unlike the telecom sector, the sources said that there would be severe fall in government revenue if revenue share model were adopted.

According to initial calculations done in the information and broadcasting ministry, if the revenue-share model is adopted at the rate of 4 per cent, then the annual mop is likely to be in the region of Rs 100 million, in sharp contrast to almost double the amount that the government collected during the first phase of auctioning of licences. also learns, however, that to ease the financial burden of the private sector FM players, the government would use the highest bid in a city, for example, as the benchmark for handing out licences.

Questioned on the sidelines of a function to unveil an Independence Day special issue of Employment News (a government publication), information and broadcasting minister Jaipal Reddy today said, "I cannot comment on them (Trai recommendations) at this stage."

Asked whether the government is aware of a deadline of 29 August on licence fee payment by private sector FM players, the minister said, "All those aspects would be taken into consideration when we decide (on the egulator's


A full radio broadcast policy, which is expected within two months, is likely to have another rider that would ensure licencees in A+ cities, like the metros, also have to take a licence in nearby cities that may not be considered too attractive financially.

This stipulation is akin to the telecom sector where private sector telecom companies have to fulfill some social obligations in the form of spreading telephony in rural areas. Alternately, they also contribute financially to a fund called the Universal Service Obligation fund.

For those seeking to set up FM stations in the north-eastern region of the country, there would be several concessions.

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