(22 February 2008 5:25 pm)

NEW DELHI: In a major shift in policy that meets a long-standing demand, the Telecom Regulatory Authority of India (Trai) has suggested increase in FDI (foreign direct investment) cap for private FM radio broadcasters and also recommended that they may be permitted to broadcast news.

For those who are interested in broadcasting news, the FDI cap including FII should be hiked to 26 per cent from the present 20 per cent. And for the non-news category of FM radio operators, the cap should be enhanced to 49 per cent.

Trai has made clear that no change in holding pattern of the shares shall be permitted till start of the FM Radio broadcasting in any circumstances. Diluting the share holding by majority shareholders is allowed after start of FM radio operation, subject to the condition that their share holding does not fall below 51 per cent, with the prior permission of the Information and Broadcasting ministry. Any change in ownership or further dilution shall be permitted after a period of three years from the date of operationalisation, after obtaining written permission of the ministry.

Regarding news, Trai has said that the FM broadcasters should only be permitted to take content from All India Radio, Doordarshan, authorized television news channels, United News of India, Press Trust of India, and any other authorized news agency. "No other source of news is permitted at present," Trai said in its recommendations on the “3rd Phase of Private FM Radio Broadcasting”.

In its report made at the request of the I&B ministry, Trai has recommended that an existing operator/permission holder can be permitted to bid for another channel in the same district if his bid is the highest. But this should be subject to the condition that the maximum number of channels to a permission holder in the district will not be more than 50 per cent of total channels in the district.

Furthermore, at least three channels excluding AIR in any district will be given to three different entities excluding AIR. Thus, the existing ceiling limit of 15 per cent of total FM Radio channels in the country permitted to a permission holder is no longer valid.

In another major recommendation, the regulator has said that the geographical basis for Private FM radio bidding in future may be changed from City to District. The channels available in a district shall be auctioned to the eligible bidders and shall be allocated to successful bidders in descending order of the bid price.

The existing operators/licensees may be given the option to enlarge the area of operation for the same channel to provide coverage to full district after fulfilling certain conditions.

The bidding for remaining 97 channels of Phase-II scheduled on city as operational area may be rescheduled considering district as operational area to avoid complication of subsequent migration from city to district level.

The number of channels for FM Radio broadcast in Category A+, A, B, C cities, now changed to districts basis, which may have been reduced due to non availability of frequencies during Phase-II bidding, may be restored as envisaged in Phase-II, subject to technical feasibility.

The rate of Annual fee in the North East and Jammu and Kashmir may be reduced to 50 per cent of that being charged from all existing permission holders in other areas for private FM Radio broadcasters for an initial period of three years, Trai said.

All private FM Radio broadcasters may be permitted networking within their network. Networking across the permission holders should not be permitted.

Co-channel Spacing within district presently used may not be changed and kept at 800 KHz. Similarly 400 KHz channel spacing between two channels in adjacent districts should be maintained.

All successful bidders may be mandated to co-locate their transmitters with existing facilities of All India Radio, if available and technically feasible, within a pre-defined period of three months. In the absence of AIR facilities, the successful bidders may form consortiums and set up required infrastructure.

The Reserve OETF (One Time Entry Fee) should be fixed at 50 per cent of the highest bid price in a District. The minimum annual fee for a district shall be calculated based on 5 per cent of reserve OTEF.

In order to encourage diversified content development, there should be no restriction on the outsourcing of content production as well as leasing of content development equipment.

Trai said that there should be provision for automatic renewal of permission to only district level permission holder of FM Radio broadcasting. Extension for renewal should be requested four months in advance of expiry of permission period.

The permission holder shall pay the required amount within one month from the date of receipt of such request from I&B ministry. The ministry shall issue permission for extension of operation period for another 10 years within one month from the date of receipt of such payment.

In its introductory remarks, Trai said one of the barriers for further growth identified by the Authority during the consultation process relates to the restriction of existing guidelines that do not permit news and current affairs on FM Radio broadcast. Information requirements of large section of the population lacking access to information through other means like internet, television services, etc. can be conveniently met without any cost to the receiving population only through FM Radio services.

Sustaining the growth witnessed in FM Radio sector is possible only if certain major policy decisions are taken and these include increasing the number of channels for FM Radio broadcast. One such area that affects the viability of FM radio operations in the country is the restriction on multiple ownership of channels in a city and networking of FM radio programmes across entities. The Authority has weighed the pros and cons of these restrictions and has concluded that the benefits arising from the removal of these barriers are likely to be very large.

The change of the unit from city to district would effectively enhance the area of operations of FM Radio broadcasting to larger geographical area, covering a larger population. This, again, would result in reduction in the cost of operations for the broadcasters. Necessary flexibility has, however, been provided for retaining the existing area of operations.