Govt. rejects TRAI proposal for lower reserve fee for FM phase III auctions

NEW DELHI: The recommendations by the Telecom Regulatory Authority of India (TRAI) to review the reserve price for FM phase III auctions have not found favour with the Information and Broadcasting (I&B) Ministry.

TRAI had recommended a change, after going through the views expressed by radio channel operators and new stakeholders that the price was too high.

However, the Ministry has pointed out to TRAI that the reserve price was fixed by a Group of Ministers and later approved by the Union Cabinet.

TRAI had expressed apprehensions that the auctions could be jeopardized since many operators felt the price was too prohibitive. The phase III reserve fee formula (highest bid of phase II), has already led to a lot of opposition from broadcasters.

When asked if this would lead to lesser number of bidders for phase III, I&B secretary Bimal Julka told indiantelevision.com, "We will cross the bridge when we come to it. At this moment, I can only say that we have accepted the TRAI recommendations with some exceptions.'' 

When the process begins – hopefully expected to start by October as indicated by Ministry sources - phase III is set for auction of 839 FM channels across 294 cities. These sources did not feel the reserve price was a major issue as the players likely to bid for the channel are large parties.

However, the Ministry sees nothing wrong with the TRAI recommendation of allowing 15-year licence period for operators migrating from phase II to phase III as phase II had provided for 10 years of licence.

TRAI had also recommended a lower minimum channel spacing of 400KHz for FM radio broadcast, as against 800KHz now, to allow more radio stations which has not been accepted by the Ministry. 

The recent 2G auctions which came as a result of an order of the Apex Court had justified the need for a low reserve fees.