Reserve price for auction of FM radio channels

The Telecom Regulatory Authority of India on October 16, 2019 released a consultation paper on Reserve Price for auction of FM radio channels. This was in response to MIB seeking recommendations of TRAI on reserve prices for 283 cities (260 new + 23 existing), under FM Phase-Ill policy including factoring in various issues like inflation, indexation of reserve prices worked out in the years from 2011 to 2015, including the reasons for the same as also reasons for variations from earlier recommended reserve prices. Comments on the consultation paper had been sought by TRAI from stakeholders.

MIB has sought TRAI’s recommendations on reserve prices of 283 cities which include 260 new cities and 23 existing cities. The 260 new cities include 10 cities of border areas of J&K and NE states. As per Phase-III policy guidelines cities in border areas with a population less than one lakh are classified in Others category and reserve price for cities in this category is fixed at `5 lakh.

Out of 260 new cities, 155 new cities were identified by MIB in 2011 in Phase-III policy and have not been put to auction yet; 37 new cities were identified by MIB in 2014 on the basis of the 2011 census data and have not been put to auction yet; 41 new cities were put to auction in Phase-III in 2016, but no bids were received in these cities; and 27 new cities were put to auction in Phase-III in 2016, wherein all the channels were not bid. Out of 23 existing cities, auction has already taken place in Phase-III in 16 cities whereas in remaining seven exiting cities no auction has taken place in Phase-III. Reserve prices for 16 existing cities were fixed by MIB in accordance with provisions of Phase-III policy guidelines. Out of 16 existing cities where auction has taken place in Phase-III, in two cities successful bid amount was higher than the reserve price for those cities and in 11 cities successful bid amount was 11 equal to the reserve price for those cities. No bids were received in 3 cities. The 23 exiting cities have 1 channel available in each city.

Recommendations are awaited from TRAI.

Brief backgrounder
The first phase of FM radio broadcasting (Phase-I) was launched by Ministry of Information and Broadcasting (MIB) in 1999. During Phase-I auction, a total of 108 channels in 40 cities were offered to private agencies in the FM spectrum band (88–108 MHz). A multiple round auction mechanism was followed to award these permissions. The permission for operation of the channel was awarded for a period of 10 years. Out of 108 channels, bid amount was paid only for 37 channels. Of these 37 channels, 21 channels became operational.

The government announced the policy for Phase-II of FM radio broadcasting on July 13, 2005. In Phase-II, a two stage bidding process, i.e., eligibility and financial bidding was followed. A total of 337 channels were put on bid across 91 cities having population equal to or more than 3 lakhs. Of 337 channels, 284 were successfully bid and, after scrutiny, permission was given for 245 channels spanning 87 cities. In Phase-II, 222 channels became operational. All the 21 operational channels of Phase-I also migrated to Phase-II after payment of a migration fee. In total, 243 FM radio channels became operational in 86 cities in Phase-II.

To expand the reach of FM radio broadcasting in the country, the government embarked upon Phase-III to enable setting up of private FM radio channels in all cities with a population of more than 1 lakh. Further, 11 other cities having a population less than one lakh in the border areas of Jammu & Kashmir (J&K) and the north east (NE) region are also included in the expansion. Policy Guidelines for Phase-III of FM radio Broadcasting were issued by the government on July 25, 2011.