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15 per cent cap irks FM operators

29-January-2015
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15 per cent cap irks FM operators

The Ministry of Information and Broadcasting (MIB) held a pre bid meeting with radio operators and consulting firms to discuss the upcoming auctions. The agenda of the meeting was to highlight the process of the auctions and to allow radio operators to put forward their doubts and suggestions.  C-1, the selected e-auctioneer of the process also outlined the process for carrying out the auctions

Among the more interesting points that came up during the discussions was the levying of a 15 per cent cap on each bidding phase. What this means is that an operator cannot own more than 15 per cent of the frequencies up to each auction phase. So, for example, in the partial auctions which will be held soon; there are 135 frequencies up for grabs. Currently, there are 243 operating channels in the country, which brings the total to 378. According to the rule, an operator cannot have more than 56.7 (56/57) frequencies.

Though this might not be a big issue for most operators, certain channels which currently have a high number of operating stations might get affected. "It affects all big players and us specifically. Ideally we would have liked to go into more cities but this restricts us to go into few cities only. As a natural corollary the likelihood gets skewed towards metros and mini metros and the C and D categories will be left out. The other option is to surrender some existing stations and bid for more cities which again does not help the growth of radio," said Nisha Narayanan, COO of Red FM.

However, it has been learnt that the ministry will not be allowing operators to surrender stations. Anyway, since most of the frequencies are in the high revenue regions like Mumbai, Delhi, Bangalore, it is unlikely anyone would want to relinquish them. Narayanan said that they have approached the MIB to reconsider this decision. However, another operator opined that this was more of an issue with only a couple of operators who have a number of frequencies and would not affect others.

Another major point that was raised was on the government decision to hold co-terminating auctions. What this means is that the auctions for all cities will be held simultaneously and the full process will not be considered over till the time the entire auction process is completed. So, if an operator has successfully bid for a certain frequency in a city, they will still only be considered as 'current' owners till the entire process is over since another operator can come in at a later time and outbid them.

Operators also asked the ministry to help resolve outstanding issues with BECIL and Prasar Bharti since all pending dues have to be resolved before signing the GOPA and moving ahead with the auctions.

The ministry said that it has made a note of objections and suggestions raised by the operators and will make a decision in the next couple of days. "We are happy with the meeting since it proves that the ministry is on track with the auctions. The next phase will be the release of NIA (Notice Inviting Applications) which should be out next week if they stick to their timetable," said another operator.
 

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