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Here's why Friday's cabinet approval is a big decision for FM

19-January-2015
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Here's why Friday's cabinet approval is a big decision for FM

The cabinet's announcement that it had agreed to the partial auctions process and the TRAI recommendations was met enthusiastically by radio operators, who had been waiting for three years for the government to finally moved ahead with the Phase III of private FM expansion.

Now that all approvals have been received, a date for the holding of auctions is expected to be announced early this week. So, why is Friday's announcement so important?

First and foremost, the operating licenses of some of the radio operators are set to start expiring by March 31, 2015. If the auctions were further delayed, these operators would find themselves in a position where they would not be able to function. This was the reason why the concept of partial auctions was introduced in the first place.

Very simply, the MIB will be conducting the auctions in a phased manner. The first block of frequencies that will go under the hammer will be 135 frequencies in 69 existing cities leftover from the Phase II auctions. The auctions of the remaining frequencies including the new cities where FM will be introduced (Phase III will open up 839 FM channels across 294 cities) will take place at a later date.

This is important as the TRAI recommended formula takes into account market price of these frequencies to come out with the new migration fee for a city.

Also, from a monetary perspective, operators will be in a better position to raise funds for the auctions and plan their strategy, the sooner the partial auctions are held and, consequently, migration fee is decided. As one operator put it; "It is difficult to plan expansion when our existence itself is in doubt."

Radio operators told us that the auctions are expected take at least a few weeks, which means that they will have to be held latest by the beginning of February to ensure that operators can migrate before the March 31 deadline. Hence, the reason why the private FM industry has been on tenterhooks since the last few months as the deadline looms ever closer.

As of now, with the implementation of two phases of private FM Radio, namely Phase I (1999-2000) and Phase II (2005-06), there are 243 private FM channels in operation in 86 cities of the country, spanning 26 States and 3 Union Territories.

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