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Is satellite radio a threat to FM radio in India?

Is satellite radio a threat to FM radio in India?

Author | Asit Ranjan Mishra | Thursday, Apr 27,2006 7:37 AM

Is satellite radio a threat to FM radio in India?

Ten months after Telecom Regulatory Authority of India’s (TRAI) recommendations on issues relating to satellite radio services, the issue is back in the limelight, with FM radio operators opposing the move by WorldSpace to get permission for terrestrial transmission through repeaters.

While FM radio operators oppose it, saying the license would take away the exclusive audience (people on the move) from FM radios, WorldSpace’s contention is that this is the global practice, wherein satellite radio is allowed terrestrial transmission.

Exchange4media spoke to some industry experts and surprisingly found their views equally divisive. While Sanjay Salil, Director, Mediaguru, supported the apprehensions of FM radio players, another industry expert, who spoke on the condition of anonymity, thought the whole controversy was a non-issue.

“The perceived threat by the FM radio players is just unfounded. It will only restrict the choice for the listeners and will lead to restrictive trade practices. In today’s world, you can’t restrict a new technology. In UK, all forms of radio, including digital radio and cable radio, exist happily,” said the expert.

“It is not competition only,” countered Salil, adding, “It is the confusion that it will create and the wrong signal that it will send to the FM broadcasters who have made huge investments from acquiring licenses through competitive bidding to set up expensive infrastructure. The government has taken huge license fees from the FM radio broadcasters, and suddenly allowing a satellite radio to broadcast on the same platform is not fair. It’s like pitching a district level bowler against Sachin Tendulkar.”

When pointed out what Shishir Lall, MD, WorldSpace had told exchange4media a few days back, that satellite radio and FM radio co-existed happily in Western countries, Salil said, “In Western countries, the market has matured. But in India, it’s not the same case. The FM radio industry is still at its nascent stage. So, allowing satellite radio to compete with FM radios at this stage will be harmful for the latter.”

However, the industry expert felt, “Innovations, new technologies never wait for others. Everyday the world is changing and so is the technology.” Citing the Radio Mirchi prospectus, which has mentioned in its risk factors that new technology might affect the prospects of the company, he said, “It would be naïve to say that FM radio players didn’t perceive this threat while bidding. New challenges are part of any business.”

However, both the experts agree on one point that the government should come out with a clear cut policy guideline on the issue as soon as possible to avoid further confusion.

The issue got a twist when recently, when Anil Dhirubhai Ambani Enterprises (ADAE) recently also indicated its interest to enter the space if the government allowed terrestrial transmission to satellite radio.

Rajesh Sawhney, President, Reliance Entertainment, had told exchange4media, “The government cannot grant license for terrestrial transmission of satellite radio to a single party (WorldSpace) unilaterally. Like it did in case of FM Radio, it has to invite bidding from interested parties. When government notifies the policy guidelines for satellite radio we will examine it and if it makes good business sense then we may also consider venturing into the space.”

Experts feel that more players like Tata, who understand the satellite business, might also enter the fray when the government came out with the policy guidelines for satellite radio.

This may put the government in more trouble in policy formulation as even the TRAI recommendation does not envisage any such possibility, and the regulator has recommended 100 per cent foreign ownership.

“In view of the fact that heavy capital investment is involved in setting up a satellite radio service, it is unlikely that a wholly owned Indian satellite radio service may come into existence in the near future. It may, therefore, not be practically feasible to subject a satellite based service provider to similar ownership restrictions that are placed on other media sectors,” the telecom regulator held.

At present, the only existing operator, WorldSpace, is operating its services after obtaining FIPB approval for setting up a 100 per cent wholly owned subsidiary for carrying out software programming activities in India.

However, TRAI had figured out the possible tussle between the FM and satellite broadcasters. “Currently, satellite radio service is being availed by a very small number of listeners, but as satellite radio is likely to become important with growth in the number of listeners in the country, it may have an impact on the listenership of private FM radio, which in turn will give rise to the issue of a level playing field,” TRAI had said.

However, the telecom regulator did not support any entry fee regime for satellite radio operators as opposed to the FM broadcasters. “In case licensing of satellite radio is opened up, there are unlikely to be a large number of applicants, if any. Therefore, the licensing would have to be done on a case-by-case basis primarily aimed at establishing whether the applicant has the necessary financial and technical capacity to execute the project…. Unless the numbers of applicants are such that there is excess demand for the available spectrum space, in which case tenders may be invited on the lines recommended for FM radio,” TRAI held.

On the crucial issue of terrestrial repeaters, interestingly, TRAI considers it essential “to provide reliable service in urban areas, where often satellite line-of-sight is obstructed due to the high rise buildings”.

“It is thus recommended that there should be no annual license fees as long as terrestrial repeaters are not permitted. Once these repeaters are permitted, a revenue share of 4 per cent of the gross revenue generated in India should be imposed as has already been recommended for FM radio,” the regulator further said.

However, with more players set to enter the satellite radio fray, the equation may soon change and government control might become more stringent in this field than expected, which may somehow assuage the FM radio operators’ ire.

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