The Ministry of Information and Broadcasting (MIB), today, released its response to queries raised by FM operators during the pre-bid conference held on January 28, 2015. Operators are sure to be disappointed as most of their requests and suggestions have been turned down by the MIB.
Among the major points was a request to do away with the 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.
15 per cent cap irks FM operators
The point raised was that the bigger operators would not be able to competitively participate in the auctions unless they surrendered existing frequencies, which operators said was counterproductive. However, the MIB turned down the request stating that 15 per cent national limit was prescribed in FM Phase III policy.
Another suggestion to remove the 1 per cent increase in Clock Round Price where bidders equal frequencies (zero excess demand was also not accepted. In its recommendations, radio operators had written to the MIB stating, “The purpose of e-auction is to close the bids when the number of bidders equals the number of frequencies available. Therefore to increase the price when there is no excess demand is incorrect.”
Some radio operators had also requested that MIB waive the 3 year lock-in period for largest Indian shareholder of an existing license holder who takes part in Phase III auctions. This caveat basically means that the majority stake holder is not allowed to change the ownership pattern of the company through transfer of shares. The MIB turned down the request too.
Certain operators had also requested that the MIB remove the two stage process of auctions - channel allocation stage and frequency allocation stage and revise it to a single stage process (channel allocation stage) similar to the Phase II auctions i.e. bidding process should not include frequency allocation, which was again turned down as was another suggestion that broadcasters with pan-India licenses should be given preference to choose such frequency over others. For example, Big 92.7 FM would be given first preference for all 92.7 MHz frequencies available in any city, should they bid for licenses in that particular city. It is easy to see why operators want this assurance as the frequency is pretty much a part of the brand name they have built. However, this request has also been turned down.
One of the major decisions made by MIB in yesterday’s announcement was to refuse to step in between the ongoing tug-of-war between BECIL and radio operators. Operators had requested MIB to let BECIL issue a NOC (No Objection Certificate) regarding the disputed settlements (a case that has been going on for a number of years), so that it does not affect the Phase III migration. However, MIB has again decided to not get involved. In fact, sources said that the Ministry had taken the same stance even during the pre-bid meeting with radio operators.
Meanwhile, the MIB also stated that auction of additional channels that may become available due to reduced channel spacing to 400 KHz would be considered after feasibility studies are completed. Similarly, MIB said that the auctions of the subsequent batch of frequencies would be conducted after a consultation with TRAI on reserve prices for new cities and completion of feasibility study on reduced channel spacing and acceptance of it by the government.