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Phase III auctions may not see reduction of minimum frequency separation

15-May-2013
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Phase III auctions may not see reduction of minimum frequency separation

January 2006 was when the last round of auctions for radio broadcasters was held. And since then, it’s been a long and anxious wait for the industry looking to expand its operation. With the Cabinet recently clearing the Empowered Group of Ministers’ e-auction decision for 839 FM radio channels in 294 cities, the industry is optimistic that the third phase of expansion will finally take place in the current financial year. But, there are various concerns of the radio operators that still remain to be addressed. One such decision is reducing the inter-channel spacing from 800 KHz to 400 KHz. In other words, it means reducing the minimum channel spacing/ frequency separation between the adjacent channels’ carrier frequencies.

The Ministry of Information and Broadcasting (MIB) had requested the Telecom Regulatory Authority of India (TRAI) to give its recommendation on reducing the minimum channel spacing in the FM radio sector. The regulator on its part had said it was technically feasible to reduce the minimum channel spacing to 400 KHz and this would in turn lead to effective radio spectrum utilisation. In simple terms, this means that the number of radio channels will be doubled as more frequencies will be available by reducing the spectrum. With more frequencies available, viewers should get to listen to more varieties of music, niche content such as talk shows and a sports channel could also be on the cards.

In fact, in its recommendation, TRAI had mentioned that this will facilitate greater consumer choice, better utilisation of natural resources and would spur innovation and healthy competition and growth in the industry. However, operators believe that the government will not change the inter-channel spacing in the upcoming auction process. This is because though TRAI has given its recommendation the government has yet to accept it.

Ashwin Padmanabhan, Business Head – Big FM, RBNL shared, “Looks like at least in this phase, the government might go ahead with current separation versus reducing the separation. What it can potentially do is that in the larger cities where there are only one or two frequencies, the bidding can really go out of hand.”

While some believe that scarcity of spectrum, especially in key metro markets, (Mumbai – 2, Chennai and Delhi – 1 each) could lead to irrational bidding, Apurva Purohit, CEO, Radio City  does not foresee such a situation arising. She said, “The radio industry is going through the auctioning process for the third time. I think current and prospective new players are very clear about what the industry can deliver in terms of revenue, margins and profitability. Most players have the maturity, learning and understanding of the last 15 years to know what to bid for.”

However, most players do agree on the fact that listeners will not get to hear differentiated or niche content any time soon. Tapas Sen, Chief Programming Officer, ENIL said, “I am very doubtful that there is going to be a new genre of music. Genres other than music i.e. sports, talk radio, etc., are highly improbable because these are going to be very expensive options and the cost of entry is so high that you cannot afford to be in a space other than mainstream.”

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