Some of the tricky commercial issues related to private FM radio are likely to go to the Telecom Regulatory Authority of India (Trai) for its views, before the draft guidelines are taken to the Union Cabinet. Revenue-sharing model, migration modalities, and changes in licensing conditions are among the issues that Trai may look at, say sources.
Trai, which was given the additional responsibility of regulating the cable and broadcasting services recently, is looking at various aspects of CAS (conditional access system) and has issued a consultation paper on it. It also froze the monthly cable TV rates in CAS and non-CAS areas, within a few days of being asked to regulate the broadcasting sector.
For the second phase of FM radio privatisation, an expert committee, headed by Ficci secretary general Amit Mitra, gave its recommendations to the government two months ago. The recommendations included revenue-sharing with government at four per cent of gross revenue of an FM radio licensee. “This revenue share shall be subject to review by a committee every five years and may be increased/decreased, depending on the then prevailing market conditions,” the committee said. During the first phase of FM privatisation, players had to pay an annual licence fee, based on the city that a licensee was operating in, which was to go up by 15 per cent each year.
Trai may now consider whether 4 per cent revenue-share is justified or not, and give its recommendations.
The Amit Mitra committee also said that while the licence should be valid for a period of 10 years, as in the case of Phase-I, “renewal of licence should be permitted, for a further period of five years, subject to satisfactory performance by the licensee”. It added, “This assessment and recommendation for renewal of licence will be made by the independent regulator to the government, once the regulator is in place”.
For the existing licensees of Phase-I, migration to the new licensing conditions and revenue-share model is expected to involve a lot of legal issues. That’s why Trai may be involved in the process of finding a solution.