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FM radio privatisation: Centre keen to end litigation in phase II

09-December-2004
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FM radio privatisation: Centre keen to end litigation in phase II

The government is set to fine-tune the FM radio privatisation policy in phase II in such a way that there’s no scope for litigation. In the first phase, a series of court cases had come up involving radio companies and the government. Many of these cases are still in court. The Centre is currently working on the reasons why so many players moved court in the radio sector.

A government official told FE that “the second phase policy framework would address the root problem of the the first round of privatisation.” High licence fee was the biggest hurdle for phase one licensees, leading to revenue losses, payment default, and in some cases legal disputes with the government.

Keeping in mind the issues in the FM radio industry, Telecom Regulatory Authority of India (Trai) recommended a shift from a licence fee regime to a revenue-sharing era. Although the government may not accept the 4% revenue-sharing model proposed by Trai, it’s looking at a practical alternative, the official indicated.

Even as revenue-sharing model makes sense, there are administrative problems related to the arrangement, the government has conveyed to Trai. Revenue-sharing can also be a source of harassment for the licensees because the government would need to examine their billing and accounts. The model is conceptually good, but the “government is trying to balance it (licence fee and revenue-sharing),” the official added.

On allowing news and current affairs in private FM radio, the government has not taken a decision either. But it is learnt that the government is not keen on permitting news in private FM. Only All India Radio (AIR) is allowed to carry news.

Currently, a process is on to appoint a merchant banker for rollout of FM-II. Among the bidders are merchant banking arms of State Bank of India, Punjab National Bank and Bank of Baroda.

Once the government finalises the policy framework on FM-II, it will go to the Union Cabinet for clearance. The process is expected to be completed soon.

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