TRAI reiterates recommendations on reserve price for FM radio auction

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The Telecommunications Regulatory Authority of India (TRAI) reiterated most of its recommendations on the “reserve price for auction of FM radio channels” to the Ministry of Information and Broadcasting (MIB).

The regulator had first issued the recommendations on April 10, 2020. The ministry had sent a back reference dated January 13, 2022, asking TRAI to review certain points and provide new recommendations under Article 11(1 ) of the TRAI Act of 1997. The MIB had sought TRAI’s opinion on the possible impact of COVID-19 on the FM radio industry and the future FM radio auction.

TRAI noted that the MIB did not return any specific recommendations and observed that the FM radio sector experienced a decline in revenues during the Covid period.

He further said revenue trends indicate that the private FM radio sector appears to have recovered post Covid. He noted that QE quarterly revenue from December 2021 reached the pre-Covid level of March 2020.

Also, the State Gross Domestic Product (GSDP) per capita showed positive growth for all States/UT except Uttarakhand. The average growth rate across 27 states/UT is 33% and the corresponding median growth rate is 36.9%, TRAI said.

While sending recommendations, TRAI obtained the FM radio listening data from the 2019 Indian readership survey. He pointed out that new data is not available as the new survey did not not conducted after 2019 due to Covid.

“As for the impact of COVID-19 on the radio industry in the bidding during the ensuing Lot III electronic auction, it can only be measured once the auction is conducted by the government,” TRAI said in its letter to the MIB. .

The regulator argued that the points raised by the MIB in its back reference do not reflect TRAI’s recommendations of 10.04.2020 resulting in material change. “Therefore, the Authority reiterates its recommendations of 10.04.2020 on the reserve price for the auction of FM radio channels. The government may decide on the timing of the auction taking into account the effective use of the spectrum available,” he added.

TRAI also reiterated the recommendation that the auctioning of the remaining Phase III channels should be done by decoupling them from the technology to facilitate a smooth transition from analogue to digital broadcasting, broadcasters may be allowed to use any technology (analogue or digital) for radio broadcasting on the frequency that will be allocated to them through auctions in the future, based on their business plan.

“A service provider has the commercial interest and will be the best judge to decide on the most appropriate technology. Any restrictions on the choice of technology will only harm development,” TRAI said.

Summary of Recommendations as of April 10, 2020

1. The Reserve Price (RP) for FM Radio Channels in a city, excluding cities located in NE, J&K and Andaman & Nicobar, must be 0.8 times the FM Radio Channel Valuation in this city.
2. PR for FM radio channels in a city located in NE, J&K and Andaman & Nicobar must be equal to 0.4 times the rating of FM radio channels in that city.
4. RP in 10 border towns under “Others” category in Phase-III is expected to be Rs. 5 lakh per channel.
5. Auctioning of the remaining Phase III strings should be done by decoupling them from the technology. Broadcasters should be allowed to use any technology (analog or digital or both) for broadcasting on their assigned frequency through an auction in the future. In the event that broadcasters opt for digital technology, they should be allowed to transmit more than one channel subject to technical feasibility on a single frequency allocated to them.
6. The current cap of 15% of the total number of FM radio channels in the country allowed to a licensee is no longer valid because the fear of a monopoly is no longer real. This limit is also not practical, as the total number of channels will vary depending on availability. Therefore, such a limit can be removed.

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