The Hindu Business Line : TRAI moots revenue sharing for FM radio

THE Telecom Regulatory Authority of India (TRAI) on Wednesday suggested allowing existing private FM radio operators to migrate from a licence-fee regime to a revenue-sharing agreement.

It has, however, remained silent on hiking the foreign direct investment (FDI) ceiling leaving it to the Government to decide on the issue.

In its Recommendations on Licensing Issues Relating to the Second Phase of Private FM Radio Broadcasting, the telecom regulator has suggested payment of a one-time entry fee and a revenue share of 4 per cent of the yearly revenue as annual fees.

For migration to the new arrangement, it has said that operators must be allowed to do so by paying up all pending dues and withdrawing pending litigations.

The suggestion to switch to a revenue-sharing arrangement was mooted after private FM companies told the Government that they were making losses of over Rs 120 crore.

In order to ensure proper accounting, it has said that if a single corporate entity holds several licences, the accounts of each should be separated. The Government would have the right to get the accounts audited annually.

TRAI has also restricted the number of frequencies held by each entity to 25 per cent of the total number being tendered during a phase. Also, if a bidder is bidding for more than one frequency in a centre, the content should be clearly differentiated.

On FDI, TRAI has said, "It is necessary for the Government to review the policy in a holistic manner and bring about a greater degree of consistency. For FM radio, it would be necessary to place some restrictions on FDI." This has been pointed out because the rules regarding FDI vary from segment to segment.

Currently, foreign institutional investors are allowed to invest up to 20 per cent in the radio business, while 20 per cent FDI is permitted in Direct-to-home (DTH) broadcasting. News channels uplinking from India can have 26 per cent equity while the cable industry can attract up to 49 per cent foreign investment.

On reviewing the existing ban on coverage of news and current affairs, the Authority has asked the Government to take a look. The cross-media ownership issues should be reviewed so that monopolies do not emerge in news dissemination.

The regulatory body has also partially permitted networking of stations. It has said that networking should be permitted but only between stations located in different cities, and it should not be allowed between operators in the same circles. Similarly, no networking should be permitted across licensees, except on special occasions.

During the second phase of privatisation, TRAI has said the maximum number of frequencies should be allowed in the four metros, Hyderabad and Bangalore. Also, towns having population of more than one lakh should be considered.

The I&B Ministry will now vet TRAI recommendations before making a policy announcement. Earlier, a committee under FICCI's Dr Amit Mitra had submitted its report to the Government, which was passed on to TRAI.

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