Govt likely to go slow on FM-III auctions

Written by Ashish Sinha | New Delhi | Updated: Nov 23 2012, 09:48am hrs
With almost half-a- dozen issues to tackle, the implementation of the third-phase rollout of private FM radio (FM-III) is set to spill over to the next financial year, 2013-14. This means that the government will be able to garner a minimum of R2,000 crore expected from the auction of 839 FM stations across 294 towns in FY13 and not in FY12, as planned.

As a result, sources said, the government has decided to go slow on FM-III rollout till it manages to tackle some of the concerns raised by the radio broadcasters. There are four main concerns of the three-dozen FM radio broadcasters. These include disagreement over the prescribed auction methodology, demand for a relook at the city-wise minimum reserve price, inclusion of additional channels in cities (on top of the list already out), and the amount of migration fees for existing radio broadcasters keen to shift to FM-III. Also, some radio companies want the government to learn from the recently concluded 2G auctions for telecom which suffered due to a steep reserve price.

When asked to give a time-line to the FM-III auctions, Manish Tewary, the new I&B minister, said: We will get back on that. The matter is already before an eGoM. Since I have taken charge, I have been on a learning curve. I am examining the matter.

U K Varma, secretary, I&B ministry, said: We are ready with the request for proposal for finalising the auctioneer. Only some minor things need to be sorted out. As soon as the eGoM on spectrum clears them, we should be able to finalise the auctioneer by March. If that happens, experts said the actual auctions cannot happen in March itself. As per the 3G auction time-lines, the auctioneer will have to conduct mock auctions, perhaps more than once. Bidders will need to familiarise themselves with the processes and the system. Arranging for the finances will also be a challenge. Mid-2013 can be practical to hold the auctions provided everything else is sorted on time, said a senior media analyst tracking the radio sector.

Under the FM-III policy, the permission for the channels would be granted on the basis of non-refundable one-time entry fees (NOTEF), i.e., successful bid amount to be arrived at through an ascending e-auction process mutatis-mutandis as recommended by the GoM on licensing methodology for FM-III. The word mutatis-mutandis makes it compulsory for the I&B ministry to seek the Cabinets approval if there are changes from how DoT conducted 3G and BWA auctions. Now eGoM on spectrum is examining the matter, said a senior official.

The FM-III policy was approved by the Union Cabinet in July 2011, when it gave 36 months to the I&B ministry to conduct e-auctions and allocate 839 FM stations.

The DoT's RFP had laid down criteria like previous experience in conducting similar auctions. Nowhere in the world have there been e-auctions for FM stations before. So new conditions have to be incorporated in the RFP for FM-III, the official said.