The runaway success of ?clock auctions? used to select winners of 3G and BWA spectrum has prompted the government to take the same route to award FM radio licence as well. However, the method, which could help raise maximum revenues and improve transparency, does not find favour with FM radio operators, since they may be forced to make expensive bids.

Sources told FE that the Cabinet secretary has issued a direction to use the 3G auction methodology to select FM radio licensees. The department of telecommunications (DoT) will work with the information and broadcasting (I&B) ministry to conduct the auctions.

Clock auction model, used for the first time in the country in 3G/BWA auctions, helped the government raise Rs 1,06,000 crore, more than three times the budget estimates of Rs 35,000 crore.

In the clock e-auction method, the government kept raising bids till equilibrium was reached in all the 22 telecom circles. This left room for bidders to enter, exit and re-enter, making the auctions a long-drawn process where prices far overshot estimates.

Licence for the third phase of FM radio rollout can be awarded in a similar way, since they are allotted on a city-basis. The clock auction method can be easily adapted in its case, where players would have to keep on putting bids till auctions are over in all 217 cities.

The conventional auction method was used to select winners in the earlier two phases of FM radio rollout.The government invited bids based on certain eligibility criteria, the radio aspirants submitted the bids in sealed envelopes, and the highest bidders won the licences.

Opposing the proposed bidding process, Prashant Panday, CEO, Radio Mirchi, part of the Bennett Coleman group, said: ?In the second phase bidding, the government earned good revenues from the auctions. There was complete transparency as well. The same process should be continued.?

?I am not sure how many of us will actually take part in FM-III bidding.

The government knows our position. We will make our point to the government if it goes for auctions based on the 3G bidding,? said Rahul Gupta, director, Radio Mantra, part of the Dainik Jagran group.

?The financial viability of FM radio business has been under a question mark. If a new bidding process is adopted, it will definitely lead to cost escalation. Not many radio companies have that kind of money,? Apurva Purohit, chief executive, Radio City told FE.

Including fees for migration from the first phase, the I&B ministry earned Rs 1,600 crore from tender-based auctions for 337 stations across 91 cities in 2006 under the FM-II policy. This could go up several times if the clock auction model is adopted.