I&B ministry rejects clock auction for FM radio III

The auction of 806 FM radio stations across 217 new towns in the third phase (FM-III) of private FM radio will be held on closed tendering process instead of the online ?clock auction? methodology adopted by the telecom ministry in awarding the 3G and broadband spectrum recently.

The ministry of information and broadcasting (I&B) is said to have turned down the request from the Committee of Secretaries (CoS) which had recommended it to model the FM-III auctions on similar lines as done by the department of telecommunications in the 3G and broadband auctions recently.

As reported by FE earlier, the CoS had urged the I&B ministry to adopt the e-auctions methodology for the FM-III auctions so as to impart fairness and transparency and also to maximise the government revenue.

According to sources, the I&B ministry in its Cabinet note on the policy guidelines for FM-III has said the telecom model is fundamentally different and ?can not? be adopted for FM licences. This comes in line with the collective view of a number of existing private FM radio operators who voiced their opposition to the online ?clock auctions? recently.

Now the I&B ministry will adopt the system of closed tender, two stage sealed bidding process. In the first stage, the technical and financial status of the bidders will be evaluated based on the FM-III guidelines. In the second stage, all eligible bidders will have to submit their financial bids for FM frequencies which will be auctioned based on city-wise classification, sources said.

The Cabinet is likely to take up and clear the FM-III policy within next few weeks after which the I&B ministry will issue the guidelines for the third-phase expansion of FM radio within a month. The FM-III will put on auctions 806 FM radio frequencies across 283 towns of which 217 towns will get access to private FM radio for the first time.

Sources said the I&B ministry is likely to auction the 806 FM stations in batches over a period of three years starting 2011. This means, the FM-III auctions will be held in three stages and all the 806 FM frequencies will be auctioned only by 2013.

Experts say the main action will be in the A+, A, B and C category towns which have already been exposed to FM radio.

In FM-III, the government has increased the foreign investment cap from the existing 20% to 26%. Also, news will be allowed in FM-III but the operators will have to source the same from All India Radio. FM operators in the third-phase will also be able to own more than one station in a city. However, there will have to be three different operators in the city in which one company-multiple channel policy can be implemented. Also, operators can not own more than 40% of the total channels in such a city.