After a nudge from the Cabinet secretariat, the information and broadcasting (I&B) ministry has fallen in line and decided to use the clock auction method to allocate licences for 806 FM stations under the third phase of expansion of FM radio.
The development would come as a disappointment to the FM radio players who had lobbied hard against the clock auction method, which was recently used for 3G spectrum?apprehending that it would make them shell out higher amounts.
FE was the first to report in July that buoyed by the success of the 3G and wireless broadband auction the Cabinet secretariat had written to the I&B ministry to adopt the same methodology for allocating licences for the third phase of FM radio.
The I&B ministry resisted the advice citing the different nature of the two businesses and moved a Cabinet note for auction on conventional lines. However, the insistence by the Cabinet secretariat has now not left it with much choice. Sources said the I&B ministry has started re-working on the Cabinet note for the third-phase of FM radio (FM-III) to incorporate the e-auction methodology. The re-worked Cabinet note will be circulated to all ministers by next week, a top I&B official said.
?The clock auction process is under active consideration of the I&B ministry as it has been proven to be a transparent system with no room for any error or complaint. It has also fetched record revenues for the government during the 3G auctions and we don?t see why we cannot adopt it for auctioning the spectrum for FM radio in the third phase,? a senior official in the I&B ministry told FE.
The official also said that for e-auctions, the FM-III bidding will be staged in four or five phases starting with the FM stations in A+ and A category towns (metros and large towns). Under FM-III, the ministry will put 806 FM stations across 283 towns on auction.
Licences for radio FM for the first two phases have been awarded on the conventional auction method wherein the government invited bids based on certain eligibility criteria. The players submitted the bids in sealed envelopes and the highest bidders downwards got the licences.
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.
Under it, the government kept raising the 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 roll out would be awarded in a similar way, since they are allotted on a city-basis. Experts said 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 designated cities.