fj(~A 0

F pRJVA TISATION AND FM BROADCASTING

rnrnent controlled media, one major reaso

a gove rnent run commercial service is not totally; cou d be that a
Id
7
\

overn . I
g t for its surv1va w h ereas a privately
.
run comepen .ant on the . \
mar ke . d f merc1a1service
·J.
w1 al }ways be un er pressure o market forces so as to .
sustain.
4 In India radio was always treated as a medium for bli .
th · h tl
castingan d at1sw y ,egovernme ntwasalw pu c SeTVIce
Era of Privatisation and broa d . . . f b . ·
·dea of pnvatisabo n o roadcasting . Howe, ·er • av" :..verse to
the 1 . . . . , m e wake of
t
. h

FM Broadcasting econ omic Iiber hsabon . introduced m 1991 the govemm t

. b . en opened
up to involve private sector m roadcasting As a result
. . . · AIR.lllltiated.
..
allotment of ~o~e time slots to private programme producing
companies ~nits first FM channel _(now named as AIR FM Rainbow)
•n 1993· It. 1s on. record that thIS experiment of parti·al .
1 . pnvate
broadcastin g failed ma~nly due to too much insistence of AIR on
PRIVATIS ED COMMERCIAL BROADCASTING
public service broadcastin g and the utter disregard shown by private
The pertinent issues in Indian broadcasti ng include public companies to AIR broadcast code.
broadc~stin g, commerci~ l broadc_asting, ~overnmen t broadcasting After the failure of the first experiment in 1998, it seemed f
and pnvate brnadcastm g. While the issues of public service 0
w~ile that t~e idea of privatisatio n of broad~ti:n g had gone to ~ :
broadcasti ng and commercia l broadcasti ng are related to the wmds. But m the wake of Supreme Court JUdgment on airwaves
objective or purpose of broadcasmi ,g, the issues of government (that airw~ves or freq~enc~es ".11"e public property) the government
controlled broadcasti ng and private broadcastin g fall under the could not ignore the pnvatisatio n of broadcastin g which eventuall
ownership and control patterns of broadcastin g organisations/ came formally in the year 2000. y
companies . From Private Sector to Governme nt Set Up
Public V. Commerci al Broadcasting
:adio br~adcastin g in almost all the countries of tlle world has
Earlier in this book, the issues of public service broadcasting a~d een sub1ect to some governmen t involvemen t. The extent of
commercia l broadcastin g have been dealt with in detail. Wh~le g~vernment involvemen t has been different in different countries at
public service broadcastin g is for the public good, comm~rcial iifferent points of time; while in some countries broadcastin g has
broadcasti ng is for commercia l gains. But the initial segregation of heen totally in the hands of the governmen t, some other countries
. ave
the two later converted into the b 1en d mg O f the two different
d ·t of th a set up of p nva . t
e sector b roadcasting under the regulations
concepts . It was with this approach that AIR launc~e 1 ; e government .
0 0
commerci al services in 1957 with the introdu_c!• :ith In India it · ·
115
privatis ti Is a Journey from private sector broadcastin g to
advertisem ents/comm ercials in 1967, without~ om~ ~~t FM a on
the dream b broadc ~s ting
of of . · In 1923
.:> some entrepreneu rs realised
the novel concept of public service broadcastin g. en ttern of the Calcutt R ro_a dcasting m India. The Bombay Radio Club and
channel started m . . · d on the pa
1992, it was orgamse blic servtce Club enter~ _adlo Club went on air in 1923 and the Madras Radio
commercia l broadcastin g but with due regards to pu e •n broadcasti ng in 1927.
broadcastin g. The first .
· blend of Broactcasti1 Cregular radio service was started by the Indian
This was further reaffirmati.on o f t l1e f ac t that
commercia l and public . .
service broadcastin · cou s
g
Id the
ucceed, 13U t
·11
ible onlY 1
01
~ July 23,;i.,; 111
Pany (IBC) with the opening of the Bombay station
this 1.5 KW t- : The then Viceroy of India Lord Irwin inaugurated
. bl
later developme nts proved that thlS en ll1d . g was poss s atton w·th
1 an e ffective range of 30
miles (48 kms). This
 1¢
94
RADIO IN NEW AVATAR rrsA T(ON AND FM BROADCASilNG 95

came ab~ut seven months after the creation of th

Broadcasting Corporation (BBC) in the UK m · J
AM To FM
..
. e Btthsh
6~"
ofl f'RIVA
ph Act 1885 and some other means of obtaining 1
. anuary 1927
publicly funded organisation with John Reith as its first . as a 111 c11a~ 1el:r:nue in place, broadcasting ~me~. in~ a profitable
General. 0 tree tor 0 {fic1ent r 1934 and the "Government felt JUStified m embarking
~enture ~ f d~velopment." The period from 19'31-34 witnessed
IBC. went into liquidation by March 1930. Under press 011 a policy ~ the listenership of radio though there were no new
th e radio-set ure f rom . crease 111 • ts . .
dealers, p. rogrammers and the general publ' th art 1fl dd d and no 1mprovemen m programnung. Fielden
tc, e
government took over the Bombay and Calcutta stations in A il sta~onse: thi: spurt to the starting of the Empire service of the BBC
1930. Thus, in the first stint of 4 years and 1 month Oune 192f~ attribut b l 932 and "the consequent purchase of sets by a large
July 1927) and in the second stint of 2 years and 8 months Oui° . oecem er,
Jll
numbero
f Europeans m
. Ind' ,,
ia .
. .
1927 to March 1930], broadcasting remained in the hands of th~
Evidently the nature of broadcasting r~mained commercial
private sector.
. the hands of the government. While on one hand the
Even after the broadcasting rolled into the hands of the British even in runent wanted to earn more an d more revenue, on the other
gover tl
government, they gave Indian princely states the right to construct hand it wanted to keep the mvestmen
. F .
ow. or instance an amount
and use transmitters and to collect fees for receiving sets as stipulated of Rs. zo lakh was sanctioned for _the deve~opment of br~dcasting
in the Government of India Act 1935. It is further interesting to note in India but at the insistence of Fielden this amount was mcreased
that few private stations in North West Frontier Province and United II
to Rs. 40 lakh. Fielden even felt that the service which can be given
Province continued to exist till 1935 when AIR incorporated these to India for a sum of 40 lakhs will be poor."
stations into its network for broadcasting rural programmes.
Fielden made recommendations for expansion of broadcasting
Broadcasting under Government Control to rural areas, stating that though ISBS was more a commercial
Except for the above mentioned period of seven years br?adcasting 11
than social service, the idea of sell-supporting service was wrong
in India has remained in the hands of the government 1.e. 1930 t~ and the government should devote the limited funds available to
1997. It may be noted that with implementa~on of Prasar ~harati unremunerative stations in rural areas." The emphasis on planning
Act in 1997 the era of decontrol started in Indian broadcasting:: would initially bring funds "only from the sophisticated listeners
so post 1997 period cannot be accounted for government contro e :hoc~ pay for their entertainment", but there was a po.-;.5ibility to

~=
~ro~de a service both for the towns and the villages, which has
broadcasting. fu ther be Wifum it the seed of development on a selfsupporting basis."
The era of government control (1930-199;J4~a~d ~e otlwr
subdivided into two periods, one !
930 :tter understanding fro~ollowing ~ielden' s persistent efforts the focus of AIR shifted
Bow commercial broadcasting to public service broadcasting.
from 1947 to 1997 for the purpose o . vmg a
of the growth of broadcasting in India. ti' in 1930,
trans;er, the last decade to independence remained a period of
k er broadcas ng . but re;~ Where the government tried to take care of rural listeners
When the British government too ~v com any into a profit.. ained vigilant for commercial gains.
its basic objective was to turn a loss-u:1'mJ as~g Services (!SB: Afterinde ...
of bro act pendence the government defined the responsibility
making company. The Indian Sta~ r : ~untinS for f~)le p casttng h' h
wasmootedonApril 1, 1930and w en t of the old stotY• ,_rogrammes ,1:" 1c was to 'serve' the public throug h
th
year 1930-31 was completed it ;5~ :~ureofJSBSon~= ~n'Prove' th at inform, educate and entertain'. AIR set out to
t
1 What the; masses by giving them not what they sought to hear
governmentgotfrustratedandor r: November 23, t93l an
10, 1931. The orders were reversed Of! beports of AI;ught to hear. As affirmed by all the ensuing Annual
government doubled the duty o~ radio sets. ra by Ad t 933 a.nd :~adcasttng in tn~ also posted on its website, the objectives of
01
eson,e ent nd ~a seek to "provide information, education and
With the help of Indian Wueless Teleg p ertamm en t, k eepmg
. . . Bahu1an
.
111 view the motto,
96
RADIO IN NEW AVATAR h• Of pRIVATISATION AND FM BROADCASTING
~vi To FM siv- 97
Hitaya; Bahujan Sukhaya i.e. the benefit and happin
sections of the people," and strive to "produce and tress _of lar~e , nuiJle autonomy'. Verghese Group set up in 197! to look.
. d getonornY issue recommend ed the formation of
programm es d es1gne to awaken, inform, enlighteans1tdvaned au mto the
entertain and enrich_ all sections of the people, with du~ .:e
the fact that the national broadcast audience consists f g d to
:ate, IllO
d •
National Broa casting T rust Akash Bharati. But thin an autonomous
ve further due to collapse of Jana ta Party governmgs c~uld not
series of public." 0 entm1979.
a whole For giving autonomy to AIR (also Doordarshan) Prasar Bhara.
With a view to realise these objectives, a regime of Planned Ad was passed by Parliament in 1990. The Act was implem ted _ti
developme nt of broadcastin g to cover the country, as kicked off by 1997 but till that time the broadcasting scenario of the co~ ha~
Fielden and reworked by Goyder, was brought to life. Over they
with allocation of funds made in all subsequent Five Year p:
(FYPs), All India Radio has developed into" one of the largestmedia
changed. Private players in te!evision broadcasting had arrived and
wne slots had been given to pnvate companies on FM channel of AIR
In view of increasing number of players in the broadcasting sector th
networks in the world" and boasts today of a network of 209
broadcastin g centres (which include 113 regional and 76 local radio
government was contemplati ng for the Broadam Bill, which made
autonomy issue of AIR (and Doordarshan) meaning~.
th:
stations) and 149 medium wave, 55 high frequency (SW) and 131 And Back to Private Sector
FM transmitter s.
In 1930 broadcastin g shifted from private companies to government
The growth of broadcasti ng post independen ce has been control and in 1993 the switchover was from the government setup
discussed in detail in the initial pages of this book. Hence, without to private enterprise. The p~licy of partial privatisation mooted in
repetition it can be summed up that AIR developed u a developed 1993 changed to full-fledged privatisation in 2000. But the new
agent during 1950s and 1960s. Informatio n and education broadcast policy has one difference from the earlier policy, it believes
dominated all through though during 1960s and 19'10saspurtwu in the co-existenc e of public and private sector. While A1R channels
seen in entertainm ent componen t. 1980s witnessed a sluggish under the autonomou s organisation Prasar Bharati can be put under
growth since the focus of the governmen t was shifted form radio public sector broadcastin g, private channels like Radio Gty and
(AIR) to television (Doordarsh an). Radio Mirchi reprei;ent private sector broadcasting.
From Governme nt Control to Autonomy .However, the policy of 1927 (and 1930) on one hand and the
In 1 %Os only thinking started developing on the part of policy policy of 1993 (and 2000) on the other hand have one thing in
makers that AIR should be given more independen ce an~~ common i.e. commercial broadcasting. Profitability by earning more
so as to serve the masses better. The Chanda Committee ~UN~ and more revenue is the key of privatised broadcasting and the
to give "purpose and substance" to the programme s and to. to co_m petition to grab more market share is increasing day by day
the developm ent imperativ es of national r~onstructi ODand with the addition of increasing number of players.
organisatio nal deficiencie s, inadequate financial resources the Ag~in one difference between the old and the new policy, w~
over-centra lisation. earlier one was based on AM transmission the present policy
. tofdte offers FM trans . .
Chanda Committee did not favour AIR as an ~ t e L __.a•• m1SS10n.
. . pnva nai- ATrEMPT S TO PRIVATIS ATION AND PHASE I OF
govemmen t. It also opposed giving broadcastin ~ in whel'd' state
Instead it favoured a decentralis ed ~~oadcasti nl b e ~ B FM BROADCASTING
governmen ts, civic bodies and univers1tieS should also Alf.,. l>~o~dcasttng on FM Mode
The governmen t, however, declined to give autonolllY to clotbll ""-d10 Uk O th
ll\ed. e er electronic media is an ever-deveIoptng
· technical
Following the misuse of AIR by the then gov~e cl fol In •um and has seen a lot of new developments in the recent ~ast.
Emergency (1975-77) the Janata Party govenunen P course of time Amplitude Modulation (AM) comp~ing MedtUJll
 ♦
f pJUVATISATION AND PM BROAOCASTJN
98 e~~ O G
RADIO IN NEW AVATAR A - 99
MTOPJ.l Nine time slots w~e ]eased out on AIRFM channeJs
Wave (M-Wave) and Short Wave (S-Wave) h
Frequency Modulation (FM). After the emergence
studio system has been converted to workstati
:s
conver~d to
ho compub!r enttte
39
wer
Rainbow) of Delh1 and Mumbai on AugustlS

5e tember '
1 1993 d . p . ..
an m anap, on January 24, 1994
1 (]a~natned
e given on FM channels to private Parti ' .993•Tune slots
es m Chenna·
• on
. on w ere computer
a multip~ role, taking care of recording and editing to broad _I>~ th! turn of Cakutta FM channeJ. onJuly 25, 1994_ · Then came
Mono recording has changed to stereo and multi tra k casttng. With innovative programming and aggressive . eff
c recording.
Whatever technological developments have taken l of private parties brou~t FM to centre stage. How~ Or1S
rears, the technology that has revolutionised the broad~a:~ov:~ th~ to operate the slots with effect from June 26 19')8 therceasect
IS FM. For commercial and local broadcasting FM te hn lg ~tor · fu 11 fl · • . ' a., g09emment
was conte~plating . - edged pnvatisation of FM broadca.,tm
boo Th. techn 1 c O ogy IS a
n. o ogy was successfully used when AIR

=rt
IS intrO d . enabling pnvatedpthartieghstothset up and operate PM stations. At leas~
the concept of local radio station in 1984 This was uced this was on recor ou e confrontation between private
d · a concept to
~romote -~ preserve local culture and to disseminate information providers and AIR programming heads w~ oot a hidden
m remote rural area, thereby, paving the way for their development
There was evidently a clash in the value sysiemof A1R and that
Though the first ever FM service started from Madras on Jul of private players. AIR was too possessive for ifs &oadca.,t Code
23, 1977, the new ground was broken on October 13, 1984 why and Commercial code and it asked the private-playm-nottode\,iate
AIR c~mmissioned the first Loc~l Radio ~tation (LRS) at Nagarc~~ from the codes while producing their programmes. Though this
(Tamil Nadu). The success of th1S expenment led to phenomenon was part ?f. the agreement between the two, private pJayer.; were
growth of LRSs during the VIII Plan period (1992-97). At present not too willing to adheTe to the codes. This appeared a., a nmmatch
there are 76 Local Radio Stations in the country. All the stations in the standards between the programmes produced by .-\IR in-
operate on FM mode. house and those produced by private players.
Initially the stations did not evoke the desired response owing . Another problem was that of subletting of the k?aw by some
to non-availability of inexpensive FM receivers. To boost the private players. The bone of contention between Tunes FM, which
manufacturing and sale of FM receivers, one of the measures taken was given time slots on Delhi FM station and AIR on this tsSue
by AIR was the relay of Vividh Bharati programmes over the entire · culminated into a legal tangle. AIR finally won the case and the
Local Radio Network, in the afternoon hours. This. really helped. contract was scrapped.
The quality of FM reception was so good that people soon s ~ FM Privatisation Policy
liking it over AM transmission. But the conversion of AM s~tio~ lnAugust1953 B. V.Keskar, the then Minisreroflnformationand
to FM was a huge task which the government could not~ 0 - Broadcasting delivered a lecture on commercial broadcasting.
initially. However, the government thought of pursu~g: ~onunercial radio, he said, would fall into the clutches oi foieign
transmission when the issue of privatisation surfaced m e rterests and become a slave to advertising revenue. These forces,
beginning ofl990s. - eskar Warned, were "boUI\d to bring down the quality of radio
programmes and convert them into a cheap vaudeville show." Fifty
Initial Steps Towards Privatisation Years on . · _,--1,.. and .1.1.~ sale of

On October 2 1992 AIR FM channel was commissioned at Ja~~

FM ' commercial radio is back on the.-- a~ .
to l(frequellCies in the yew- 2000 would helve btoughton gratificabOn
AIR FM ~ l s came up in Delhi, Mumbai, Chennai, ranap eskat.
TL- f . ll,.T;-th
Calcutta within a year's time. . ~ .,.
l'l\'e '(•~ otmcl) hAa. .......-~of
-&-uu.a,s
· ....."""""""""°li,,,vwasinade
pnva--~ r--7
IDJ'UI•
. objective
. . "'"ationpoliCY .. , for r~:: p~ (lW/~2002) oqective. ln ttus plaP. ~~~...1 uality
The government acted swiftly on its pr1va"'° on itl f'"
AIR started leasing out time slots to private opera::ol-vin8 di' wu unproving the variety of coru,entand \IJ!UU..__q
stereo channels. It was a major policy dep~rtu~e
regulation of terrestrial broadcasting for the first tiJJle·
 BROADCASTING
10() f pRIV ATISATION AND FM 1~
RADIO IN NEW AV ~A O
ATAR AM To FM t
of bro adc asti ng. On th """2 . The lice nse
s for priv ate FM Radio Broadcas were granted
fro. nt the focus shifte f f . • Th 'ti into five .
T\ toe tecF hno log ical ear =-J es wer e div ided
Me diu m Wa ve fMlA ,n....,y J req u ·~ ftolt\ , he basis o citi es. ese c1 rese rve license fees
11
cate gones
PI fo en ~ Mo dul atio n (FM) . D uring the
an Per iod the thr ust are as r radio wer e on· otl th bas is of the am oun
t of .
ofl t e .
• I · slow . Ou t of 40 cities and 108 fr
mp rov em ent ofp rog r t The st.a rt-u p has bee n
rega te of Rs equenaes,
oic ::r e con ten bid s for an agg
• Pro vid ing Wid er ch rnm ent rec eiv ed 101 425
as
es fr~m b"dscro;es
• Im pro ~g bro adc ast qua
J';o gra mm e
govi~st the esti ma ted am oun t of Rs. 79.65 cror 1 1or 37
.dd . defa ulte d.
nic al fea ture s aga ect of 64 frequencies
• Enh anc ing tech
ole te . frequencies as bt ers m resp me
• Ren ew al of old and obs ied out of which 22 licenses beca
• Ad diti on of new faci l.ti equ _1pments
1 es at rad io stat ion s. A tot.al of 37 licenses wer e ism licen sees con tinued
ed dow n. Two
operational tho ugh one late r
clos
dur ing the Nin th Pia .
y cou ld not operationalise the licen
se.
The gov ern me nt per iod allowed full to pay lice nse fee s tho ugh the
ies to set . n ts by desc ribin th
ow ned Ind ian com pan ept ed suc h paymen
2000 u~priv ate FM rad io stat
ions on~ Finally the gov ern me nt acc g e
lice nse fee bas is. In Ma y t auc tion ed 108 as dee me d ope rati ona lise d.
m , e40go~~r~men licenses
freq uen cies in the FM spe ctru across cities m the co tn, through un_, isin g the licenses was one yearform
an O •
pen .i"'\.Uction. Bid din g pro
A ces s The d . .1on to ope n th The dea dlin e for ope rati onl ever,
. ec1S up e ent s, i.e. December 29, 2001. How
. t pri vat e par tici pat ion wa s tak en b th
fre qu enc1es o ernm ent signing the Lic ens e Agr eem and sign ing the Lice nse
. Y e gov k guarantees
wit h the foll ow ing obj ecti
ves : even afte r furn ish ing the ban ld not ope ratio nali se their
der s cou
d . Agreement, 13 suc ces sfu l bid
1. To ope n up FM bro adc asti ng for ent erta inm ent ucation tim e frame and ultimately surr
endered
ati on dis sem ina tio n by ,e licenses wit hin the req uire d
and inf orm com mer cial their licenses.
bro adc ast ers
lity pro gra mm es wit h a loca
lised Failure of Fir st Pha se
2. To ma k~ ava ilab le qua van ce giv en licenses in the fust pha
se started
flav our m term s of con ten
t and rele
t The com pan ies wh ich wer e priv ate broa dcasters
nt and gen era te emp loy men facing a rou gh we ath er sinc
e beg inn ing . 'The
3. To enc o~r ~ge _n ew tale ind irec tly rma tion and Bro adc astin g Ministry
opp ort uru ties dire ctly and ~et the rep res ent ativ es of Info , the
vic es of All Ind ia Rad io (AIR
) and the pen din g mu es. Accordingly
4. To sup ple me nt the ser in the m Aug ust 2001 to reso lve ssio n faci lities to priv ate
of the bro adc ast netw ork e the tran smi
pro mo te rap id exp ans ion government agr eed to pro vid FM stat ion of the country
Ind ian pop ula ce. firs t priv ate
cou ntr y for the ben efit of the broadcasters. Me anw hile , the d to
1. But aim ~ all the stations faile
it too k too lon g for the governm
ent became ope rati ona l in July 200
De spi te the policy init iati ve the con duc t of bidding, start the bro adc asti ng by the dea dlin e of Dec emb er 2001 .
ces s. Eve n afte r
to org ani se the bid din g pro . Services a b.Is&e between Information
and
pro gre ss of ope rati ona lisi ng FM Rad io wa s ver y slow B In Au gus t 2002 the re was ove rsy
the ion s (of whi ch 2 were io operators, the ~~ tof ~ntr
es and onl y 24 stat ~:d cas tin g ~t ry and rad
cou ld sta rt onl y in 14 citi rati ona l out of37 oth er unju st con ditio ns unp osed on
gra nte d dee me d ope rati ona
l sta tus ) bec am e ope th g th e hea vy lice nse fee and pro test ed by w~ g out
pan ies
lice nse s issu ed.
ofem. In the Wa ke of this two com ium Radio-Qtennai and Midday
lenn
R th_e contract. The se wer e Mil . also threatened to pull out,
First Ph ase of FM Licensing 08 MHZJ
ad10-New Del hi • 0ther com pan ies
While
in the FM spectrum (VHF 8~-1 0
In Ma y 2000, 108 frequencies ,r;:e som e oth ers got inv olv ed in
litigation
r;:
we re auc tion ed acr oss 40
auc tio n me cha nis m wa s
citi es in the cou ntry . Mu!tip
fol low ed to aw ard the se
iod of 10 yea rs and the ann
le

f the fttti
lic -
:e broa~he tes ult of the firs t
expec~:
pha se of privatisation of FM
stin~ wa s not vet y encouraging as only 25 per ce;~~
ope rati ona l. Mos
th:
0

license wa s aw ard ed for a per t per ann um on the base O · d hce nse s cou ld bec om e
cen
fees wa s esc ala ted at 15 per
102 TISATION AND FM BROADCASTING 103
Of pRJVA
RADIO IN NEW AVATAR
AM TO FM atu\ · te --a.: · ti ·
broadcasters were findin th . Encouraging pnva . p~ uc1~a . on m providing quality
· riJ g e pro1ects co •
PrlDla y due to very high amount f Ii mmerc1ally unviabl (c) services and rep1acing u~ e~ISting sr~m of bidding for
pay to the government The . o cense fee, which they had· toe Jicenses with a revenue s a_rmg mec arusm
· private playe · th
reported heavy losses that were likely to ~ m e FM industry Automating all FM tradnsbeml itters an~ all MW transmitters
continue
(d) of zo kilowatt (kw) a~ ow ca~acity .
Both ~e government and the private la er ..
from the bitter experience of the first h p y ~ tn~d to come out C ation of high quality content with long sheH life to enable
was in this light that a work. p ase of privatisation. And it (e) A;; to fulfill its role of publi~ service broadcaster_ .
Broadcasting sector was set up I:!d!:o;~ ;n !~;~mation and Strengthening and expanding the reach of radio m the
(2002-07). This group felt that treating these: . ive Year Plan (f) North Eastern states (including Sikkim) and island
reven f th rvices as source of territories
ue o e government is counter productive as the hind
the services to the peoJe Aserthe (g) Use of FM radio to spread literacy, because of better
gr~wth and quick roll out of
SUltable corrective policy measures should be taken, so that inn:= transmission and reception.
growth of these services could accelerate and substantial pnvate· The Tenth Plan stipulated that private operators were to be
.
~nvestment could be attracted to supplement the efforts and encouraged to provide FM Rad~o services in metros and small ~~es.
mvesbnent of All India Radio. For the FM license it also envisaged replacement of the ex1Sting
MITRACOMMIITE EANDCONSULTAT ION system of bidding for license with a revenue sharing mechanism.
FOR POLICY REVISION Radio Broadcast Policy Committee Report
Broadcasting in Tenth Plan Document The government subsequently constituted a committee on July 24,
Despite not very good experience of the first phase of FM 2003 to mak,e recommendations for the second phase of licensing of
broadcasting as envisaged in the Ninth Five Year Plan (1997-02), FM Radio. The Committee named as Radio Broadcast Policy
the government further thought of expanding the broadcasting. In Committee was headed by Dr. Amit Mitra, Secretary General of
the Tenth Five Year Plan (2002-07) the broadcasting scenario was Fl~CI. The terms of reference, inter alia, included the following:
reviewed and it was found that MW transmission had reached 99 "Study the desirability and legal implications of making
per cent of the population. However, FM broadcasting was found modifications in licensing regime of Phase I licensees, should
to be the preferred mode of radio transmission all over the worl~ _ a different licensing regime be proposed for Phase II."

in the Tenth Plan was on substantially enhancing FM

from 30 per cent of the population along with efforts to conso
cov::~
due to its high quality stereophonic sound. Therefore, theemp~JS
The committee after delving through the lessons from the fir st
Phase and the relevant experience from the telecom sector as well
as global e:)(periences made a series of recommendations. These
the MW transmission network. p· Were Primarily related to the following:
f the Tenth ive
The following were the major thrust areas o • Entry and exit mechanism
Year Plan: . . except in • Lic:e nse fees structure
15
(a) No further expansion of MW transm s~o~rderarea6 : Enhancing the scope of services
sparsely populated, hilly terrain an~ strategic • !~proving roll out
where it will still be more cost effective 60 per cent of the Th Mi.g ration of existing licensees to Phase II.
(b) Expanding the reach of FM radio to coverfriv11te op,ratotll the con~llUnittee submitted its report in November 2003. While
population by the end of th~ Tenth
are to be encouraged to provide FM ra
Pi:
seJ'VieeB jJt ~ soll\e tok 1:tee was entirely focused on commercial radio, there w~
ein references to policy for niche and non-commercial
and small cities
104

chann ls · • •
'·
RADIO IN NEW AVATAR

e m its terms of references Still th

, community radio' . .
AM Top~.
,v1

, ere was not a word About

~~~
JVATISATION AND FM BROADCASTING

ut it isn't just in the social a~gle that the Mitra Committee's

o~mendations may have been m want. While deciding that only
~
l
. recommendations:
This comnuttee m a d e two maJor re<; should have FM channels, one of the particular concerns of
cities ·t Mitra Committee seems to have been the scar •ty f
a o
(a) To open the radio broadcasting sector to FDI the Arntdes and t..,e
,1..
need t o use th.IS " scarce resource ...rationall
cent at par with other media up to 26 per ftequen ' . 11 ,, h f y,
efficiently and. opf tima y .' as ew reasons to agonize over the
(b) To introduce a revenue sharing system b t shortage of radio requenc1es.
government and private players e Ween the
ces to TRAI .and Interim Recommendation
Mitra Committee recommended that the lice f Ref eren ·
needed to be revised and migration of the license nstee eefrstructure The need of a regulato~ in the b~oadcasting sector was being
C • ~ ~fud recommended for a long time. In the light of the judgment of Supreme
Iicense 1ee basis to a one-time entry fee with an ann 1 e
h . ua revenue Court on airwaves the government was required to set up an
s anng arrangement was the most suitable option The try f
· · en ee independent authority to regulate airwaves. Paswan Committee
s h ou ldbedetermmed by a competitive bid process that will reflect
the true market value of the frequency. In addition there should be also advised the government to setup a regulatory body. This body
an annual revenue share, which was recommended at 4 per cent of was proposed to monitor both government and private players and
the gross revenue. was supposed to handle both hardware are software aspects.
The committee also found that the broadcast industry appeared Since the government failed to put a broadcast regulator in
to be unviable under Phase I licensing regime. The committee, place, it was decided to give the regulator's job to TRAI, at least for
therefore, recommended that there was a need for re-structuring of the time being. The government notified broadcasting to be a
the FM broadcast industry and the Phase I licenses. Migration of the telecommunication service under Section 2(i)(k) ofTRAI on January
Phase I licenses to Phase II license terms and conditions would ensure 18, 2004. Subsequently the Ministry for Information and
uniform implementation of the proposed policy of the government. Broadcasting on February 12, 2004 sent the report of the Committee
The coir.mittee made detailed recommendations, which included that headed by Dr. Amit Mitra to TRAI for making appropriate
the liabilities of the original license fees should be restricted to July recommendations.
24, 2003, that was the date of the appointment of the Committee. . On February 11, 2004, five private FM broadcasters met the
ti .
True to its primary mandate the Amit Mitra Committee_brought r ten Deputy Pr.ime M'rmster and submitted a representation
out a report whose main concern was to ease the way for pnvate FM equesting for deferment of the Annual FM License fee till the
. f gun·e to a revenue government t k d · · . · ' .
broadcasters to switch over from a license ee re nd Task F a es a ecision on unplementation of the FM Radio
sharing system. Committee demo~tra~ed social conce;;:on- 1RAI f re~ recommendations. This representation was referred to
0

, or Its recom mend ations,

.
by the government on February
recommended a Universal Service Obligation Fund to sup~ercial 24, 2004.
. -'----~•. . The Comnu•tteesaid that'suchnon-co
commercialcu,uullt:li>, te 0 rytowns,
.,
The governm . .
channels will be initially required in all A+' A and B c~ g Mumbai, the . el_\t m Its letter poinred out that in respect of
· · · the future. 2004, In
followed by its expansion in other c10 es m . dcastiJlS next hcense fee for the third year was due in April
·ty of a kind ofbroa - Pctid the ~ t of Delhi, Calcutta and ChennaL licensees had not
The committee examined the feas ibili
package with a social content whereby
mercial, non·
n~~:i;;icensed
t,ydte
the goverl\n\nse
0
:ee for the 2nd year due in August 2003 requesting
~ratton Tl.~~ to charge the license fee from the date of actual
advertisement driven channels could be oper in rogr~I lnd if 1 · Ul:i matter
same commercial broadcasters. A code of corui~\ .. J:,ns were aJIO 2004 Pprove<t th ~as W\der consideration of the government
. nf cement for vtoua · It was l>Oin ese lietmse fees would aJso become due in April
matters and method of strict e or ted out that the request of private broadcasters
studied by the committee-
 106
. RADIO IN NEW AVATAR AM To pRJV ATISATJON AND PM BROADCASTING 107
involved the relaxati f FM efU\ Of
accordance with prov<:>~ o terms and condition of the U ainst this demand of the governmen t in view of TRAI' s interim
ll(i)(d) and Section 11(:);Xi)~ ~:on l l(i)(a)~ii) read wi~~:: ag Jllendation . In some cases the courts stay orders while .
the governmen t to seek ~ Act, it was mandatoh ry or
fn
recoJll the court directed the licensees to approach the TDSAT . Thme
. recommend ations of TRAI in others . ·f f.
In View of the first r uest ma sue matters. Tribunal granted stay m avour o sel'Vlce providers with the
February 12, 2004 and theq d de by the government to TRA.I condition that they would pay 1/3 of the license fee due.
A . M. e secon request on Feb on
~It f, itra gave a presentatio n on his report r e ~ 24, ~004, Dr. consultatio n Paper of TRAI
~ cy or FM Radio to the Authority on March 8 2~ g to licensing
raISe~ a number of points for further information . The :Authority TRAI issued a consultatio n paper on April 14, 2004 for giving its
Dr. Mitra submitted . in afollowing
the additional information follo which recommend ations to the governme nt on the second phase of
.
presentatio n to the Authority The accounts of th Ii wupof the licensing. The co~ul~tio n pape~ was based on extensive analysis
called for and these were scrutinised TRAI ls h e cens_ees were and comprehen sive inputs recewed from various stakeholders,
various stakeholde rs in this regard. . a o eld meetings with Ministry of Informatio n and Broadcastin g and Dr. Mitra Committee.

Based on the inputs received from the Ministry ofT-.c . The objective of the consultatio n paper was to examine the
.uuormation
d the Report of the Radio Broadcast various licensing, regulatory and level playing field issues for
and Broadc
. as tin g an Poli
Committee , !~I started the process of preparing a consultati~ enabling the issue of second phase of Private FM Radio Licenses.
paper on which 1t could seek the comments of all the stakeholders. The paper was prepared to seek the views of the stakeholders on
Subsequen t)~ after receiving the comments TRAI made its the licensing terms and conditions for the second phase of FM
reco~end ations to the governmen t. This process took some time licensing.
and m the meanwhile the license fees of some of the operators became . Th~s consultati on provided the necessary platform for
due. discussmg the important issues relating the issue of licenses for the
So, TRAI prepared and submitted its interim recommendation ;econd phase of Private FM Radio Broadcastin g. The paper called
to the governmen t on April 5, 2004. In its interim recommendation, . 01 th ~ comments of various stakeholde rs on different issues
TRAI mentioned me1thudmgth
. •
e ISSUe .
o f nugration of ~cl-ma licensees. The comments
0n e cons It ti ~~"O
"That the licensees may be gi.ven the option of deferring the large numbeu a on paper were invited up to May 7, 2004 and a
payments which may fall due till a final decision is taken. This r of responses were received.
would be subject to the condition that the dues as finally decided,_ TRAI also held O pen H ouse Discussion
stakehold
. .
. s w1.th various
by the government, after taki.ng into account the recommendation ' Mumbai ers on May 7, 11, and 15, 2004 in Chennai, Delhi and
of TRAI would be coll.ected from the licensees with interest from respectively .
the due date, on the quantum oflicense fees found to be p~yable. 0 The consultation . paper mainly covered the following areas: .
The final recommendations of TRAI would address the issue 1
license fee payable as well as the relevant interest rate. •• 1
°
Details f the experience so far in Phase I
Accordingly al.I licensees could be given the opti~n. of deJerri,:;; • ~~ues ~or considerat ion in Phase II of licenSing
their next installment ofdues subject to the condition that t t. • S gration of Phase I licenses to Phase II
.
1lt UUU:narises the lSSUes for consultation .
would pay this amount, after the issue is decided by governmen '
j 11,~t Boldly~ consultation •
with interest as may be decilkd final.ly." of F lllterpretinn- paper on FM Radio proved to be an eye-opener-
, . to pay the r rt objective of expanding the reach
The governmen t wrote to all the licensees t to c:01' the M radio TRAJ."6 ~e Tenth Plan
installmen t by the .due dat.e. Some of the licensee' wen 7Q roU..out of br said ~at the licensing process should imp1:°ve
Per cent of <>adcasnng services in rural and remote areas, s.lllce
our population lives there. The licensing process,
 TION AND FM BROADCASTING 109
108 o[VATISA
RADIO IN NEW AVATAR AM
~~ .

ToJIM B~ out and Niche Programming

"d TRA I, should expand the covera of b Rural Ro11
sa1 Fund to improv e roll out and/
~e unserv ed areas, particu larly north e:te roadcast services
"to Fund for 1,ecreated a FM Radio
the resent ; ' states, border regtons, chould there -comm ercial progra mmes?
hilly terrain s and enhanc e ;; rnoteno n
ion or to pro
cove~~ ge of FM to 60 per cent by le end of !ep;1:: t~1t populat . process
~t pointed out
that, m case we continu e with the presen t ci Wis~
Licensing .oach should be adopte d to award the FM radio
, there
would be no roll out of private FM in rural a!as." licenses (a) What a~pr the second phase in areas where there is no
license in ?
Thou~ h th_e TRAI consul tation paper was theoretica scarcity of spectru m . ch
0
~ the Amit ~1tra report, it raised issues
not dreamt of ev: :ased h ere there is scarcit y of spectru m, what approa
~1tra.Co~t tee. For the first time, it asked, what should th
~ the (b) In areas w
should be adopte d? . .
licensi ng regime for commu nity station s so that these can . e
increase 1.,1 In case a Ucti
.on route is contin. ued . with, what . change s are
-_. th
rapidl ? It A~------se(l •b· . · lie g process , Le. should we
. Y· u.&;:K..w;. e poss1 ility of provinc ial and rural ic, . d to be made in the eXIStin odel?
to tmprov e rollout of radio services in unserv ed areas. It also
~~ require revenu es
h
are m .
out an entirel.y differe nt- and simple r- system of licensing areas 'kmte adopt a one time entry
(d) In event of auction ,
fees+
wheth er
annual
th~ en_° ! fees s~ould be the
w h ere there IS no scarcit y of spectru m' (read: 'rural and remote same for all license es, based on individ ual bids, based on
orwas
areas') . To put it simply , it appear ed thatthe telecom regulat lowest of all bids?
develo pmenta l purpos es of radio. to reduce
seized to the social and (e) What change s are require d in the biddin g process
Major Issues of Consid eration the scope of litigati on and specul ative bidding ?
Type a/Lice nse Multiple Licenses
on (a) How should the entry fee be set in case auction
is not
Should there be stipula tion on the type of conten t to be carried
each license or the choice be entirel y left to the licensee? adopte d?
(b) What should be the basis of reserve price, when
auction s
SeroiceArea
are held?
(a) Should we consid er licensi ng of private FM Radio
stations what
of (c) If a revenu e sharin g arrang ement is adopte d, then
on the basis of city, or should we migrat e to the concept e share? Should it vary
should be the annua l revenu
region al/nati onal license s? .
for depend ing on the size of the city or should it be the same
(b) Wheth er the locatio ns of the station s to be put on bid for all areas?
Phase II can be spread out to cover more towns an~ further
Quantum 0/ Entry and License Fee
what steps can be taken to ensure that the coverage JS evenly
(a) WJ_te~er the numbe r of frequen cies that an entity,
directly
spread out?
. d? or mduectiy, may hold in a particu lar centre be restrict ed?
Duration ofLicense If so, then to what extent?
Ii epeno for JtoW r of
(a) Is there a need to change the presen t ~ensd? If so (b) ~heth er there should be restric tion on numbe
in any
(b) Wheth er license renewa l may be per~ . fo~ renewal? requencies (licens e) for news and curren t affairs
0
many yea.rs and what should be the co itton :ne tentre?
(c) What should be the total number of frequencies
that an entity
~wit h
Roll Out Obligation
Ra.;!°,!et
the rentll (cl) ~~• ~ directly or indirec tly, nationa lly in each phase?
Should we consid er a prov incia l~ for FM the er the conten t plan for each separa te frequen cy at
a specifi ed roll out criteria laid down 1-? a manne r e b 2007?
, ~am e centre being bid for by the same bidder must be
Plan objecti ves of 60 per cent popula tiOn covera g y rent t o ~ wider availability of choices lo the listeners?
 110 ON AND FM BROADCASTING 111
~rvATJSATI
RADIO IN NEW AVATAR of p"
AM To PM e~A t s whether co-location be made mandatory in
(e) Whether the licensees should maint . broadcas er ,
for each frequency allocated to them;1n separate accoun~
Programme Code J'hase l~at should be the mechanism for such co-location

.
(b) If so~f~e three options below: . .
(a) Do the existing laws of the country impose suff' . otd Use AIR towers wherever technically feasible.
restraint on the licensees or is there a need to . ic1ent self. • • ~.,DPQ make their own arrangement through mutual
programme code? unpose any ~~~- .

(b) Are the existing guidelines on AIR sufficient negotiation.

d • Mandated Third Party such as BEOL be required to
require any amendments? or O they
nstruct towers on terms and conditions to be either
Technical Issues
:~eeable to all parties or decided by the Regulator/
(a) Should we continue to mandate co-location of trans ·tt Government.
sites~ Or ~hould this _be mandated only in the eve=~:;
multiple licenses are ISsued and restricted to the holder of Penalty for Non aperationalisation of License
such a multiple licensee? What penalty should be imposed for non-operational isation of the
(b) If no, what should be the spacing between frequencies ht awarded licenses.
the same city?
(c) Should we specify maximum or minimum transmitter
FDILimit
power and height of tower? Whether FDI should be permitted in radio broadcasting sector and
(d) How to.specify reasonable coverage requirements on the what should be the limit of FDI?
service providers? Non-Commercial Licenses
Netwurki.ng Should certain frequencies be reserved for niche channels
(a)
(a) Whether it should be allowed between broadcasters in the to be tendered separately with a low reserve fee and fow
:;amecity? . revenue share percentage?
(b) Whether it should be allowed ~tween bro~dc~t stations (b) If so, the terms and conditions to be prescribed to ensure
of the same entity in different cities be pemutted. . ent that such channels are exclusively developed for niche
'c) Whether it should be allowed between differ (c) programming and there is no partial niche programming?
broadcasters across the ct'ti•es.?
\I
·ng that Whether government should release additional frequencies
(d) What safeguar d s are neces sary for ensur1
. d. theprocess? (d) ~ncourage such niche channels?
competition aspects are not compromise m at should be the licensing regime for community sections
News and Current Affairs aff . be lifted Mi . so that these can mcrease
·
rapidly?
(a) Whether the restriction on news and current aus 8TaHon Related Issues

for the Phase II licensees? (a) Whether · •

. d to be imposed oJ\ the ?egim . migration of existing licensees to revenue share
(b) What other conditions are require t any s~~M Ra~~o be permitted? If yes, should there be
licensees? . s ial codes for broadcaB (b) Which~ cond~ons attached to this migration?
(c) Is there a requirement to IDlPose pee
tnigrati categones of licensees be considered eligible for
of News and Current Affairs? (c) W on1
·vate 0
hat should be
Co-locatio1t d by the pr• 1lerators be the pre requisite conditions that these
(a) In view of the difficulties expresse asked to meet before migrating?
 112 RADIO IN NEW AVATAR AM pRJ V ATISATIO N AND PM BROADCASTING
to FM E-RA OF 11 3
(d) What should be the cut-off date i.e. the date of migt Atio ? (c) The s tructure of the license fee should be as recommen ded
(e) What should be the terms and conditions of the migtati: n by Amit Mitra Committ~ e-a one time entry fee and a
package? reve nue share. The one ti1tte entry fee is only a means of
(f) Whether the governme nt sh~ld consider payment of selection o f the licensee among various bidders.
license fees due till the date of migration as the entty fees (d) The one time entry fee should be quoted by all the bidders
for the migrants? · a n d the highest bidders that match th e available
(g) · In case, the governme nt decides to give national/ provincial
frequenci es would be selected . Thus, if there are three
license, should the existing service providers be granted
freq uencies in a particular town, the three highest bidders
these licenses to improve their viability? . w ould be selected. The bidderssh< 'uldbeaske d to pay the
Oz) Whether there is likely to be any difference in the terms and
amounts quoted by each one of them.
condition s of those who may be given the Qption of
(e) If the number of bids exceed the number of frequencies, the
migrating and the new entrants? · . unsuccess ful bidders should be kept on a waiting list. Such
MAJORR ECOMME NDATION OFTRAIF ORPHAS EIIPOUC Y , , bidders should be a llowed to step in, inc~ of default by
An assessme nt of the recomme ndatio~ of ~AI for Phase II policy one or more sun:essful bidders.
is presented below. TRAI did its job quite efficT1enRAt1y . Thf
, e gove~t ; (ft The licenses would continue to be put on bid on a city
f d the FM-polic y revision issue _to . . 1 or approp111ate basis, as was done in Phase l
re erre d ti. ns m· February 2004. TRAI identified the major.~
- recomme n a O . . A il 2004. 2. License Fee Structure
of considera tion and issued a consultati• on paper·· :· th pr . f .
I kin into the viewpoin ts of stakehold ers an (a) TRAI endorsed the license fee structure as recommen ded

:::a~~= for
e r~port~
After ~o g ·ttee, TRAI submitted its recotnmendations ,~n . by Mitra Committ ee- a onetime entry fee and an annual
issU:es the second phase of private_FMradio share of revenue. Such an approach was-.mo recommended
in the Tenth Plan. The one· time entry fee would be
broadcas ting in August 2004.
determine d by the bidding procedureasd.i.9rus9ed above.
Licensing (b) Mitra Committe e had recommen ded a 4 per cent revenue
1. Licensing Procedure share applied on the- gross revenue ot the company and
. in fee should be kept this was also endorsed by TRAl. This decision was taken
(a) TRA1 recomme nd~ that the l~e~of ~layers need to ~e
based on three factors:
low and the maxrmum num e d broadagreementwtth
ed to 9'<n+iripate It expresse (i) The experience of Phase I licensing wheie license fee
encourag ~-:-- · ·t Mitra Committee- It may be paid by the lie~
the recommen datiOns of Ami • n auction bid P~ va.tied from -1' per cent to 73 per
ted that this conunitte e found tite ope .es Instead it ce~t as a pei-centage oi ~ and generally
no . . of the frequenc1 . . t,le m o.re than 100 --.,- cent as. a ~entage oi revenue.
not suitable for auctionin g cess more su1ta .. ed ( ii) r- - · l"--

recomme nded adoption of te~d~ ~r;e bidder is prov1dthe The experience .:>f teJephony where the license fee
Va.,ies from 5 to 10 ~ C $ \ l
(b) The entry fee would be forfelte - head, execu~tted
· nalise the sta ·
:e
Letter of Intent (LOI) but does ntiD?tngTo periOd perJllolntl\S
(iii) The practiceot other countries likeCanad a andSouth
Africa which have revenue share bMed license fees.
license and operatiO t:jonal should \,e 12e'/ft,
Jl\
all
(c) s· .
11\ce license fees would vary from year to year and would
for making the stations opera f frequency . J:ioWpdiPIQJ\
depeaq on the revenue of the licensee there is a need for
from the date of allotmen t o overninen t depe
certain safeguard s to ensure correct reporting.
extension can be granted by the g
the merit of the case.
 l
RIV ATISATION AND FM BROADCASTING
115
sFA oF P
114 as determined by the bidding process. The entry fee along with
RApio IN NEW AVATAR A
MTOFM the PBG would be forfeited if there is any default at any stage-
(i) There should be accounting separation the PBG would be retu~ after the station is operational and
single corporate entity. operated by a the first installment of license fees has been paid.
\/ii) The government should have the right to . . _ • The highest bidders (the ~ber of such bidders being equal
accounts audited annually be the Comptr0 Jet the to the number of frequenaes offered) for any location would
Auditor General (CAG). er and be selected and each would pay the amount bid by him/her.
• The existing license fee structure would be changed to one
3. Licensing Period
time entry fee and a revenue share of 4 per cent of gross
(a) In Ph_a~ I the period_ of ~cense was kept at 10 years with no revenue.
provIS1ons for automatic extension. Mitra Committee had • There should be separate accounts for each license and the
recommende~ that the license should be valid °for a period government should have the right to get the accounts
of 10 years with a renewal of 5 years subject to satisfactory audited by CAG annually.
performance and provided that no default has taken place. • The exiting license period of 10 years could be extended by
(b) TRAI also supported the extension of license so as to make another 5 years on an automatic basis unless there are
the industry more viable and encourage more players. It, grounds for complete reorganisation of the industry due to
however, recommended an automatic extension stating changes in technology (for example developments in the
that if a license continues to be valid at the end of 10 years field of Digital Radio Broadcasting) in which case no
it should be presumed that all license conditions have been extension should be given to any licensee.
satisfied and the extension should be automatic. • Licenses would continue to be put on bid on a city basis
(c) There is only one condition under which this extension and not on a regional or national basis.
may not be given.·This would arise in case there are changes Ownership
in technology which would warrant a complete overhaul
of the licensing system to make way for the new and better 1. Multiple Licenses and Monopolies
technology. (a) TRAI expressed the view that there should be some limited
Summary ofRecommendations on Licensing restriction on ownership. It agreed with the recomm~
dations of Mitra Committee that the number of licemes that
• Licenses should be allocated based on the entry fee quote d one entity can hold in one city should not be more than 3 or
by bidders. . n one-third of the licenses of that city whichever i s ~ Such
• All bidders in Phase I should be eligible to bid fo~ ~h~e multiple licenses can be given only in cities where there are
also, subject to them withdrawing pending littga!'Zi at least 6 licenses including the Phase I licenseS- .
Eligibility condition would be the same as in Phase · ted (b) Mitra Committee had recommended that no entity shall
bidders both new and those of Phase I, would be evalua · hold more than one frequency (License) for news an~
to check if they satisfy the minimum conditions l a i ~ current affairs in any one centre. TRAI did not accept this
• To prevent gaming by non serious players all preq So pet recommendation as it was felt that there need ~ot be
bidders would have to deposit an amount ~ual ~ dedicated licenses for news and current affairs. Each JicenSe
cent of the reseJ"Ve price of Phase I along with d,e tD pay ~ou)d be valid for being used il.1 whatevei: manner the
bids. In addition each successful bidder ~ould hav~een (c) Uc~ felt apprQpriatesubject to AIR code ~mgo~;!;
within a week of being so informed the differ~ed bf d1' TRAI agreed to the reconl.Dl.endation of Mitra Com.nu
this amount and the entry fee amount as detenntn e ~ th at there should be a cap of 25 per cent on the extent to
bidding process and also provide a Perforin::aJI\Ounl
Guarantee (PGB) equal to 50 per cent of the entry
116
RADIO IN NEW AVATAR ' PRIVATISATION AND FM BROADCASTING
1:RA Of 117
which one entity can hold li AM To FM
rec d censes nati ll of FDI and cr?ss media ownership, which could then be
om men ed to prevent cone . one. y. This incorporated m Phase III of FM Licensing.
(d) There should be greater numbe::~ation of ~Wnership.Was
sm~ller towns so as to provide c=:e.n~1es Provided in riy 0 FRecommendations on Ownership
sumttta 'I
vanety. Local-monopolies could be p tition and greate • The existing ban on m~ltiple licenses in one centre should
at least tw f removed by • r
. . o requencies in smaller towns providing be given up- the maximum nu mher of licenses that one
competition after the licensing was and encourage entity can h~ld shou~d not~ more than 3 or one third of
t. . f over rather th
compe 1bon or a few licenses h an have the licenses m one city whichever is less. Such multi le
artificially kept low. w ose number was licenses should be given only in cities with atleast6 licer!s.
2. Foreign Direct Investment There should be no restriction on the number of licenses
that can do news and current affairs. There should
(a) Mitra Committee had recommend d F . however, be a restriction on the number of licenses that ca~
ore1gn n·
Invesbnent (FDI) upto 26 per cent in FMebroadcastin irect be owned nationally-at 25 per cent.
as well as entertainment). The equity held b th g(news • The FDI policy should be reviewed along with the policies
Indian shareholders group should be at least {1 e largest in other segments of the media sector to make the whole
the equity. per cent of
policy consistent Similarly there should be a conscious
(b) TRAI also supported POI in FM broadcasting sector. ltfelt policy decision on cross media ownership as part of the
·1 f
the .need of greater degree of consistency in the rueso comprehensive media policy. Pending a decision on these
vanous segments in media sector. issues by the government there should be no change in the
(c) At the same time TRAI felt necessary to place some policy for Phase II and formulation of these policies should
restrictions on FDI keeping in view the practices in most of not delay Phase II. A suitable time frame should be laid
the countries. However, it did not make any specific down for licensees to comply with the new guidelines,
recommendation with regard to FDI except asking the wherever dilution is found necessary.
government to review the policy. • Specific provision should be made in the license conditions
(d) TRAI also suggested a review of the ban on coverage of for complying with whatever policies may be laid down in
news and current affairs, provided some safeguards can the future for restrictions on foreign ownership and cross
be put in place. media ownership.
News and Current Affairs and Programme Code
3. Cross Media Ownership
1· News and Current Affairs
(a) Mitra Committee had not made any recommendations on
cross media ownership though the Broadcast Bill of
1997 (a) Mitra Committee did not find any reason in putting
had such provisions. TRAI felt the need of putting II:'~
50 restrictions on news and current affairs broadcast on Phase
. 0 f these
restrictions on media organisations so as to avoi I licensees. It strongly recommended lifting
restrictions and permission to Phase Il licenSe5 to broadcast
domination of the media business taken as a whole.h u}d
news and current affair.
(b) TRAI recommended that as in the case ot FOi the:;f
sm~dia
(b) TRA d current affairs
be a consistent across the board pohcy for frAJPB I agreed that the broadcast of news an . bility of
segments. Though TRAI asked the gov_ernment tomakJnS will give the listeners greater variety, ooosttb~ via f ch
su
th e ch annels and lead to greater prOliferati.onso ecific
necessary policy guidelines but it refrained froll'l .
channels It however, did not make any p iew
any specific recommendations. ccelerate me . ' th venunent to rev
recommendations except asking ego
(c) Evidently the approach of TRAI was to a 'd theisSues
process of Phase II licensing and thereafter decl e
116
RADIO IN NEW AVAT ,
ff<.A 0
TlSATJO N AND FM BROADC ASTING
f pRtVA -
117
7
.
.
AR AM Top
M FDI and cross media ownersh ip, which could then be
which one entity can hold licens of porated in Phase III of FM Licensing.
recomm ended to prevent concentra es national ly. lhis iflCOf
h tionof Was
(d) Th
ere s ou1d be greater number of ~wner!lhip. Recomm endatio ns on Owners hip
co~u~n ~1es Provided in S11 ,ntnaf1j0if . . .
sm~ller towns so as to provide Th existing ban on multipl e hcenses m one centre should
variety. Local-m onopoli es could be petition ·and greater • be ~iven up-the maximu m number of licenses that one
at least -~o frequen cies in smaller r:::ed by providing entity can hold shou~d not ~ more ~an 3 or one third of
and encourage
compet ition after the licensin g w as over rathe
. . th the licenses in one city whichev er 1s less. Such multiple
for a few license s h r an have
compe tition
w ose number was licenses should be given only in cities with atleast6 licenses.
artificia lly kept low.
There should be no restricti on on the number of licenses
2. Foreign Direct Investm ent that can do news and current affairs. There should,
. howeve r, be a restricti on on the number of licenses that can
(a) Mitra Commi ttee had recomm ended For .
e1gn Direct
Invesbn ent(FD I)upto2 6percen tinFMbroad casting(n be owned nationa lly - at 25 per cent.
ews • The FDI policy should be reviewe d along with the policies
as well as entertai nment). The equity held b th
Indian shareho lders group should be at least per §ie largest in other segmen ts of the media sector to make the whole
the equity. cent of policy consist ent Similarl y ~ere sho~ be a conscious
policy decision on cross media ownersh ip as part of the
(b) TRAI also suppor ted FDI in FM broadca sting sector. ltfelt
compre hensive media policy. Pending a decision on these
the _need of greater degree of consiste ncy in the rU:Ies of
various segmen ts in media sector. issues by the governm ent there should be no change in the
some policy for Phase II and formula tion of these policies sho~d
(c) At ~e- same time TRAI felt necessa ry to place
not delay Phase II. A suitable time frame should be laid
restricti ons on FDI keeping in view the practice s in most of
down for licensee s to comply with the new guidelines,
the countri es. Howev er, it did not make any specific
wherev er dilution is found necessar y.
recomm endatio n with regard to FDI except asking the
• Specific provisio n should be made in the license ~onditioi:15
govern ment to review the policy.
of for comply ing with whateve r policies may be laid down m
(d) TRAI also suggest ed a review of the ban on coverage
provide d some safeguar ds can the future for restricti ons on foreign ownersh ip and cross
news and current affairs,
media owners hip.
be put in place.
News and Curren t Affairs and Program me Code
3. Cross Media Owners hip
1· Ne-ws and Current Affairs
(a) Mitra Commi ttee had not made any recomm endation
s on
cross media owners hip though the Broadca st Bill of 1997 (a) Mitra Commi ttee did not find any reason in putting
had such provisio ns. TRAI felt the need of putting son:i: restricti ons on news and current affairs broadcast on Phaseth
I licensee s. It strongly recomm ended lifting of ese
restrict ions on media organis ations so as to avoi . . . .ion to Phase ll· licenses to broadcast
ld restr1ctions and pernus.s
domina tion of the media busines s taken as a whole.
(b) TRAI recomm ended that as in the case of FDI
be a consist ent across the board policy for .all
segmen ts. Though TRAI asked the gov_ernment to .
there
r:
shou

'ijllg
news and current affair.
(b) TRAI agreed that the broadca st of news and th
Will give the listeners greater variety, booSt
~~:ty~
~ via f uch
s
- th e channel s and lead to greater proliferation o cific
necessa ry policy guidelin es but it refraine d from ma
any specific recomm endatio ns. w the channe ls. It, howeve r, did not make an~;'::v iew
recomm endation s except asking the governmen
(c) Eviden tly the approac h of TRAI was to a~cel:i sSud
process of Phase II licensin g and thereaft er decide
 118

. . . .
RADIO IN NEW AVAT

the exISting policy m view of th .

AR AM to PM f~A Of
pRJVATISATION AND FM BROADCASTING

()rice the license becomes operational the only

119
l
segments. e practices in other llledia (c) be made in the new arrangement would be thpayment to
. erevenue
2. Code of Conduct share. Th IS revenue share should be paid every quarter in
(a)
Mitra Committee had recommended that . . advance except for the first quarter when the payment
broadcasters must adhere to AIR B private FM would be made at the end of the quarter along with the
Advertising Code. TRAialsoendorsed ~adcast Code and advance amount for the next quarter (based on first quarter
(b) TRAI asked for suspension or revocation1:°nun~ndati on. actuals). Subsequent payments can be adjusted for any
those broadcasters who were accused f . l f ~e hcense of pluses or minuses that may arise on account of actuals
District Magistrates can be auth ~ vdio atingthecodes. deviating each quarter. The Performance Bank Guarantee
. onse to reco
suspension/ revocation of a license . • _mmend (PBG) can be returned after the first payment is made.
Th . l m case of viol ti (d) Government should cancel the liceme, if the broadcast
IS wou d give an added level of protecti . a on.
possibility of misuse of the license to provi;n against the service provided by the licensee remains closed down for
news and current affairs. e coverage of more than six months for various reason,.
Summary ofRecommendations on News and Current Affairs summary ofRecommendations on License Conditions
• The current restriction on coverage of news and • The tender conditions should be spelt out clearly. The tender
aff,airs should be reviewed keeping in view. the pol~u~re~t itself should have a license agreement
th d. 1ciesm
o er me ia s~~ents: These restrictions should be lifted • A Performance Bank Guarantee should be provided ~
once the security rmplications of this step are adequately already discussed earlier.
addressed. • Once the license is operational the only payment to be made
• The cross-media ownership issues should be reviewed so in the new arrangement would be the revenue share to be
that monopolies do not emerge in news dissemination. paid every quarter in advance. The PBG can be returned
• The AIR code should be imposed on all licensees as once the first payment is made comprising oi thefustqwuter
recommended by the Mitra Committee. actuals and second quarter advance payment t.ied on first
quarter actuals.
License Conditions and Default Obligations
• Government should cancel the license if the broadcast
(a) Mitra Committee recommended that the license having been service is closed down for more than six months for any
a warded, it was necessary for the licensee to operationalise reason.
the license within a maximum period of one year from the Networking
date of the award. In case of failure of the licensee doing so,
the government, as a condition of the license, will forfeit (a) Networking means the simultaneous broadcast of the same
the license and re-tender it in public interest. content by a number of radio stations. This was not allow_ed
· p • ·th the pnor
(b) Mitra committee advocated clear penalties for those who m hase I except on important occasions wi und
indulge in speculative bidding with clear default permission of the gov ~nt This was.done onifthe
0 .... gro
,.:u --• this was to
conditions. TRAI agreed with this and said that the tender that there would be no local flavour in content
conditions needed to be spelt out clearly. To ensure thlt be J>ennitted. und
there remained no contradiction between these and the (b) Miua Committee ~networ~onth eS:ture
license conditions, the tender itself should have Jicen,e that it woulct significa.ntly .-educe the Capital Exf::ation,
agreement drafted by a committee that should fiJl.alise t)le al\d Operating Ex--nditure of a broadcasf the view
es · ,-- ·ttee was o
tender conditions and modalities. Jlee1ally in a small city. The coll\DU
120 TJON AND FM BROADCASTING 121
RADIO IN NEW AVATAR

that market mechanism would ensure diffe . .

AM TO FM

content reflecting listeners' choice. Mitra C ren~ation of

eR
;.Of
pJZIVATISA

Spectrum
(MHz)
.
Allocation
Exclusively for FM Broadcasting Service
1
3 7)
that onun1ttee said 3.7 (lOO-l0 - by All India Radio
(i) Networking be permitted only amongst th b 4.3 (103.7-108) Exclusively for FM Broadcasting Service
Sta.tions of the same entity and not across· the Iiroadcast
3.5 (91.5-95) Exclusively for FM Broadcasting Service
(ii) It should not be permitted in the same city~ censees.
4.5 (87-91.5) Shared between Fixed/Mobile and FM
(c) TRAI also viewed networking as a powerful tool to
th . expand Broadcasting Services. (Fixed/Mobile
e reach o f FM rad1~, cut down cost and provide quality Servi_ces have priority over FM Broad-
content. Hence, 1t endorsed Mitra Committee
recommendations on networking. casting)
(d) According to TRAI, Networking should not be permitted 5.0 (95-100) Shared between Fixed/Mobile and .FM
in the same city either across or within the same licensee Broadcasting Services. (Fixedj Mobile
group. This is because the objective of FM is to provide Services have priority over FM Broad-
variety and competition should be local. casting)
(e) There should be no networking permitted across licensees
Thus, the total spectrum exclusively available for F~
as this could provide a means of transfer of ownership ~nd
effective control. Broadcasting in India is 11.5 MHz out of which 3.7 MHz~
reserved for All India Radio. Remaining 7 .8 MHz 1s
(f) States do not provide a logical area for restricting
networking and once it is being restricted to the same assigned among All India Radio, private broadcasters and
licensee there is no harm in allowing this nationally. Indira Gandhi National Open University (IGNOU). In the
(g) In Phase I license agreements, networking was permitted sharedspectrumof9.5MHz(i.e.87-91.5/'&100MHz)only
on special and important occasions with ~rior ~pproval ~f few assignments have been made for FM Broadcasting.
the licensor. TRAI recommended contmuation of this (b) The question is whether the existing spectrum allocated to
provision. FM Broadcasting is sufficient to increase the availability of
number of FM Channels in each city. In Phase L government
Summary ofRecommendations on Networking .
offered a total of 108 frequencies·in 40 cities for private FM
• Networking should be permitted but only between stations broadcasting through open auction bidding process. As on
located in differerif cities. . d within the same city. ¼ugust 2004, (when TRAI submitted.its recommendations),
• No networking should be pernutte •tted across only 23 Private FM stations were operational (including 2
• Similarly no networking shoul~ be perm1 deemed operational) in 14 cities. One station had closed
licensees, except on special occas1ons. ld ke available a doWn.
• To simplify matters, the licensor s~ou m:ally on which (c) In Phase I government offered one FM frequency in each of
list of special and important occasions_ ann ission for 40 'ti ·
. ci es to IGNOU fot education broadcasting. However,
the licensees would not require prior r e : would t,e
till August 2004 IGNOU was able to operationalise FM
st
networking. However, prior written permJSsther occasion-
required if networking is to be done on any o ati?ns only in 10 cities. There is a view that the
req~u-ement of education broadcasting which consists of
Il\a.i.nI .
Increase in Number of Frequenc_ies fo~ FM for FM Broadcasting . Y spoken words programmes can be met by using
(a) The following spectrum 18 available :ed1um wave transmitters. On the other hand, it is a fa~t
in India. at FM transmissions are more suitable for Hi-Fi music
Program · ·on
mes as compared to medium wave transnussi ·
 122
RADIO IN NEW AVATAR AM TO FM
RIVATJS ATION AND PM BROADCASTING
The questio n is whethe r IGNOU should be disall BRA Of p 123
. .
fu r ther u tills ation o f FM spectru m in order to increasowedth referred to use the FM band because of superior quality.
availabi lity offrequ encies for private FM broadca stin; e ~fter conside ring IGNOU ' s point of view, TRAI was of the
(d) Mitra Commit tee was of the view that the release of a high
vieW that IGNOU might be allowed to use FM spectrum in
number of frequen cies fo~ tenderin g in Phase n tnig:~ those cities only where neither the Medium Wave
adverse ly affect the valuatio n of the frequencies, and the
market would also find it difficul t to sustain a higher frequen cies w~e availabl e _to ~tablis~ IGNOU' sown radio
stations nor did IGNOU find 1t feasible to share Medium
number of frequen cies. It was of the view that release of
additio nal frequen cies for Phase II of liberalisation of FM Wave infrastr ucture of AIR.
broadca sting should be through the migratio n of existing
sum mary ofRecommendations on IncreaseinFretp,encies
.
players to the Phase II regime and consequ ent release of • Allow the maxim um number of frequencies possible in
unutilis ed spectru m from Phase I.
metros, Hydera bad and Bangalore. 'There is a need to re~
(e) On account of paucity of spectru m it was not advisabl
e to additio nal exclusi ve spectru m for FM Broadcasting out of
allocate FM frequen cies for educati onal broadcasts. The
Commi ttee was of the opinion that some other available the shared bands i.e. 87-91.5 MHz and~100 MHz in such
frequen cies might be more effectiv ely utilised for the selected location s where spectru m may be a problem in
purpose s of educati onal broadca sts by IGNOU. It was Phase Ill.
brough t to the notice of the commit tee that d~rin~ the l_ast • Unlike Phase·I, a minimu m of two frequencies should be
,,, few years AIR had been in the process of nugratin g high offered for licenses even at the smalles t town in order to
quality music program mes like Vividh Barati fr~m MW to ensure compet ition and variety of program ming.
FM. The possibil ity of availing these ~ tr~nutt ers from • Consid er all remain ing towns having populat ion of more
AIR by IGNOU require d serious conside ration. . than one fakh in the ~ase II of the licemin g process.
(f) TRAI felt the need for adding more frequencies to the • Due to rapid develop ments in the field of digital tedmology,
bidding process in metros as well as smaller cities. Apart
in case digital radio broadca sting were to be introduc ed
from includi ng the unutilis ed cha~e~ under Pha:~I,
before the licensin g pericxl was over, the government should
governm ent should conside r all remaim ng towns ha g
release addition al spectru m either from the shared spectrum
a populat ion of more than one lakh in the list of towns
of VHF Band Il (87-91.5 /95-100 MHz) or VHFBa ndill (174-
where FM licensee s are to be issued in Pha~ II. vastl
TRAI . said that unless the supply of frequencies was th Y 230 MHz) or fresh bands. This could also be conside red in
. tr ined and ere Phase III.
increas ed demand would rem.am cons a d to
·w
would be very Ii e grow · th There was an acute nee Non-Co mmerci al and Niche Channels
. d tall locations
increase the number of frequen cies offere a losion in 1. Non-Commercial, Non-Advertisement Driven Channels
coupled with fewer restricti ons to _enable an exbnly with
the growth of FM Radio in the private secto~.:..._tial of FM (a) With regard to non-com mercial and non-adv ertisem ent
• gramm e can the full poa.c... driven channe ls, there were two proposa ls before the Mitra
sueh an ambitious pro . ill give a great Committee.
Radio be achieve d. Further this p~oces~ wth. retativelY
boost to local talent and create Jobs m IS
(i) Asking the comme rcial broadca sters to also take up
neglecte d sector. : f Mitra eonuni- the respons ibility of running non-com mercial and
(g) IGNOU objected to the recommendatiOn
to shift from FM to MW Band. IGNOU mdJC
°. . ated that it (ii) non-ad vertisem ent driven channel s.
Creatin g a fund by reservin g a certain percent age out
of the revenue collected by the governm ent from ~
fees.
124 VATJSATJON AND FM BROADCASTIN G
RADIO IN NEW AVATAR AM eRA of pRI
TOFM
same and since they are located at. the same site, they·
(b) The Committee did not find the above a O . th e be attenuate d s1m1
will . ·1 ar l?' wit
· h the distance, thus,
workable policy as this may defeat th.e v~ryprpactical and
· •t h d• maintajning the same protection ~een the channels.
b oosting e ra 10 broadcast market throughurpose
Ph .
of
licensing process. (c) The broadcasters opposed co-location for the following
ase-II
(c) The ~ommi~ looked into the model of Public Broadcast reasons:
SeIV1ce (PBS) m the US and BBC model for non-commercial (i) For co-location, itis necessary for private broctdcasters
channels where the programmes are funded by vario to form a consortium.
organisation s. Accordingly it recommende d a mod:: (ii) Forming a consortium is difiicult since the
wherein, out of the 4 per cent revenue share that
government would receive from the FM broadcasters, 1 per
th; broadcasters compete with each other.
(iii) Ifa broadcaster backs out, hisshaTeofco stoncommon
cent of the revenue share should be set apart as a separate infrastructure would have to be borne by the remaining
fund for the purpose of developing the non-commercial ones. •
channels related to a wide range of areas such as culture . (iv) Private broadcasters have to bear substantial cost on
and heritage and public health. studio-transm itter link as in co-location case, the ·
(d) 1RAI was of the viewpointtha titwas not necessary to provide studio set up would mostly be at a different location.
a separate channel or station for such contents as mentio:..'led (d) . Co-location of FM broadcast transmitters in a city has the
above and these could very well be grafted on the existing
following advantages.
channels. AIR could alc;o be asked to do the job.
(i) It results in the efficient utilisation of spectrum.
2. Niche Channels (ii) In inetro and large cities (category 'A' cities of Phase I)
1 It was noticed that all the private channels in metro citi~ demand of large nwriber of channels can be met by ·
sound .a like without much diversity of content. Hence, it reducing the carrier separation (say from 800 KHz to .
was proposed that separate licenses shou_ld be used
niche channels (like classical music etc.) with low reserv
£o; 400KHz).
(iii) In metro and large cities (category' A' cities of Phase I)
fees and low revenue sharing percentage. d wher~ number of FM channels would be large, co-
IL tlrfitra Committee agreed with the above pr_oposa1 ~~ loca~on (due to sharing of infrastructure ) would
recommende d reservation of certain frequencies for roe e
provide a much cheaper option.
channels in every city. (e) TRAI
·tr Comnrittee .. was o f the view - that co-location can help in better
Ill TRAI did not accept the suggestion of ~e ~ai~ that the
for setting up niche channels. t utilisation of the specbum and in turn this would help in
tpnewhen
recommendat ion could be considered after some mofore frequencies being available and in increa~inO' the level
competiti . --o
the industry stabilised. 1government on. However, m view of the difficulties of Phase
locati sh Id ak . .
. ou m e available a default option of co-
Co-location locating the agreemeon mt case the pnva · te parties
· could not come to
an
(a) Co-location is the tern~ used to~':::Sofa pilrtieU!Jr I&a cou}~ ~1 would. therefore be better if the Ministry of
transDlitting set ups o~ vanous bro~ .. the couunon tower- and ind. 1 ate a suitable agency to construct new towers
city in the same prelJ'l)SeS and shA':mg in metro dtieS was
e cos t wou Id be per licensee.
tcate what th
not feasible . .
to If 1t was
In Phase I broadcasting, co-locatiOJl
t1ff ctive ll\~tro cities d;o-.loca~ all transmitters on a single tower in
mandatory. . · that the i:- e l nught .,.11 e to various technical reasons government
(b) The basic idea behind co-locauon JS ls would t,eneilr y 1' • ""Wane0
Radiated Power (ERP) of all the channe his Would be in~ more towers to cerlocate the' transmitters.
teated in the tender dqcuments (wherever
 7
, 126
RADIO IN NEW AVATAR
necessary) so as to make the bidd
. ers aware of wh
AM To FM
e~A Op pRI

h
by
yATISATIO
.
N AND FM BROADCAST ING

·abilities 111c~rre
the O Id regime.
.
d till the cut-off date should be goveme

was of the opinion that operatio

127

.
· nalis ti'
a on
d

wou Id be I1able to pay. at they (b) Mitra C ommittee 1 st a serious attempt ·

at operationalisa ti"on
Summary ofRecommend ations on Co-location of licen:t;:tc ~~erion for distinguish ing ~tween serious
• Co-location of all FM transmitters should be should d t so serious ones. The comnuttee, however,
metros as well as Bangalore and Hyderabad w'th mandated · licensees a~e;~hat there should not be ~y black~ting of
m ·
selected by Ministry of I&B doing the -ob of ~tegran tagency recornrnen licenses on the basis of thell' default m Phase
·d · I .
provi ing a ong with the tender document
1 a orand b1·ddersforne
e Phase
w
J was characteris ed by acute mark e~ an d
h
.
approxrma te capita. I
cost. Depending on the numbs .t ef I, as th . perfections that rendered the marketunv iable.
licensees co-location could also be considered in Pha::; reguJatolryklJJ\ed into the arguments given in favour of
~ TRAI oo .
in other cities. (c migration are the followmg:
• If it was not feasible to co-locate all transmitters on a single T O systems should not co-exist. This would create
tower in metro cities due to various technical reasons, • p:blems of competitio n as the conditions of Phase Il
governmen t might allow one or more towers to co-locate
the transmitter s. are more favourable.
• In retrospect the outc.ome of Phase I has not been one
• After bidding all successful bidders could agree to do co-
location on their own rather than through the selected that would lead to a sustainable model of developme nt
agency of the Ministry- this option must be exercised of the sector. The high license fees would inhibit growth
within one month of getting the LOI. and many may not even survive-th is would mean a
waste of all the efforts of the past few years.
Technical Parameter s
(d) The main argument against any migration was that the
(a) In Phase I technical parameters na~~ly power of
rules of game should not be changed midway. Bidders had
transmitter s and antenna gain were specified_ separat~ly.
consciously made commitme nts and they should abide by
However the internation al practice is to specify Eff~~;e them. Such a change of license conditions could also invite
Radiated Power (ERP) which is the ~ro.d uct o e legal challenge.
transmitter output power and antenna g~- ft hnical (e) ~dorsing the recommen dation of Mitra Committee , TRAI
(b) Mitra Committee did not touch upon the:~u~~ fo~owing said that migration should be permitted Essentially this
parameters . However, TRAI recommen e '. was because the Ph I di.. . .
ERP.
(z) Metro
·
cities, Hyderabad
W(M ) and
5.0 K 1 a;5 KW (Min)
allow
in the
n:
sustain bl
O
ase con tions were inherently not
e and also because it would not be correct to
systems to c_o -exist TRAI did not find any reason
Banga ore
soKW(Max) lllidw:1&Ument th~t license conditions cannot be chan ed
(ii) Remaining cities
1 KW(Min) Conunitie! ~tead it agreed with the finding of
change the Ii at the governme nt had the inherent right to
Mf tra
(f) There a
Migration from Phase I to Phase JI RegJ·me rposef of ceuse conditions .
· nded that for the pu th of c0 re several cate ·
(a) Mitra Committee reconunethe Phase II regime, Z4_u"" 1\siderect for . . gories of players who could be
· ...: from Phase I to new B dcast p~, • l'L llllgration.
DUgrauon . tmentofRadio roa ,, frOJSI ·••ose w ho obtained
July 2003 (the day of appotn Ji . .
'ttee) should be taken as
the ,, Cut-off pate ,.jtne
the new rei;.- "'
• !1'd also pai t th .
, hOSe Wh " . eu dues.
censes, operationa lised stations
-~ 1,w
CoJJ\Dll
w licable to the players. ,~g
u.
hich the rights and O gations under htB accru~
bli
Which wa: 1:~!~~:~es ~~cept the last installmen t
would be ~PP
in litigation. These could be
 1

·PRIVATISATION AND FM BROADCASTING 129

128 RADIO IN NEW AVATAR AM TO PM ERA OF
Phase II conditi ons from the start of the financia l year in
allowed to migrate if they agreed to pay all their dues which the LOI is given. If unsucce ssful they could be given
upto the cut-off date. the option of termina ting with one month' s notice (instead
• Those who operati onalise d their stations but defaulted
of 12) or continu ing with Phase I.
in paymen ts. They could be allowed to migrate on
clearan ce of all dues upto the cut-off date. POUC Y ON EXPAN SION OF FM RADIO
• Those who made all payme nts but failed to have 'l\Ot BROAD CASTI NG SERVICES
operati onalise their stations . They could be allowed to In zoos Ministr y of Inform ation and Broadc asting formula
migrate provide d they operati onalise d their stations ted a
policy on expans ion of FM radio broadca sting service s through
within six months of the govern ment decision on Phase private agencie s (Phase II). The policy announ ced on July 13,
II and the migrati on packag e. 2005
incorpo rated major recomm endatio ns made by TRAI in respect
of
(g) The various options availab le for migrati on to new license private FM radio broadc asting.
structu re were analyse d by TRAI. As per this policy, enterpr ising broadca ster will be granted
lice~
(i) TRAI did.not agree on July 24, 2003 as the cut-off on the basis of One-Ti me Entry Fees (OTEF) quoted by the bidders
date
as recomm ended by Mitra Commi ttee. It support ed to (Closed Tender System ).
start the new system with the financi al year i.e. March
The details follow:
1.: 31, 2004. This would start the new system early and
I' ' allow a large numbe r of existin g ope~ato rs to s~ive Eligibil ity Process
as all the operato rs with one excepti on had paid all (i) As laid down in the policy, the process of grantin
g
', their dues till 31-03-2004. . permiss ion for new particip ants under Phase II shall consist
'· ' (ii) The final recomm endatio n of TRAI was not to specify of two rounds . The first round shall be for pre-qua lificatio n
I: the cut-off date now and allow the existing contra~ts to and only applica nts qualify ing in accordance with prescribed
run their course. When the bids for Phase II are called e~igiliil~ty crj-teria will proceed to the next round for making
then ·those operato rs who have given · their option for fmanc1al bids for specific channe ls in differen t cities.
.
migrati on can also bid. If success ful, they can ~gr;: (ii) p artiicipa nts of Phase
I, who exercis e their option to be
to the Phase II conditi ons from the start of the fman co_ru:idered for Phase II, includi ng those licensees who are
. hich the LOI is given. If unsucce ssful they ehg1ble for automa tic migrat ion for channe ls aheady
year m w . . with one
could be given the option of ter~a ~g "th p}lase operationalised. by them. will be eligible to be conside red for
months notice (instea d of 12) or continu ing WI the pr~ual lficatio n round for fresh tendering under Phase
I conditi ons. _ . II, subject to their fulfilling the prescrib ed eligibility criteria.
Summa ry ofReco,nmendations on Migrat ion
Eligibility Criteria
·tted for
• Migrat ion to Phase II conditi ons should ~ pe~ithd ra'W (i) Laying down the eligibil ity criteria , the policy
Phase I licensees provide d that they pay~
all pendin g litigatio n and also not be m
::~ult of anY
states that
only comp~ es registe red under the Indian Compa nies
Act, 1956 wdl be eligible for biddin g and obtaini ng
per · · n for FM
license conditi on.
d . mtsSio radio channe ls. The follow ing
u1d be pernUtted isqualif ications shall apply to these compan ies:
• Other categories of Phase I partic ipan:i 5~ and wtthdtaW
to bid in Phase II provide d they clear • Notreg istered inlndia
"' •• S C 0 ~~o~e d by persons
all pendin g litigatio n. . to phase II shOutdt)\f convict ed of certain offence s
• The operato rs who wish to nugrat e d to nugrate to ~ u •diary of the applica nt compan y
allowe d to bid for Phase II and aUowe
 4
130
RADI O IN NEW AVATAR AM TO PM F PRIVATTSATTON AND FM BROADCAS
• Com panie s with same mana geme nt F,RA O TING
131
• Com pa~i es of the same grou p or of valid bid9 being more than the availa
comp arues inter -tortn eded ble numb er of
frequ encie s, those unsuc cessf ul valid
• Relig io~s bodi es or their cont rolle bidde rs, who are
d/ ASSodated abov e the reser ve _CYfEF l_irnit, and who
comp anies are willin g to
conti nue the depo sit of their PBG for the
• Poli tical bodi es or their cont rolle ,amount equal to
d/ assoc iated 50 per cent of their respe ctive finar<cial
comp anies bids, will be placed
in a waiti ng list in accor dan.c e with the
• Adve rtisin g agen cies or their contr desce nding order
olled / asstlciated of their finan cial bids for a perio d of two
comp anies years .
(v) Ever y succe ssful bidde r will be
• asked to deposit the balance
Trus·t s, Socie ties, non- profi t organ isatio 50 per cent of his finan cial bid throu gh
ns' contr olled / a dema nd draft
assoc iated comp anies . withi n a perio d of seven days of being
declared a successful
(ii) The finan cial comp etenc e of the bidde r.
comp anies will be assessed
befo re they are allow ed to putic ipate (vi) Any succe ssful bidde r, who fails
in the bid process. to depo sit the balance SO
Mini mum net wort h requ ired for one per cent of the bid amou nt withi n the
chan nel per centr e in all presc noed perio d,
will be imm ediat ely disqu alifie d to take
regio ns: part in any flesh
bidd ing anyw here in the coun try for a perio
• D categ ory centr es: d oi five years.
Rs. 50 lakhs Furth er, the origi nal paym ent made throu
gh demand draft
• C categ ory centr es: Rs. lcror f! for 50 per cent of the bid amou nt
will be forfe ited
• B categ ory centr es: Rs. 2cro re imme diate ly.
• A or A+ categ ory centr es: Rs. 3cro re (vii) On depo sit of the balan ce 50
per cent of the bid amou nt
• Allce ntres : Rs.1 0cro re withi n the stipu lated time, and fu1fill
ment of other eligibility
Process of Gran ting Penn issio n cond ition s, the succe ssful bidd er will be
issued a Lette r of
The polic y has men tione d in deta . Inten t (LOI ) to enab le the comp any to
obtai n frequency
il the proc ess of grant ing . alloc ation , SAC FA clear ance, achie ve finan
cial closu re and
perm issio n. appo int all key execu tives , enter into ag1
.. r · ill be allow ed to apply for
eemems with DD/
(i) Ever y pre-q ualif ied app 1~t wl AIR/ BEC IL and depo sit the requisite
amou nts towards
allot men t of only one c anne in each city throu gh a land / towe r lease rent comm on transmissi
on in£ra.fflucture
sepa rate financial bid for paym ent of OTEF chcrumnel etc. and comp ly with requi site cond itions
for~ d with a of eligib ility for
(ii) Each such finan cial bid will signi ng the "Gra nt of Perm issio n Agre
be ~~0 ~1;; 1:e~ t of the emen t" withi n a
dem and draf t for an amo unt ~ua perio d of nine mont hs from the date of
d irrev ocab le is.sue of LOl
(viii) On comp lying with all the requi
fina ncia l bid and unco nd1( ~~a) siteo ondit iom of eligibility,
~o:: n amou nt equal and furnishing a PBG for an amou nt
Perfo rman ce Bank Guar antee . equa l l'O the annu al
to 50 per cent of the finan cial bid valid for one Year • ·
from the fee (10% of Rese rve OTEF), the LOI holde
r and the Milm try
. . ocess of lnfo. -mati on and Broa dcast ing will
date of closure of the bidd ing pr
(iii) Rese rve OTEF limit for eac~ city
hall be 25 per cent of the Perm issio n Agre emen t in the presc ribed
sign the Gran t of
format. Besides
s .ds
high est valid bid in that city. AU b1 bel w the reseJ'\'e the Mini stry of Infor matio n and Broad
o castin g woul d issue
perm issio n after signi ng the agree ment
limit shall be swnmarily rejected,
(iv) Chan nels avail able for priva te
Cl·ty will be alloc ated
. ids
age ~
.
:es~S
. p}laS e II in each

in accordancethewtth nt of the n,.nnbtt

.
order
perm issio n hold er to insta ll the radio
Wire less Oper ating Licen se (WO L) and
chan nel withi n.a perio d of one year from
to enab le ~e
statio n, obtai n
oper atio. na~ ~e
the date of sigrung
of valid financial b recew ed · In eve th e Gran t
of Perm issio n Agre emen t. The perio
d of
 pRIVATJSATION AND FM BROADCASTING 133
RADIO IN NEW AVATAR AM TO FM ERA O F
132
will be no provision for its _extension and it will automatically
permission shall be reckoned from the date of lapse at:the end of the period and the permission holder will
operationalisati.o~ o~ one year from the _date of signing of have no rights to continue to operate the channel after the
the Grant of Pernuss1on Agreement, whichever is earlier. date of expiry. The government at the appropriate time will
Fee and Duration determine procedure for issue of fresh permissions and no
conces!,ional treatment will be afforded to the permission
About fee and du ration of license, the following has been laid down
holders in the allotment of channels thereafter.
in the policy. ·
No Multiple Pennissions in a City
(i) Annual Fee will be charged@ 4 per cent of gross revenue, for
the year or @ 10 per cent of the Reserve OTEF limit for the The policy does not approve any broadcast company to own more
concerned city, whichever is higher. Gross revenue for this than one channel in a city. The provisions follow:
purpose would be the gross revenue without deduction of taxes. • Every applicant will be allowed to run only one channel
(ii) The first year from the date of signing the Grant of. per city provided the total number of channels allocated to
Permission Agreement shall be reckoned as the the entity is within the overall ceiling of 15 per cent of all
commissioning period. The first year's fee shall become allocated channels in the country.
payable with effect from the date of operationalisation of • No pe1rmission holder will outsource, through any long-
the channel or expiry of one year from the date of signing term production or procurement arrangement, more than
the Grant of Permission Agreement, whichever is earlier. · 50 per cent of its total content, of which not more than 25
The permission holder shall initially pay advance quarterly per cent of its total content shall be outsourced to a single
installments on the basis of the Reserve OTEF formula till content-provider.
• No permission holder will hire or lease more than 50 per
the end of the financial year. Once the final fee for the
cent of broadcast equipment on long-term basis.
financial year is determined on the basis of gross revenue
share formula, the permission holder shall pay the balance Total Number iofFrequencies that an Entity May Hold
in one lump sum within a period of one month from the No entity will hold permission for more than 15 per cent of all
date of such determination, in any case not later than channels allotted in the country. In the event of allotment of more
September 30 of the following year. chai:1nels th~n prescribed, the entity will have the discretion to
(iii) From the second year onwards, the permission holder shall decide which channels it would like to surrender and the
pay advance license fee on the basis of 4 per cent gross government will refund its OTEF for these channels in full
revenue share of the first year or 10 per cent of reserve CJl'EF, Foreign Investment
whichever is higher, within the first fortnight of each In this policy also, the government reiterates its earlier stand on FOL
quarter, and balance due of final annual fee by September
(i) Total foreign investment, including Foreign Direct
30eachyear. f Investment (FDI) as defined by RBL including FOi by OCBs/
(iv) The government will have the right to get the accounts 0
NRis/_ PIOs etc., Portfolio Investments by Fils (within limits
any permission holder audited by CAG or any otber ~r~bed by RBI) and borrowings, if these carry conversion
professional auditors at their discretion. In case o f = ptions, is permitted to the extent of not more than 20 per
between the financial results determined by the . ws cent of th~ paid up equity in the entity holding a permission
accountant and the government appointed auditors, theVlf t for a radio channel, subject to the following conditions:
of the government appointed auditor will prevail to theextell • One Indian individual or company owm more than 50
of determining~ revenues of the permission holder· per cent of the paid up equity excluding the equity held
(v) Every permission will be valid for a period of te~ ~ : by banks and other lending institutions
from the date of operationalisation of the chaJUU! ·
134
RADIO IN NEW AVATAR AM TO FM
.. I g~A O
F pRJVATISATION AND PM BROADCASTING
135

• The majority shareholder exercises mana

control over the applicant entity gement
regulations are modified, the permission holder will be
obliged to conform to the revised guidelines.
• Has only resid~nt Ind_ians as Directors on the Board (iii) No permission holder will use brand names or owners'
• All_ key ex~tive officers of the applicant entity are
resident Indians
names or corp_?rate-group names to identify its channel to
gain cornmeroal advantage <Wer other permission holders.
(ii) If d~g the curre:r~.cy of~~ permission period, government (iv) The Ministry of Information and Broadcasting will have
policy on FOi/FIi IS modified, the permission holders Will the right to suspend the permission of one or more
hav~ to conform to the revised guidelines within a period permission hold:rs in publi~ interest or national security
of six months from the date of such notification. to prevent the misuse of their respective channels and the
(iii) No permission holder will be permitted to change the permission holders shall be obliged to immediately comply
ownership pattern of the company through transfer of shares with the directives of the government
of the major shareholders to any new shareholders without
the written permission of the Ministry of Information and Networking
Broadcasting, which will not be granted for a period of five (i) An entity wiJI be permitted to network its channels in C
years from the date of operationalisatio n of the permission, and D category cities within a region only.
subject to the condition that the new shareholders conform (ii) No two entities will be permitted to network any of their
to all the prescribed eligibility criteria. channels in any category of cities.
Cross Media Ownership
Number ofFrequencies
If during the currency of the permission period, government policy
A total of 336 channels in 90 cities across the country would be
on cross-media ownership is announced, the permission holder
will be obliged to conform to the revised guidelines within a period made available for bidding by Indian private companies.
of six months from the date of such notification. Co-location
In case the permission holder js not in a position to comply Dealing with technical issues, the policy states the following:
with cross media restrictions for bonafide reasons to the satisfaction
(i) It has been made mandatory fo.r all Phase II operators to a:r
of the Ministry of Information and Broadcasting, the permission
holder would be given an option of furnishing one month's exit locate transmission facilities in all the 90 cities. In 81 cities,
notice and the entry fee for the remaining period, to be calculated on the facilities would be co-located on existing AIR/ DD
pro rata basis, will be refunded to the permission holder. towers, while in remaining 9 cities, new towers shall be got
constructed by the Ministry of Information and
News and Cu"entAffairs Programmes
Broadcasting through Broadcast Engineering Consultants
No news and current affairs programmes are permitted under the India Limited (BECIL) for the purpose.
Phase II policy guidelines. (ii) Pending creation of co-location facilities by BECIL in due
Code ofConduct course, the successful bidders in these 9 cities will be
For the purpose of maintaining the standards of programmes, the permitted to operationalise their channek on individual
policy states the following: basis for a period of two years, at the end of whi~ tl_tey
shall shift their operations to the new facilities. PennisSlon
(i) Every permission holder will follow the AIR Progra~ to run its individual channel will be granted to each
and Advertising Code as amended from time to~· su_ccessful bidder only after it has entered into an agreem~t
(ii) In the event of the government announcing the setting JJP With BECIL and made full payments towards its share m
of a Broadcast Regulatory Authority, and the content · the common infrastructure.
136 RADIO IN NEW AVATAR AMT0FM of pRJVATIS ATION AND FM BROADC
eRA ASTINc
137
Migratio n to Phase II vu. In the event of any operation aJised .
J declinin g to opt for automatic mi lie~ ~older of Phase
In the polietJ guidelines , the process of migration from Phase I to Phas
has been adequatel y elaborated. e II to be governe d by the terms and c:t~~n, it Will continue
operation r . license under Phase I policy regime a~ti~ ~fits original
l · Licensee s of Phase I, who have actually to time. ' ntodified from time
their cha~els w?uld be giv~n the option to migr::~
Ph~ Il policy regun~. They will have to exercise their initial 'foSum Up
option by th~ presc_n ~ date to automati cally migrate to • Radio broadcas ting in India complete d th . .
Phas~ ~I policy ~~ m accordan ce with the terms and 1923 to 2000 as it was a joum f e fu~ crrcle from
conditio ns of_ ~igratio n ?r continue under Phase I or broadcas ting to privatisat ion· of ::'oa~m ?nvate sector
surrende r their licenses with one month's notice. to 1997 broadcas ting remained in the sting. From 19'30
II. In the event of surrende r of channels , governm ent ma though the official broadcas t media ~ m e n t control
include the surrende red channels for allotmen t under a{ . au~m ~
Phase Il policy regime.
ill. Automat ic migratio n will be consider ed for only thos
e after 1997. Despite public service broad
commerc ial broadcas ting, the tenets of 7
pu
tu~g mto
5erVICe were
never sacrifice d.
license holders of Phase I who have actually operation alise~
their channels , provided they have paid all their dues from • First st~p to~ards privatisa tion was taken in 1993 when
~e due date (after ~owing for certain condona tion of delay so~e time s ots were leased out _!)n AIR FM channels to
m the case of Delhi, Kolkata and Chennai due to problems private program me producin g compani es. This
of co-locati on) up to the cut-off date, and are not in default arrangem ent ceased to exist in 1998 following which the
of any other license conditio ns till the date of migratio n to governm ent_ announc ed ~e policy of giving licenses to fully
Phasell. owi:ied Indian comparu es to set up private FM radio
IV. The cut-off date for automati c migratio n to Phase Il will be stations. In the first phase, 108 frequencies were auctioned
taken as April 1, 2005. All payment s made by operation - acr~ss 40 cities in May 2000 and the first private radio
alised license holders of Phase I in excess of amounts due station became operatio nal in July 2001.
till the cut-off date, will be given credit and adjusted against • The governm ent constitute d. Mitra Committe e on July 24,
their One-Tim e Entry Fee (OTEF) for Phase Il. 200~ to make recomme ndations for the second phase of FM
V. Each operatio nalised license holder of Phase I, who is radio. The committe e submitted .its reportinNovember-2003
eligible for automati c migratio n, will pay OTEF amount which the governm ent referred to TR.AI on February 12,
equal to the average of all successfu l bids received under 2004 for its recomme ndations. To ad~imm ediate is.5\J.es
Phase Il in that city. In the event of no successf ul bid in the TRAI submitte d its interim recomme ndation on April s:
city, such OTEF amount will be equal to the average of all 2004. Subsequ ently it issued a consultat ion paper on April
successfu l bids received in that category of cities in that 14,. 2004 so as to collect the opinion of stakehold ers.
region. In the event of no successfu l bid in any metro city, • In its recomm endation s submitte d in August 2004 TRA1
such OTEF amount will be equal to the average of all recomm ended one-time entry fee and a revenue share(4 %
successfu l bids received in all the four metro cities. of the gross revenue of the company ) arrangem ent replacing
VI. On exercisin g its option to automati cally migrate to Phase the ear lier licensing procedu N, TMI recomme nded
II, and payment of the OfEF within the prescr ibed~' multiple licenses at one centre- one entity holding not more ·
each eligible operatio nalised license holder of Phase I will than three or one-third of the licenses in one city. TRAI
be issued a fresh permissi on with the same terms and refrained from making clear recomme ndations about FDI,
condition s as for successfu l bidders of Phase II. cross media ownersh ip and news broadcast .
 RADTO JN NEW AVATA~ AM TO FM
1:\8
e_city, no
• TRAl petmitted 1,0 networking with ih the sam
~ between
netw orki ng across liee'n ses _b ut permitted the sam
g to the
radi o 'Sta tions loca ted i" diff eten t cities belong.m
ernment
same broadcasting com pah y. TRA I asked the gov
s as well as
to make available more frequencies for big citie
tion about
small ones . It did not make any clea r recommenda
aske d the
non com mercial chan nels and nich e channels . It
smitters
gov emm ent to make the co-location of FM tran
compulsory.
ting service
• In its policy on exp ansion of FM radi o broadcas
ernmellt
(Phase II) ann oun ced on July 13, 2005, the gov
the li~ense
completely changed the licensing proc edu re and
policy
fee as com pare d to Pha se I policy. In the new
s of TRAI),
guidelines (mostly based on the recommendation
ula (4 %of
one time entry fee system and revenue share form
ed. The
the gross reve nue of the com pan y) was introduc
bidd er for
process of gran ting perm issi on to successful
the policy.
operationising a channel has also been detailed in
es to be ten
• In Pha se II policy, the license peri od con tinu
atio ns of
years. The policy disa ppro ves the reco mm end
centre. The
TRAI for mul tiple licenses (to one entity) at one
channel
gov ernm ent ado pted the poli cy of one enti ty one
in one city, also prov idin g for a cap of 15 per
cen t on the
national
num ber of chan nels that an enti ty can own at the
in the FDl
level. The policy doc ume nt pres crib es no cha nge
rd to
limit of 20 per cent, and fram es no rule s with rega
cros s med ia own ersh ip.
current
• In Phase Dpolicy, ban on the broadcast of news and
d the
affairs oontiruies. The policy documents also endorse
Phase l p.oli.cy of making adherence to AIR broadcast code ters.
and advertise1nentcode compulsory to private broadcas
11W raoommendation of permitting networking ICfOSS citieS ~y
(between ohannels of the same entity) w~s not accepted
the gover ~. The policy guidelines pernut all enti
ty to
~o rlc lt6 channels in C and D category dues with
ill a
re~ n o.nJy b1i~ do not permit networking by two entitieS.
o£
tbeJT cfoumels ~ any Ciltegory of cities.
• Abou,t co.~cttion of tlansmitter~, Phaae I policy of mak '.8
iJ.l8
the ~o-Joc~tion compulsory for private PM broad, Mte1
ut
co~tin~~ m the second phcase. The policy guidelines pein
rrug_ration of Phase I lice nses to Ph.a.se II regime subject
to
f ulfillmtmt of certain conditions .