TRAI seeks industry comments on reserve price for auction of FM radio channels
The Telecom Regulatory Authority of India (TRAI) has released a Consultation Paper on ‘Reserve Price for auction of FM Radio channels’, wherein it has sought the comments of stakeholders on whether they agree with the methodology used in TRAI’s recommendations, dated March 15, 2015, for valuation FM Radio channels.
The consultation paper has been released after the Ministry of Information & Broadcasting (MIB) wrote to TRAI seeking its recommendations on reserve prices of 283 cities under FM Phase-III Policy, which include 260 new cities and 23 existing cities. Out of these 260 new cities, 155 new cities were identified by MIB in 2011 in Phase-III policy and have not been put to auction yet; 37 new cities were identified by MIB in 2014 on the basis of the 2011 Census data and have not been put to auction yet; 41 new cities were put to auction in Phase-III in 2016, but no bids were received in these cities; and 27 new cities were put to auction in Phase-III in 2016, wherein all the channels were not bid.
MIB, vide its letter dated August 22, 2019, has asked TRAI whether various issues like inflation, indexation of reserve prices worked out in the years from 2011 to 2015, need to be factored in while determining the reserve prices for auction of FM Radio channels in 283 cities under FM Phase-III Policy.
In batch 1 and batch 2 of Phase-III auction, reserve price for existing cities were fixed by MIB as per provisions of Phase-III policy guidelines. No recommendations were sought from TRAI on reserve price for existing cities.
MIB in its letter dated August 22, 2019 has sought recommendations on reserve prices of 260 new cities, which include 10 cities of border areas of J&K and the North-Eastern states. As per Phase-III Policy guidelines cities in border areas with a population less than one lakh are classified in ‘Others’ category and reserve price for cities in this category is fixed at Rs 5 lakh.
In its paper, TRAI has put up 9 key issues for consultation:
- Do you agree with the methodology used in TRAI’s recommendations dated 15th March 2015 for valuation FM Radio channels? You may also suggest an alternative approach/ methodology with details and justifications.
- Can the Phase-III policy, that is, the highest bid price received for a city in Phase-II continued to be reserve price for the existing cities? If yes, is there a need to account for the inflation? If no, please suggest approach/ methodology for existing cities with justification.
- Do you agree that various technical changes, behaviorial changes in listeners, availability of devices for FM Radio listening will be duly captured by the variables – Population, Per capita income, Listenership of FM Radio, and Per capita Gross Revenue (GR) earned by existing FM Radio operators, as recommended by TRAI in 2015, for valuation of FM radio channels in new cities? If not, what additional variables need to be considered for truly reflecting the valuation of FM radio channels in new cities? You may also suggest alternative variables with details and justifications.
- How should the present listenership of FM Radio in each state be estimated? Please provide your suggestions with justification.
- In case methodology as recommended by TRAI in 2015 for determining reserve price for FM Radio channels in new cities is adopted, should the reference price be taken as the average of successful bids received in Phase-III auction held in 2015 and 2016? If no, please suggest an alternative proposal with justification.
- Do you agree with the proposal that the reserve price for FM Radio channels in a new city can be set equal to 0.8 times of the valuation of FM Radio channels in that city? If no, suggest an alternative proposal with justification.
- Should the auction of remaining FM channels of Phase-III be done delinking it from technology adopted for radio broadcasting? Please give your suggestions with detailed justification.
- In case auction of remaining FM channels of Phase-III is delinked from technology, whether FM Radio broadcasters who adopt digital technology be permitted to broadcast multiple channels on single frequency? Please give your suggestions with detailed justification.
- Stakeholders may also provide their comments/ suggestions on any other issue that may be relevant to the present consultation.