Modulating frequencies

While radio is increasingly attracting listeners, the government's policy on it is bizarre; the latest example being the decision not to allow private FM radio channels to air election advertisements during the run-up to the national elections.

The justification, it appears, is that since All India Radio does not air such advertisements, why should the competition?

But that's the whole point: radio cannot be looked at in isolation, but needs to be viewed as a medium in competition with television, print and outdoor hoardings. When the competition is free to carry advertisements, why prevent FM radio channels from doing so?

In fact, why prevent privately-owned FM channels from reporting news as is the case today? Surely if owners of radio channels like India Today and The Times of India can be trusted to carry news in print, and on the Internet, they are responsible enough to carry it on the radio channels they own as well?

Nor can the problem be one of foreign ownership, because if it were so, a solution along the lines proposed for television channels could be worked out in this area also "" i.e. cap the foreign investment at 26 per cent, insist that as in the case of the print media, the dominant Indian partner has at least a 51 per cent stake, and so on.

In other words, if Star News is free to provide news despite a 26 per cent foreign ownership, surely Radio City should be free to provide news once the information and broadcasting ministry is convinced that the control of the radio rests in Indian hands.

These instances, sadly, are just the tip of the iceberg when it comes to government policy on FM radio. As in the case of telecom, private players also wildly bid for the FM radio licences, fully convinced that a boom in listenership and advertisements would more than make up for start-up costs.

Well, as in the case of telecom, the boom didn't happen. But, while a boom took place once the government reduced the exorbitant licence fees to a moderate revenue-sharing arrangement in telecom in 1999, the same has not been done for FM radio.

Interestingly, thanks to the boom in telecom services, the government's revenue from licence fees is higher than what it would have got from the earlier high fixed licence fee regime.

In other words, the government has actually gained revenue by lowering the licence fees in telecom. There is no reason why the same will not happen in radio.

Today, with FM radio firms in Delhi and Mumbai paying licence fees in excess of their total earnings from advertisement, the model is clearly not working. If the firms close down, the government will lose revenue.

But if the radio companies are made viable, the government stands to make more in even the medium term. It seems a win-win situation for everyone, making the government's indecision look even more curious.