The static of discontent

A P Parigi

FM radio broadcasters ask the government to review contentious clauses in the new policy.

They're certainly a beleaguered bunch. First it was the high license fee that left the fledgling FM radio entrants floundering. Now, private broadcasters complain that the government's recent guidelines on the expansion of FM operations nationwide discriminate against existing players and could stymie the nascent industry's overall gowth.

Banding together as the Radio Group, FM broadcasters held two crucial meetings last week that might determine their fate under the long-awaited new policy announced in July.

Steered by A P Parigi, CEO of The Times of India Group-owned Entertainment Network India Ltd (which runs Radio Mirchi), the first meeting discussed common grouses surrounding the government's much-touted second phase of FM radio in the country.

The carefully-worded 'observations and suggestions' were contained in a paper compiled by the Federation of Indian Chambers of Commerce and Industry, which acted as a facilitator for the group. Within days, the group forwarded the paper to the ministry of information and broadcasting.

Topping the list of gripes is the eligibility criteria for companies bidding for the 336 frequencies in 90 cities in the next phase.

"The policy says that a company bidding for an FM license across cities must have a net worth of Rs 10 crore. Thanks to the huge losses, our net worth has been wiped out over the years," complains a senior executive at Red FM, the station owned by the India Today Group.

Radio company heads also point out that though 20 per cent foreign equity has finally been allowed in the sector, their boards are not allowed to have any foreigners. That, they say, is unfair given the fact that foreigners are allowed on the boards of insurance and telecom companies. "We have made it clear that those who invest money in us would also seek representation on the board," comments Parigi.

The new policy stipulates that an operator cannot sell his business before five years. The Radio Group argues that disallowing mergers and acquisitions in the first five years may result in a time-consuming re-allocation of frequencies vacated by failed operators. The group has, therefore, requested a reduction in the lock-in period to three years "The fate of most businesses is usually decided in the first three years," says Parigi.

The policy states: "Every applicant shall be allowed to run only one channel per city provided the total number of channels allocated to the entity is within the overall ceiling of 15 per cent of all allocated channels in the country." Operators have requested multiple frequencies in the top 9 nine cities.

One of the biggest issues before the FM radio companies is that the government has barred them from carrying news and current affairs programming. They have now asked the ministry to consider the broadcast of news and current affiars on a pilot basis in certain select areas for a period of one year.

Says Radio City head Apurva Purohit: "Radio operators believe that the depth of local coverage a radio station can provide is unparalleled by any other medium. Its live 24/7 interactive nature, compared to a newspaper, makes it eminently suitable for providing relevant, local current affairs information. That's why radio operators had asked for it during the initial deliberations on the radio policy."

Besides, operators are worried about competition from satellite radio. The Telecom Regulatory Authority of India consultation paper on the subject does not debar satellite radio broadcasters from carrying news.

In fact, Worldspace, the only satellite radio player broadcasting over India, already provides several news channels. The government argues that the high cost of satellite radio sets "" currently between Rs 3,000 and Rs 5,000 "" and the subscription fee restricts the reach of satellite radio. The counterpoint: the price of hardware will crash.

"Look at the prices of plasma TVs and mobile phones. The government's argument on pricing does not hold water," says a radio operator.

Yet another concern is the new policy's clause on mandatory co-location (basically, sharing transmission infrastructure). In 81 cities, the facilities would be co-located on existing All India Radio (AIR) or Doordarshan (DD) towers, while in others new towers will be constructed by the ministry, through Broadcast Engineering Consultants India Ltd (BECIL).

Operators say that co-location with AIR and DD towers should not be mandatory. Besides the policy imposes heavy penalties in case operators fail to operationalise the stations within a stipulated period. They feel that even BECIL should be penalised in case it causes delays.

For its part, I&B ministry officials had not yet responded to the Radio Group's note at the time of going to press. However, industry sources say that while the government is unlikely to make any major changes in the policy at this stage as it is eager to start the bidding process as soon as possible, it may review some of the clauses.

"Policies cannot cater to every need of every player. Having said that, for the government to move to a deregulated environment, the policies should become more flexible to spur growth and minimise hurdles," says Parigi. Such flexibility, the Radio Group clearly hopes, would turn the static of discontent into sweet music.