It is my pleasure to be present in CEO’S Roundtable on Radio organized by the Confederation of Indian Industry (CII). I compliment the organizers for giving me the opportunity to deliver the keynote address on the challenges of Phase-III – FM licensing.
2. The Government recognizes radio as an immensely powerful medium. Its free to air nature, ease of reception, affordability and diversity of receiver sets, ease of listenership at all places and at all times distinguish it from other forms of media and place it at an advantageous position and made it a powerful tool.
I would like to reiterate that the policy of Government is to develop and strengthen radio broadcasting services and take it to every nook and corner of the country.
3. Radio remained in the Government domain for a substantially long time since 1936 when the Government first stepped in. FM radio sector was opened up for private participation in the year 1999 when the policy for FM Phase-I was announced. At the time of partition the radio coverage in India was 2.5% of the area and 11.1% of the population. Now the radio network provides coverage to across the length and breadth of country and all countryman. All India Radio (AIR), the public broadcaster, has a network comprising 246 FM stations and more than 299 FM transmitters throughout the country. Another 216 FM digital transmitters are being installed.
4. In the 10th Plan, one 250 kW SW transmitter at Khampur (Delhi) and 1000 kW MW transmitters at Rajkot were digitalized. Currently, 71 MW transmitters and 9 SW transmitters are being digitalized. 34 analog FM transmitters are being replaced by Digital Compatible FM transmitters. 6 Nos. 1 kW MW transmitters are also being replaced by digital compatible FM transmitters. A Digitalization of transmitters would improve the transmission quality reduction in power consumption besides providing number of Value Added Services (VAS).
5. AIR has proposed to procure DRM+ compatible FM transmitters so that these can be converted in Digital transmitters as per availability of receivers for DRM+. These DRM+ Transmitters will have capabilities of transmitting 3-4 channels on each Transmitter alongwith Value Added Service. This will facilitate use of spectrum optimally allowing more no. of Channels per city.
6. In addition to above, co-location facilities have been created on AIR/DD Towers in 81 cities. In 4 cities i.e., Chennai, Delhi, Hyderabad & Jaipur co-location done on towers created by Government on Prasar Bharti land. Presently, 222 Private FM Licensees under Phase-II scheme are sharing Prasar Bharati infrastructure in 85 cities. Pvt. FM Broadcasting is being allowed in more than 150 cities where AIR FM is not present.
7. The thrust of the Government has always been to find ways and means in ensuring a robust growth of the radio sector. We also have a Community Radio Policy in
place which was amended in December, 2006 to empower the civil society organizations to be able to make use of this powerful medium to extend their reach to the community they desire to serve. An FM radio channel in each city has also been earmarked for educational purposes. Indira Gandhi National Open University (IGNOU) is already operating a number of channels in many cities.
8. Policies are always dynamic and never static. They evolve over time in a calibrated manner, keeping in view the benefits to the people as well as to the industry. A measured and well planned policy is always preferable to a hit and run policy that fails due to inadequacies and shortcomings. The FM radio policy has been steadily evolving. Both the industry and the Government learnt lessons from the limited success of FM Phase-I. The deficiencies of Phase-I which resulted in only 21 operational channels in 12 cities were overcome in the Phase-II announced in the year 2005. It provided a revenue sharing regime instead of a fixed fee regime amongst others and provided the ground for a quantum jump in the growth of the sector. The policy has been well received and we now have a total of 242 channels operated by 37 operators in 85 cities.
9. It has been established that FM Radio is capable of becoming a change agent in the Indian Society in general and more particularly in the semi-urban and rural areas. The success of Phase-II of private broadcasting and its popularity amongst the masses itself speaks of success in this direction. The scheme to rope in private broadcasters for FM radio has not only resulted in providing good quality of reception to radio listeners, but has also gone a long way in encouraging local talent and generating employment to large number of people in various cities. Employment opportunities in this sector are thus no longer confined to Metros and handful of cities, but are also becoming available in other cities.
10. Private FM radio services have made rapid strides in the recent past, particularly since the launching of Phase-II. Needless to mention that Private FM Radio services has brought back the glory of radio listening which was in hibernation with the advent of television.
11. Through private participation in FM radio sector, the Government intends to make available quality programme with a localized flavour in terms of content and relevance to diverse populace as also to encourage talent and generate employment opportunities directly or indirectly. The overwhelming response which FM Radio has so far received indicates that the Government’s objective has fulfilled to a great extent. However, benefits of FM Radio are still to reach smaller cities, broader areas, particularly in J&K, NE States and Island territories of the country. Keeping this in view, the Government has already announced expansion of this sector. Great opportunity is again knocking at the doors of private broadcasters with the prospects of further expansion of Private FM broadcasting, which with the great genius of Indian broadcasters is surely expected to be exploited fully.
12. Though the global economic slowdown has adversely impacted the growth rate and the total ad spends, yet it is hoped that the value for money which the radio as a marketing medium offers, both for national as well as local advertisers and the advantageous position it holds vis-à-vis other media as far as local advertising is concerned, will enable it to maintain its growth through difficult times. Government also allowed political advertisements over radio thus opening up another source for tapping advertisement revenue. The advertisers will find it easier to place their advertisements on the radio and will be able to determine the popularity of the radio channels over different cities.
13. On the recommendation of GOM ascending e-auction methodology has been adopted are FM Phase-III. This method of e-auction will ensure not only transparency but also beneficial to the broadcaster’s as well as to the Government.
14. There are some relaxations and incentives in Phase-III policy as compared to Phase-II. On the relaxation side, these include removal of restriction in networking of channels and multiple ownership of channels in a city with a cap of 40%. At present, private FM Radio broadcasters not permitted to carry news and current affairs. This has been one of the concerns of the Industry. Though Phase-III, the Government is making
a beginning towards this end by allowing AIR news bulletin in unaltered form. The removal of restriction in networking of channels owned by an operator is bound to bring down the operational costs in general and will also improve the viability in remote and difficult area. To ensure adequate flow of investment in this sector, FDI limit has been enhanced from 20% to 26%. In addition to these relaxations, various incentives are also proposed in terms of ownership of channels and reduction of payment of annual fees in the case of channels in North-Eastern States, Jammu & Kashmir and Island territories. These relaxations and incentives are expected to go a long way in making the operations more viable. It is hoped that private operators will make full use of them for their success as well as overall growth of FM broadcasting in the country.
15. As I already mentioned, remote and difficult regions like North-East, Jammu and Kashmir and Island territories have been given special dispensation in the FM Phase-III policy framework. These include allowing the ownership of channels in these areas over and above the 15% limit on national ownership and payment of annual fees at the rate of 50% of the rate for an initial period of three years of operations. Apart from the fee relaxation. Prasar Bharati infrastructure would be made available at half the lease rentals for similar category cities in such areas. The incentives are also extended to the existing operators in these areas to enable them to effectively compete with the new operators in these areas.
16. I am aware that one of the major issues which remains to be addressed and which is not directly under the control of I&B Ministry is that of Music Royalties. The expenditure on music royalties as per estimates varies from 7% to 43% of the operational costs depending on city categories and impacts the profitability and viability of FM radio operations especially in C and D category cities. Since a large part of the Phase-III expansion is going to take place in such cities an amicable resolution of the issue is a prime concern for us. The copy right order had provided much needed relief to the industry. The Ministry is aware that the issue has again become such-judice
and may adversely affect the industry and may result in weakening of interest in FM Phase-III. We are hopeful that the interest of the radio operators will be taken care of.
17. As on today, programmes broadcast by all the channels are nearly of the same genealogy and are based on film music. The listener is, therefore, left with no variety of programme to choose from. It is thus feared that monotony may set in and channels may start losing their sheen with the passage of time. Suitable steps are, therefore, required to be taken in the matters of content and programme formats. Now with the availability of multiple ownership of channels, it is expected that it will be possible for broadcasters to create channels with special flavors. In this context, it also appears necessary for broadcasters to enlarge their catchment area in terms of age so as to increase the quantum of listener-ship and thus the advertisement pie.
18. In view of the fact that the reach of FM Phase-III will extend to small places, private broadcasters, both present and of future, will do well to keep this cultural diversity in mind while choosing their programme formats and styles of broadcasts to suit the genius of people of these parts of the country.
19. As you all know FM Phase-III policy was announced last year and under this policy 839 channels in 294 cities will be e-auctioned. All cities with a population of one lakh and above have been covered under this policy. However, two major problems have been crept in while implementing the policy. In April, 2012, TRAI suggested this Ministry that inter-channel spacing can be reduced to 400 KHz. from the existing 800 KHz. This recommendation, however, subject to technical and infrastructural constraints. Charging of migration fee for shifting from FM Phase-II licenses to Phase-III license is the second matter that will come up for discussion in the EGoM meeting. However, if migration fee is decided to be charged, TRAI will be authorized to fix the same after hearing all stakeholders. These two matters and few others matters have been placed before the Empowered Group of Ministers to give its recommendations.
20. On the subject of reduction of spacing to 400 KHz., Broadcasters seems to have divided views. Few broadcasters wants reduction in the inter channel spacing, on the other hand many broadcasters are of the view that inter channel spacing must be kept at 800 KHz. instead of reduction to 400 KHz. Increasing the total number of licensed channels purely on technical grounds may adversely impact the industry. Reducing the channel spacing to 400 KHz. and introducing additional players into the market may do the existing FM operators injustice.
21. In Chennai, Hyderabad and Delhi with the availability of Infrastructure (towers/slots); which is the key requirement for the Implementation of 400 KHz. separation, auction can be done as part of Phase-III. Among new larger towns (e.g. B category of cities namely Dhanbad, Moradabad and Ludhiana) where infrastructure (for 400 KHz. separation) is to be created, auction could also be done as part of Phase-III. Channels with 800 KHz. separation may also be maintained in C & D category cities to begin with, as these are small town where even the proposed (under Phase-III) 4 & 3 channels respectively may not find bidders on auction.
22. Private FM broadcasting which was ushered by the government to aid and supplement the efforts of All India Radio in providing information, education and entertainment in the country, has to play a vital role in the expansion of domestic broadcasting in the country. It is hoped that FM Phase-III will enable fast growth of FM Radio Broadcasting and will provide better listening experience with increased variety of content to Indian populace. I wish all success to the CEO’s Roundtable on Radio.
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