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FICCI seeks removal of ownership cap on FM radio players

MUMBAI: The Federation of Indian Chambers of Commerce and Industry (FICCI) has urged the government to remove the ownership cap in FM radio that bars an entity from holding permission for more than 15% of all channels allotted in the country excluding Jammu and Kashmir, North Eastern States and island territories.

The removal of cap will help national players and strong regional player to consolidate operations, bring in economies of scale to the industry, the reach grassroots level, and acquire more frequencies, the FICCI said in its report ‘Policy Recommendations for the Growth of Radio Broadcast Sector in India’.

Currently, a permission holder cannot run more than 40% of the total channels in a city subject to three different operators in the city. Furthermore, no entity can hold permission for more than 15% of all channels allotted in the country excluding channels located in Jammu and Kashmir, North Eastern states and island territories.

The industry body noted that such policy restrictions are actually prohibiting the industry players to leverage economies of scale and holding them back from making greater investment in technology and content.

The industry believes that there may have been sufficient rationale for such restrictions when the radio industry was in its infancy stage. However, as the industry has matured, it is time that such regressive regulations were removed to allow the industry players to scale up their operations and technologies.

The industry believes that there are sufficient regulations and regulatory bodies such as Competition Commission of India (CCI), which can address the concerns of creating monopolistic market or other unfair trade practices. In view of the above, the government is recommended to reconsider its current policy and remove all such arbitrary caps.

Three-year lock-in period

FICCI is also recommended that the condition for the three-year lock-in period should be waived for new allotments done in Phase III to the existing radio broadcasters as such broadcasters have already served the lock-in period in earlier phases. Additionally, lock-in should not apply to Phase I and/or Phase II broadcasters who have migrated to Phase III. The lock-in period should be imposed only once.

The current policy mandates that the shareholding of the largest Indian shareholder in a radio broadcasting company cannot be reduced below 51% until a period of three years from the date on which all the channels allotted to the company holding permission stand operationalised. Existing radio broadcasters have already served a lock-in period in a previous regime of Phase I and/or Phase II. Further, Phase III imposes a fresh lock-in from the date of operationalisation of all the channels that could possibly extend during the second batch auctions.

Sourcing of news & current affairs

FICCI also recommended that radio, being a free-to-air medium for the masses, should not be restricted in terms of sourcing of news and information. It should be considered as the primary medium for dissemination of information at the national and local level, which will assist in the formation of pluralistic opinions and higher awareness among listeners. Similar to television, the radio industry should be liberalised to broadcast independent debates and local news sourced from any wire services, or independently, as they desire. Standard rules of checks and balances as applicable to other news media should apply to FM radio as well.

Based on the current regulations, the permission holder will be permitted to carry the news bulletins of All India Radio (AIR) in exactly the same format unaltered. Consequently, exclusive radio interviews, debates and content sourcing from any other source are not allowed. In the current age of internet access and converged media platforms, access to news and information has become unrestricted. Under Phase III, the medium will penetrate deeper into the newer cities.

Service Tax/GST levy on advertisement

Services Tax and GST should be lowest in radio as radio is a free-to-air medium. Advertisement on radio is liable to Service Tax levy. Radio competes with newspaper at the local level. There is no levy of service tax on advertisement in newspaper. It is recommended to remove Service Tax on advertisement in radio to provide a level playing field to radio.

Auction rules

FICCI also recommended that the increase in Auction Activity Requirement (AAR) should be in an accelerated manner in Phase III, Batch II auctions. AAR of 100% should be reached after a few rounds of 80% and 90%.

In the first clock round, the AAR will be set at 80%. Subsequently, the AAR will be increased in two steps as the auction progresses, from 80% to 90%, and then to 100%. In Phase III, Batch I auctions, the AAR went to 80–90% after many rounds and then arbitrarily to 90–100% after many rounds, which led to gaming, parking and artificial rate increase.