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Govt rejects TRAI reco on revising downwards the reserve price for FM Phase III

MUMBAI: The government has rejected the Telecom Regulatory Authority of India’s (TRAI) recommendation on revising downwards the reserve price for the FM Phase III auctions.

The government has stated that the decision to fix the Phase III reserve price was taken by the Union Cabinet and could not be overturned by the ministry.

The rejection of the reserve price recommendation would have delayed the entire auction process once again.

“The government has decided to let the market decide whether or not the reserve price is high. If there is no bidding in certain towns due to high price, it will be reviewed after the auction. The main thing was the migration formula which has been accepted by the MIB,” the head of a private FM radio company said on condition of anonymity.

“The reserve price was not the focus of TRAI recommendations at all. The recommendations were on migration fees and the point of reserve fees was made in passing. The MIB has already accepted migration fee recommendations and that is all that matters. This policy on reserve fees has been part of the Phase III policy since July 2011,” he added.

As reported earlier by TelevisionPost.com, the government had written a letter to the Association of Radio Operators of India (AROI) referring to TRAI’s recommendations for the Phase III migration of radio operators.

In fact, TRAI had earlier cautioned the ministry that if the methodology for determining the reserve price was not reconsidered, it could ‘jeopardize’ the auction. This was because the high reserve price set for C and D towns in the FM Phase III policy were a spoiler for radio broadcasters looking to expand to smaller towns.

In a recommendation paper issued earlier, TRAI had suggested the MIB reconsider the reserve price and revise it downwards so that it would lead to a healthy bidding. Among other recommendations, TRAI had also suggested the migration fee formula and allowing a 15-year licence period for FM operators migrating from Phase II to Phase III.

Meanwhile, the ministry has accepted TRAI’s recommendation for allowing a 15-year licence for operators migrating from Phase II to Phase III. The Phase II permission period was 10 years. The cut-off date for the migration will be decided by the MIB after completion of the auction process.

TRAI had also recommended a lower minimum channel spacing of 400 KHz for FM radio broadcast, as against 800 KHz now, to encourage more radio stations. This point, too, has not been accepted by the Ministry.

The industry is now looking forward to the announcement of the auction dates, which is expected to be soon. The Phase III pre-qualification bids were slated to be announced last week, but they were delayed by about a week and are now set to be announced in the coming week.