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TRAI to hold OHD on reserve price for auction of new cities in FM Phase III

MUMBAI: The Telecom Regulatory Authority of India (TRAI) will hold an open house discussion (OHD) on the reserve price for auction of FM radio channels in new cities. The OHD will be held on 9 March at the TRAI headquarters in New Delhi at 11 am.

Stakeholders who are interested to participate have to register themselves by 4 March.

Recently, TRAI had issued a consultation paper on ‘Reserve Price for auction of FM Radio channels in New Cities’ inviting views and comments from stakeholders.

The methodology for determination of the reserve prices for auction of FM radio channels had already been finalised by the government. However, in its recommendations of 20 February 2014, the authority said that the methodology for determining the reserve prices for fresh cities (where no private FM radio channels were operational) in Phase III should be reconsidered as the current methodology might jeopardise the auction.

Thus, it sought comments from stakeholders on the reserve prices for auction of FM radio channels in 264 new cities in Phase III.

One of the key issues for consultation would be the reserve price calculation, because as per the current method mentioned in the policy guidelines, the reserve price (RP) for the new city Cuddapah (D category) would be Rs 31 lakh (Rs 3.1 million) with Gangtok being the reference city. Similarly, for Shahjahanpur (C category), the RP would be Rs 156.1 lakh (Rs 15.61 million) with the reference city being Chandigarh.

According to TRAI, it is unreasonable to expect that even after a gap of almost 10 years, the prices set for Chandigarh would be reasonable RP for Shahjahanpur. Similarly, the RP for Cuddapah worked out above appears to be discordant (far too low) with the revenue-generation potential of these cities.

The authority had suggested some methods to derive the reserve price for the new cities and asked the stakeholders to suggest alternate options.

TelevisionPost.com was the first to report that the Ministry of Information and Broadcasting (MIB) had referred some issues back to TRAI regarding the upcoming Phase III auctions. These included the incorporation of new cities as per the 2011 Census data.

Thus, 37 additional cities were identified where 112 private FM radio channels would be put up for auction. This is in addition to the 227 new cities earlier earmarked for FM radio expansion as per the 2001 Census data.

Further, based on the 2011 Census data, the MIB also upgraded the category of 11 new cities that were already mentioned in the Phase III policy guidelines dated 25 July 2011. Eleven other cities having a population of less than one lakh in the border areas of Jammu & Kashmir and the Northeast region are also proposed to be included in the expansion. Thus, in 264 (227+37) new cities, 831 FM radio channels would be put up for auction.