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India’s FM Auctions Center on Big Cities

Critics wish the program would bring more radio to “media-dark” towns and rural areas

In the latest round of radio auctions in India, concluded in early September, FM frequencies in big cities drew extraordinary bids from private players by way of license fees; but some other areas were yet to see any takers at all.

This is the third phase of bidding for private FM stations in the world’s second most populous nation, part of a process that has played out over many years.

Some believe FM radio in India has untapped potential thanks to the nation’s linguistic and cultural diversity; a booming middle class that coexists with a significant illiterate population; large areas unserved by media; and government’s dominance of the medium (and consequent limited growth) till the 1990s.

Others see FM as past its prime, given the country’s ongoing expansion into digital radio.

Phase I of bidding by private players seeking FM stations came in the late 1990s, covering 21 private channels in 12 cities. The second phase was introduced in 2005, after which India had 243 FM channels in 86 cities.

Very large numbers of listeners are involved. The country has 1.2 billion people. Private enterprises believe FM radio in India currently reaches 40 million listeners in four metro cities and 350 million in 91 smaller cities and towns.

“Now, with Phase III, it will touch 90 percent of the population, making it truly a common man’s medium,” Reliance Broadcast Network Chief Executive Officer Tarun Katial told Reliance Broadcast Network is an influential media conglomerate, part of one of India’s largest industrial empires.

Auction details from the Indian ministry of information and broadcasting showed that FM frequencies in cities like Mumbai, Bangalore, Pune and Ahmedabad have gone for high amounts — $26 million in Delhi — but stations in 20 somewhat smaller cities and towns like Mysore, Mangalore, Pondicherry, Trichy and Vijayawada took more time or didn’t attract takers at all.

These frequencies are mostly “left over” from Phase II. This is the first batch of Phase III licenses to be auctioned; 135 frequencies in 69 cities were released. Some 680 frequencies are yet to go under Phase III; they will be auctioned in batches over the next two or three years.

Phase III licenses will be operative for 15 years. Foreign direct or institutional investment of up to 26 percent is being allowed in these stations; in the second phase, only 20 percent was allowed.

Of the unsold licenses, one industry watcher told Radio World, “Most of those — perhaps 500 or so — are in Group D (smaller) towns, and the chances of many of them being sold are remote, especially since the industry sees FM as a nearly obsolete technology, soon to be replaced by digital radio.” The government of India has promised to invest significantly in digitizing some of its state-run broadcast transmitters using Digital Radio Mondiale.

Critics of the FM expansion process say that to date, the government’s approach seems to be to seek revenue from cities that already have a glut of FM stations while ignoring the social and cultural benefits of encouraging growth of FM in small towns and rural India that lack local radio entirely.

India has also made promises of setting up some 4,000 community stations, but critics say the government has barely managed to issue licenses to 226 of them, of which only 184 are operational, and quite a few of those are campus radio stations.

Prime Minister Narendra Modi, in an Independence Day speech, expressed satisfaction that his government was able to auction 135-odd commercial FM frequencies for the equivalent of $152 million; he also said there was pressure on him not to auction the frequencies. Modi said in Hindi: “I was asked why we are auctioning FM radio, a medium which is of use to the common man and doesn’t entail much earnings … ”

Others said objections to auctioning frequencies were not without basis: $152 million is about a third of what the state spends on the officially-supported Prasar Bharati broadcaster each year.

Sajan Venniyoor, a keen supporter of community radio, called this amount “peanuts, compared to the extraordinary social and economic benefits that could accrue if FM frequencies were deployed in media-dark towns, rural and border areas first, where there is no local radio at present. That’s two-thirds of the country.”

FM radio in India — mostly AIR FM stations — covers about 30 percent of the land area and about 45 percent of the population of India. AIR FM is a network of FM channels across this huge country, run by the government-funded, autonomous All India Radio.

Some commentators feel that expanding FM coverage in deprived areas should be a priority, instead of continuing to sell frequencies in cities where FM is well established.

So cities like Delhi, which already has eight private FM channels and three AIR FM channels (FM Rainbow, FM Gold and Vividh Bharati) all playing more or less the same kind of music, will now get one more FM channel.

By selling to the highest bidder, by disallowing independent news on radio and by not insisting on diversity of language and programming, the government policy has been criticized for having reduced FM radio to cookie-cutter stations, all playing top 20 film songs.

Under the Phase III rules, private FM stations will not be allowed to broadcast their own news but can relay bulletins of state-run All India Radio. Broadcasts pertaining to sporting events, traffic and weather, coverage of cultural events, festivals, exams, admissions, public announcements, natural calamities, health alerts will be allowed.

Private operators have been allowed to own more than one channel, but not over 40 percent of the total channels in a city, subject to a minimum of three different operators in the city.

Networking of channels will be permissible within a private FM broadcaster’s own network across the country.

Nisha Narayanan, chief operating officer of private broadcaster Red FM, said, “The bids are not unrealistic but they [appear] to be pushing the bounds of realism … Most of the players have bid very aggressively in … key media consumption markets.”

Narayanan told Radio World, “While we expected demand to go high in some major markets like Delhi, Bangalore, Chennai, Mumbai and the like, Bhubaneswar and Guwahati kind of emerged as surprise. Delhi, Mumbai, Bangalore Chennai have also gone beyond reasonable prices.

Looking at it from demand-and-supply angle, it looks like in some markets the bids have over shot. On the other hand there are as many as 13 cities that have seen no bid and some of them are prominent cities. So yes there are some surprises in this auction.”

The author is a journalist based in Goa, India. He is founder of the CR-India mailing list, which promotes community radio.