On issues in the implementation of the Phase III of private FM expansion

There are still many open issues which need to be resolved before the start of Phase III:

Extension of the Licensee Term and Multiple licensing - Today what we all need is extension of the license term. OTEF (One time entry fee) charged by the government at the time of offering the existing licenses is a huge burden and extension only can reduce this burden. Also the multiple licenses per station will account for better utilization of resources and better profitability. This will allow radio operators to create formats which will increase listener as well as advertiser involvement.

Music Royalty - Today most radio stations are reeling under the impact of steep music royalties being paid to the music labels. Music royalties must be rationalized.

Content Restriction - In India though, the industry is yet to mature completely as there is no news broadcast on any FM channel. Government should give licenses to broadcast news and also sports on private channels. Today FM radio is not only about music and listeners have matured to consume radio for more than what music can offer. They do expect functional benefits from radio in terms of knowledge and updates. This will also bring down the dependence of music and save costs of royalty to a great extent.

On interference of FM radio waves due to close geographical proximity

There is likely to be some amount of interference but that will have to be sorted on a case to case basis. The ministry will have to work out a way to fast track resolution of any such cases.

On high music royalties paid by the radio stations to music companies

Music royalties are the biggest of the issues faced by broadcasters especially in small stations. They make the operations in C&D category cities virtually unviable.

On number of FM stations that should make investments under FM Phase III

Our belief is that if these issues are genuinely addressed by the government in Phase III policy, it will restore investor confidence and we will see a lot of companies ready to start operations under Phase III.

On request for the extension of licensing period of the FM stations from 10-15 years

The ministry is very much aware of the fact that the industry has taken a hit on account of various external factors such as royalties etc. When almost every operator in the industry is struggling to achieve operational breakeven, there is a strong argument for increasing the license period to help the industry. This would also bring in a new set of investors in Phase III.

On government response to all these issues

Government has so far given a sympathetic hearing to all these issues and has assured action on these fronts. We are hoping that at least some of these issues will be resolved in Phase III policy.