FM Radio Phase III Auctions: Reaping Benefits for Everyone

The 90s marked the advent of private FM Broadcasting in India. At the turn of the century, the Government made its plans clear to auction FM frequencies across the country. The first phase of FM Auctions, which was conducted in 2000, saw 108 frequencies in 40 cities undergo bidding. This was followed by Phase II of FM Radio Auctions in 2006 in which 338 channels spread over 91 cities were up for grabs. This year, FM Radio Phase III Auctions are being conducted by the Government in association with C1 Global, the auctioneer.

Phase III marks a considerable shift from the previous two phases as the focus shifts to increasing the reach of FM coverage to tier II and tier III cities. Earmarked for spreading private FM Channels in all regions of the country, the Phase III Auctions form a paradigm for future endeavours of the government in this field. FM Phase 3 comprises of 839 FM Channels across 294 cities. Currently, the first batch of 135 channels in 69 cities is being auctioned.

The question now arises that why is it that the Government is showing so much interest in auctioning a natural resource. Though this may appear as a cynical move for some, the truth is that in the long run, the auctions will reap benefits for everyone. Consider some of the advantages mentioned below:

1) Employment: Expanding FM broadcasting to smaller cities in the country will usher well in creating thousands of jobs. This may serve as a new lease of life for many aspiring Radio Jockeys, Video Jockeys. Even in bigger cities, there are professionals who are interested in pursuing a career in media and entertainment, which is better than a monotonous 9- 5 job any day!

2) Socio-Economic Development: Imagine this- In a country of 1.25 billion, there would be FM Channels in almost all cities to fulfil the entertainment and information needs of citizens. In Phase III, channels are now permitted to carry the news bulletins of AIR by mutual agreement with Prasar Bharti, India’s largest broadcaster. In the long run, growth in FM will result in socio-economic development of small cities.

3) Sector Growth: Roll out of FM Broadcast services to Tier II and Tier III cities will stimulate competition in the sector. Moreover, under the guidelines for Phase III, an operator cannot own more than 40% of FM channels in a city and even that figure is subject to the presence of three different operators in that city. A rejuvenated approach to FM Auctions is set to make the sector competitive instead of limiting it to a few players.

4) Revenue: Of course, at the end of the day, auctioning a natural resource like air wave will fill the government’s coffers significantly. Auctioning is the more preferred route because this will lead to the discovery of a frequency’s market price. Since the price is market determined, it will generate huge revenues for the Government. Just to quote an example, the Government has targeted revenue generation of Rs. 550 crore from first batch of Phase III Auctions and two weeks after the start, the bids have already touched 1000 crore!

To sum it up, the FM Auctions are reaping benefits for every concerned individual. They will serve as a driving force as India embarks on the digital development path!

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