Govt invites applications for e-auction of first batch of FM radio Phase III channels

The first batch of FM Phase III comprises 135 channels in 69 existing cities of Phase II. Last date for submission of applications is March 23, 2015

BestMediaInfo Bureau | Delhi | March 3, 2015

The Ministry of Information and Broadcasting has kicked off Phase III of FM radio broadcasting with a notice, dated March 2, 2015, inviting applications for e-auction of first batch of FM Phase III radio channels. The first batch of FM Phase III comprises 135 channels in 69 existing cities of Phase II.

Based on the applications, the Government shall pre-qualify applicants who meet the eligibility criteria for participation in the auction.

Last date for submission of applications is March 23, 2015. The date for publication of ownership details of applicants is April 7, while bidder ownership compliance certificate have to be submitted by April 10. A mock auction will be held 4-5 days after pre-qualification of bidders on April 17. The auction will start one week after pre-qualification of bidders.

The Simultaneous Multiple Round Ascending e-auction process will be carried out for allotting the FM channels, conducted over the Internet. Bidders will be able to access the Electronic Auction System (EAS) to be used for participation in the auctions using web browsing software: Internet Explorer 11.x, or Mozilla 34.x or Google Chrome 37.x.

Prior to the auction, bidders will have to procure Class-III Digital Signature Certificate(s) (DSC) for signing and encryption issued by any valid Certifying Authority (approved by the Controller of Certifying Authorities) in India, which is mandatory for accessing the Electronic Auction System (EAS).

Winning bidders of FM channel(s) in each city shall be determined in a two-stage process. These two stages shall operate as follows:

Channel Allocation Stage: This stage will allocate number (count) of FM channels in each of the cities to the winning bidders. In this stage, in each city bidders will bid for number of channels only without linkage to any specific radio frequency. This stage will consist of a number of Clock Rounds. These rounds will stop once the auction activity requirement is 100 per cent or no bid has been submitted by any of the bidders for all cities in all the channels.

Frequency Allocation Stage: It will follow the Channel Allocation Stage and will allocate specific frequencies to the winning bidders in a city. During this stage, the winning bidders will be allowed to only select the FM frequency for the winning channel(s) amongst the frequencies available in the respective city, which have been identified by WPC. Frequency selection preference would be based upon the rank of the bidder in a particular city, that is, Rank 1 bidder in a city will have the first right to choose the frequency, followed by Rank 2 bidder of that city and so on.

The permission shall be valid for a period of 15 years from the date of operationalisation of the channel. The permission shall be for free-to-air broadcasts on main carrier and data on sub-carriers.

Cap on foreign investment

Permission will be granted only in cases where equity held by the largest Indian shareholder is at least 51 per cent of the total equity, excluding the equity held by scheduled banks and public financial institutions. The total direct and indirect foreign investment shall not exceed 26 per cent at the time of application and during the currency of license.

Cross-media ownership

If during the currency of the permission period, Government policy on cross-media ownership is announced, the permission holder shall be obliged to conform to the revised guidelines within a period of six months from the date of such notification, failing which it shall be treated as non-compliant of Grant of Permission Agreement, and liable for punitive action.

Provided, however, in case the permission holder is not in a position to comply with cross-media restrictions for bona fide reasons to the satisfaction of the Ministry of Information & Broadcasting, the permission holder would be given an option of furnishing one month's exit notice along with a compensation calculated on a pro rata basis of the Non-Refundable One-Time Entry Fee (NOTEF) amount(s) for the remaining period of permission(s) held by the company.

News and current affairs

The permission holder will be permitted to carry the news bulletins of All India Radio in exactly the same format. No other news and current affairs programmes are permitted under the Policy (Phase III). The permission holder shall ensure that at least 50 per cent of the programmes broadcast by it are produced in India.

The broadcast pertaining to the following categories will be treated as non-news and current affairs broadcast and will therefore be permissible:

• Information pertaining to sporting events excluding live coverage. However, live commentaries of sporting events of local nature may be permissible
• Information pertaining to traffic and weather
• Information pertaining to and coverage of cultural events, festivals
• Coverage of topics pertaining to examinations, results, admissions, career counselling
• Availability of employment opportunities
• Public announcements pertaining to civic amenities like electricity, water supply, natural calamities, health alerts, etc., as provided by the local administration
• Such other categories not permitted at present that may subsequently be specifically permitted by the MIB from time to time

Content differentiation and local content

In case of multiple permissions to an entity/related entities in a city, the attempt should be to distinguish programming on each channel based on era of music, language of music, genre of music, etc., to ensure diversity of programming to the listener.

The permission holder can outsource content production, but will have to ensure that there is no linkage between a party from whom a programme is outsourced and an advertising agency.

An entity will be permitted to network its channels in its own network within the country. However, it is also to be ensured that at least 20 per cent of the total broadcast in a day is in the local language of that city and promotes local content.

No two entities shall be permitted to network any of their channels in any category of cities.

Cap on channels allotted

No entity shall hold permission for more than 15 per cent of all channels allotted in the country, excluding channels in the cities located in Jammu and Kashmir, the North Eastern states and Island Territories, where only city wise cap will apply.

In respect of existing license/ permission/ LOI holders, the license(s)/  permission(s)/ LOI(s) already held by them shall also be taken into consideration for calculating the 15 per cent limit.

The nationwide 15 per cent cap would be applied at the time of allocation of the FM channels in each clock round, that is, if the bidder submits the bids for more channels than this prescribed cap, then EAS would allocate channels only for the top 15 per cent channels in terms of their highest values in descending order.

Every applicant shall be allowed to run not more than 40 per cent of the total channels in a city, subject to a minimum of three different operators in the city.

Meanwhile, MIB issued a notice, dated February 24, 2015, providing an option to existing permission holders to migrate to FM Phase III. The option for migration from FM Phase II to Phase III has to be submitted to the MIB preferably by March 9, but before March 23, 2015.

As per the notice issued, existing FM Phase II operators who want to migrate to Phase III have to deposit 25 per cent of the non-refundable one-time entry fee (NOTMF) within five calendar days, and the balance amount within 15 days from the date of issue of the NOTMF notification.

FM channels put on bid in the first batch of Phase III of private FM radio broadcasting:

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