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‘Policy Recommendations for the Growth of Radio Broadcast Sector in India’ – FICCI

MediaInfoline March 1, 2016
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1. Restriction on ownership of licenses
Current policy Regulation

A permission holder cannot run more than 40% of the total channels in a city subject to three
different operators in the city.
No entity shall hold permission for more than 15% of all channels allotted in the country
excluding channels located in Jammu and Kashmir, North Eastern States and island territories.
While such policy restriction may have been designed to address concern around creating
monopoly and promoting competition, such policy restriction is actually prohibiting the
Industry players to leverage economies of scale and holding them back from making greater
investment in technology and content. The Industry believes that there may have been
sufficient rationale for such restrictions when the Radio Industry was in its infancy stage.
However, as the Industry has matured, it is right time that such regressive regulations can be
removed to allow the Industry players to scale up their operations and technologies. The
Industry bonafide believes that there are sufficient regulations and regulatory bodies such as
Competition Commission of India (CCI) which can address the concerns of creating monopolistic
market or other unfair trade practices. In view of the above, it is humbly submitted that the
government should reconsider its current policy and remove all such arbitrary caps.
Recommendation:
It is recommended that the cap on ownership be removed such that national players and strong
regional player can emerge that can consolidate operations, bring in economies of scale to the
industry, reach grass roots level and acquire more frequencies.
2. Three Year Lock-in Period
Current Provision
The current policy mandates that the shareholding of the largest Indian shareholder in a Radio
Broadcasting company cannot be reduced below 51% till a period of 3 years from the date on
which all the channels allotted to the company holding permission stand operationalized.
Existing Radio Broadcasters have already served a lock-in period in previous regime of Phase I
and/or Phase II. Further, Phase III imposes a fresh lock-in from the date of operationalisation of
all the channels which could possibly extend during batch II auctions.
Recommendation
It is recommended that the said condition for three year lock-in period should be waived for
new allotments done in Phase III to the existing radio broadcasters as such broadcasters have
already served the lock-in period in earlier phases. Additionally, lock-in should not apply to
Phase I and/or Phase II broadcasters who have migrated into Phase III. The Lock-in period
should be imposed only once.
3. Sourcing of news & current affairs
Current Policy Regulation
Based on the current regulations, the permission holder will be permitted to carry the news
bulletins of All India Radio (AIR) in exactly same format unaltered. Consequently, exclusive radio
interviews, debates and content sourcing from any other source are not allowed.
In the current age of internet access and converged media platforms, access to news and
information has become unrestricted. Under phase III, the medium will penetrate deeper into
the newer cities.
Recommendation
Radio being a free to air medium for masses should not be restricted in terms of sourcing of
news and information. It should be considered as the primary medium for dissemination of
information at national and local level which will assist in formation of pluralistic opinions and
higher awareness amongst listeners.
Similar to television, radio industry should be liberalized to broadcast independent debates and
local news sourced from any wire services, or independently, as they desire. Standard rules of
checks and balances as applicable to other news media should apply to FM radio as well.
4. Service Tax/GST levy on Advertisement
Advertisement on radio is liable to Service Tax levy. Radio competes with newspaper at local
level. There is no levy of service tax on advertisement in newspaper. It is recommended to
remove service tax on advertisement in Radio to provide level playing field to Radio. It is
recommended that Services Tax and GST should be lowest in radio as it is a free to air medium.
5. Auction Rules
In the first Clock Round, the Auction Activity Requirement (AAR) will be set at 80%.
Subsequently, the Auction Activity Requirement will be increased in two steps as the Auction
progresses, from 80% to 90% and then to 100%.
In Phase III Batch I Auctions, the AAR went to 80- 90 % after many rounds and then arbitrarily to
90 -100% after many rounds which led to gaming, parking and artificial rate increase.

Recommendation
It is recommended that the increase in AAR should be in accelerated manner in Phase III Batch
II auctions. AAR of 100% should be reached after a few rounds of 80% and 90%.

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