The right frequency

The Telecom Regulatory Authority of India’s (TRAI’s) recommendations that FM radio channels move from the existing fixed-licence fee regime to a revenue-sharing arrangement, hasn’t come a day too soon, given how the industry clocked a Rs 200-crore loss last year, on top of Rs 110 crore the year before.

Much of these losses, the industry argues, have been due to the high licence fees. While the fees in Mumbai, for instance, are Rs 52 crore, the advertising market for radio is barely Rs 35 crore.

It can of course be argued that the FM radio firms should be held to their contract; after all they bid for the channels at these prices. But everyone now knows that there is such a thing as the winner’s curse in an auction. And if the business itself does not survive because the high fees make it unviable, there will be no licence fees coming to the government anyway. The debate in that sense is really about a non-issue.

For wisdom on the issue, take a look at the history of mobile telephony. For, a similar argument was made at the time of the New Telecom Policy of 1999, which allowed telecom firms to migrate from fixed FM-style high licence fees to a revenue-share regime.

That has paid off handsomely for the government (and for everyone else), since the companies have done very well under the new regime, and the government has made more money out of revenue share than it would have with fixed licence fees.

The other difference is that the industry is booming today, whereas it was close to extinction in 1999, so the government benefits from the taxes it gets on corporate profits as well. Finally, there is the consumer benefit that has resulted from low-cost telephony.

There is the residual question of whether migration would be fair to the bidders who lost out in the original auction for the sin of bidding rationally, but the balance of convenience today argues in favour of migration to revenue share.

Even if the government accepts the TRAI recommendations, though, it will be just the beginning of reforms in a sector that has been given step-sisterly treatment so far.

If private television channels can be allowed to beam news and current affairs programmes, why shouldn’t FM channels be allowed to do the same?

And, if minority foreign equity is permitted in both television and print media, why shouldn’t the same be allowed for radio, subject to the same provisos?

While these proposals have been made by the Amit Mitra Radio Broadcast Committee report, the information and broadcasting ministry has been sitting on them.

Indeed, since the reach of radio is many times that of television, any government that is serious about giving citizens choice in terms of where they get their news and views from should free radio news from the AIR monopoly.

If anyone has doubts, take a look at how the private TV channels have revolutionised the news business. The same is possible in radio.