Exclusive: TRAI indicates migration fee formula for FM Phase III
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04-12-2013, 08:43 AM
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TRAI indicates migration fee formula for FM Phase III
MUMBAI: The Telecom Regulatory Authority of India (TRAI) has suggested a formula that would fix the migration fee of private FM radio operators from Phase II to Phase III in line with the earlier transition. The regulator has also suggested that the Ministry of Information & Broadcasting (MIB) should fix the migration date any time after the completion of Phase III auctions. Accordingly, Phase II FM radio operators who want to migrate to the Phase III regime and are found eligible will have to pay the requisite migration fee and sign the migration grant of permission agreement (GOPA) before the specified date.
In a consultation paper issued today on ‘Migration of FM radio broadcasters from Phase-II to Phase-III’, TRAI has stated that the existing Phase II operators have only two options. They either migrate to Phase III for 15 years from the specified date or they complete their residual term of licence in Phase II and stop operations thereafter. TRAI has sought views from the stakeholders on these counts: date of migration from Phase II to Phase III, duration of permission after migration from Phase II to Phase III, and the amount of migration fee to be charged from the existing FM radio broadcasters. Stakeholders can offer their comments by 17 December and counter comments by 24 December. The consultation paper is significant as it sets the ball rolling for the much delayed FM Phase III auctions. Date of migration from Phase II to Phase III The FM Phase II policy came into existence in 2005 and all the operators in Phase I migrated to Phase II on 1 April 2005. The operators who were issued new permission for Phase II made their channels operational between 2006 and 2008, barring a few that commenced operations in 2009. Therefore, Phase II permissions will start expiring from 2015 and all permissions of Phase II will expire by 2019. As per the policy guidelines for Phase II, the permission for operating channels will be for only 10 years and cannot be extended. The consultation paper states that there shall be no provision for its extension and licenses shall automatically lapse at the end of the period. The permission holder shall have no rights whatsoever to continue to operate the channel after the date of expiry. The government at the appropriate time shall determine the procedure for issue of fresh permissions and no concessional treatment shall be afforded to the permission holders in the allotment of channels thereafter. Moreover, operators who do not migrate to Phase III and cease operations after the expiry, the respective frequency which will become available, should be auctioned afresh and no concessional treatment should be afforded to the existing permission holders in the auction process. TRAI mentions that the option of migration of existing operators to Phase III for only the balance period of their Phase II permission appears a non-starter. Since Phase II permissions would start expiring from the year 2015 onwards and these permission holders have no rights whatsoever to continue to operate the channel after the date of expiry, why would such an operator pay a migration fee? Giving his viewpoint, ENIL (Radio Mirchi) chief financial officer N Subramaniam told TelevisionPost.com, “The existing operators will have to go through a renewal process once the licences expire. So paying a migration fee is of no value as the residual tenure of the existing licence is very short. There is a problem at the base itself and the value is limited as every broadcaster differs on this. While some may want to pay, others might not agree which can create a barrier again.” One approach suggested by TRAI states that Phase II operators could migrate to Phase III for a fresh period of 15 years from the specified date as was done in case of Phase I to Phase II migration. The MIB may specify the date of migration after completion of the Phase III auction process. This will address the issue of migration of existing Phase II operators to Phase III regime as well as enable them to seek fresh permission to operate for 15 years from the date of migration. Duration of the licence after migration from Phase II to Phase III TRAI states that the existing Phase II operators have only two options: (i) Migrate to Phase-III for 15 years from the specified date (by paying the migration fee) or (ii) Do not migrate and continue in Phase-II for the balance period of licence and stop operations thereafter. Migration Fee According to TRAI, one approach to determine the migration fee could be to ascribe a value for the additional facilities permitted in Phase III, which include networking, FDI, news and current affairs, limit of number of channels for an entity and period of permission. Since the benefits of these new facilities will accrue in future, their value can only be estimated as of now and will vary depending upon the assumptions made for each city. In such circumstances, it will be difficult to arrive at an accurate value for additional facilities. Another approach stated by TRAI determines this value based on price discovered through the market mechanism. The price discovered through auction could be used as a base to calculate the migration fee. A migration fee equivalent to Non-refundable One Time Entry Fee (NOTEF), as arrived through auction, can be charged to maintain a level playing field. However, as Phase II operators have already paid a One Time Entry Fee (OTEF) for a 10-year operation in Phase II, the residual value for the remaining period could be adjusted from the NOTEF. Residual value could be calculated by amortizing the OTEF over a period of 10 years using the straight line method. The Phase II operator will pay the migration fee as NOTEF minus the residual value of Phase II licence. Read more at: http://www.televisionpost.com/trai-tdsat...phase-iii/ | TelevisionPost.com |
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05-12-2013, 12:45 PM
Post: #2
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RE: TRAI indicates migration fee formula for FM Phase III
good news.
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