(8 January 2008 2:00 pm)

NEW DELHI: Much to the delight of the FM radio industry, the sector regulator Trai today recommended that more than 700 licenses be issued right across the country, with most of the more than 260 towns and cities being granted at least three - some even four - separate licenses.

Trai today issued a consultation paper on the industry that it had predicted earlier, when chairperson Nripendra Mishra jad told indiantelevision.com in December last that Trai felt it is only good to open the sector across the country at one go, rather than in phases.

The third phase, for which the recommendations have been made to the government' ministry of Information & Broadcasting, will thus see a massive leap in the industry, though confusions regarding bidding tender documents from I&B ministry regarding a contentious issue of calculating net worth remains a stumbling block.

In the proposed selection criteria by Broadcast Engineering Consultants India Ltd, it has been said that the highest minimum distance within two category cities to qualify would be 77 km for A+ to B and the lowest minimum distance would be between D to D towns (31 km).

The recommendation says: "The Permission Holder shall pay an Annual Fee to the Grantor every year, charged at the rate of four per cent of Gross Revenue of its FM radio channel, i.e. 10 per cent of the Reserve OTEF for the city, whichever is higher.

Annual Fee shall be paid on a quarterly basis in four equal instalments. For this purpose, four quarters shall be tri-monthly periods ending 30 June, 30 September, 31 December and 31t March respectively, Trai says.

Gross Revenue for this purpose would be the gross inflow of cash, receivables or other consideration arising in the course of ordinary activities of the FM radio broadcasting enterprise from rendering of services and from use by others of the enterprise resources yielding rent, interest, dividend, royalties, commissions etc.

Gross Revenue shall, therefore, be calculated, without deduction of taxes and agency commission, on the basis of billing rates, net of discounts to advertisers. Barter advertising contracts shall also be included in the gross revenues on the basis of relevant billing rates.

The first year from the date of signing this Agreement shall be reckoned as the commissioning period. The first year's fee shall become payable with effect from the date of operationalisation of the Channel or expiry of one year from the date of signing this Agreement, whichever is earlier.

Trai says: "Provided that in the event of default in operationalisation of channel being attributable to delay beyond reasonable period by BECIL/Prasar Bharati/Wireless Planning & Coordination Wing, Ministry of Communications & IT, the time limit for operationalisation may, at the request of the Permission Holder, be extended by such period of delay as fixed by the Secretary, Ministry of Information & Broadcasting, whose decision shall be final and binding on both the parties."

It explains that in that event, the first year's fee shall become payable with effect from the last date so prescribed for operationalisation of the channel.

"The Permission Holder shall be required to initially pay within 15 days of the end of the commissioning period the first advance quarterly instalment on the basis of the Reserve OTEF formula and thereafter within 15 days of each subsequent quarter till the end of the financial year and even beyond till the determination of the first year's gross revenues.

After the determination of first year's gross revenue, the quarterly instalments will be determined on the basis of reserve OTEF or the gross revenue of the last year, for which gross revenue has been determined, whichever is higher.

From the second year onwards, the Permission Holder shall pay advance Annual Fee @ 4 per cent of gross revenue of the previous year or the last year for which the gross revenue has been determined or 10 per cent of reserve OTEF, whichever is higher, within the first fortnight of each quarter, and balance due of final annual fee by 30th September each year.

In the event of the Permission Holder's failure/ inability to operationalise the Channel as required within the prescribed time period, the Grantor shall have the right to recover the Annual Fee for the first year and all the years of such failure/inability as a lump-sum payment, and in the event of default by the Permission Holder, by invocation of the Performance Bank Guarantee furnished by it.

However, there are several restrictions on the permission holders.

The Permission is non-transferable, and the holder shall not be allowed to grant a sub-Permission directly or indirectly, Trai has recommended.

Besides, no permission holder shall hire or lease more than 50 per cent of broadcast equipment on long term basis (that is, any period exceeding 11 months by the end of the period the permission holder becomes the owner of the assets and shall include repeated renewals/extensions of lease from the same party or its associates).

Lastly, the permission holder shall not outsource, through any long-term production or procurement arrangement, more than 50 per cent of its total content, of which not more than 25 per cent of its total content shall be outsourced from a single content-provider.

'Long term' in this context means exceeding continuous 11 months, including repeated renewals.

The quantum of outsourced content would be calculated on quarterly basis.

Interestingly, the total content package to be thus calculated will not comprise advertisements, but those advertisements that come as a part of sponsored programmes will be counted within total package.

All stakeholders have been asked to send their comments by 18 January.