The vibrant voices airing music shows on twenty odd private FM radio stations in our major cities do not reflect the viability worries and restrictions that haunt this industry. In 2003-4, a whopping 93% of private broadcasters' total revenues went towards government license fees alone. Little wonder that two years in a row, stations have incurred hefty losses. Alongside this crisis, a critical policy imbalance is also depriving them of a potential market; private radio stations are banned from airing news programs, but television, print and internet operations are not.

With Cable TV regulatory issues hogging much of the limelight recently, serious questions regarding the future of radio policy are getting sidelined. Nearly two months ago, the Telecom Regulatory Authority of India (TRAI) sent its final recommendations on a new phase of licensing for FM radio to the Broadcasting Ministry. TRAI developed its recommendations through a series of three public consultations with radio stakeholders and interested citizens. Two prescriptions stood out for their progressive elements, but the Ministry's responses since then indicate that government thinking on radio continues to be myopic.

TRAI asked the government to drop the bidding-driven process for setting radio license fees because it was this system that led to the viability crisis. The regulator prefers a system more prevalent elsewhere in India and worldwide - revenue sharing. Under this system, stations will pay the government 4% of their gross revenue every year. Second, the regulator advised the Ministry to review its ban on private stations airing news and current affairs, currently a monopoly with All India Radio. In fact, TRAI stopped just short of asking for an outright removal of the ban.

The Ministry rejected the revenue sharing model, stating that if that were implemented, the government would suffer a decrease in fee collections of over Rs.100 crores. It further argued against revenue sharing saying that it could not be sure it was getting its fair share from the stations because it could not verify the revenues of every radio station. Perhaps. But realizing that it had to address the viability mess, a week ago the Ministry reportedly offered to ensure low license fees during new bidding, contradicting its earlier concerns about revenue decreases from lower fees.

Revenue-sharing is more progressive because government fee inflows remain proportional to how well stations are doing. With fixed license fees and static annual increases, this is not the case. The Ministry's sore point that it cannot monitor station revenues is a weak argument. Broadcasters are already paying service taxes on their revenues and their half-yearly statements are available with the tax authorities. The Ministry offers no evidence to show that radio broadcasters are a special lot that need to be singled out for special scrutiny.

To TRAI's recommendation to review the ban on news, the Ministry has said the ban will remain. And here too, the 'monitoring' argument made an appearance. The Ministry feels it will be unable to monitor news on local stations and that this constituted a grave security threat. But are there grounds to allege that radio news broadcasters will be particularly cavalier on sensitive matters when their television counterparts have not been found against? In fact, anticipating this misplaced concern, TRAI did point out, correctly, that existing laws may be used to curb violations of radio program code.

New Delhi cannot have it both ways - holding off on instituting an independent regulator and at the same time throwing up its hands over the inability to enforce radio code.
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But beneath this professed inability to comb our airwaves lies a worrisome intransigence that has afflicted every recent Central government. For years, New Delhi has been leaden-footed in instituting an independent broadcast regulator, preferring to arrogate this power to itself instead. A regulator with the mandate to create a level playing field is well suited to run a listener-driven complaints system to enforce the law on the air. This has been shown to be doable elsewhere. Second, in persisting with the current ban, the Ministry is only supporting AIR's continuing monopoly over radio news.

Legally, the Ministry's positions stand in stark contrast to the Supreme Court's landmark ruling of 1995, where the Court asked New Delhi to open up the airwaves and appoint an autonomous broadcast regulator. The ruling warned that the right of private citizens to telecast is subject only to reasonable restrictions. There is little doubt that Ministry's outright ban on private FM stations airing news is a monopolistic restriction and will be eventually struck down by the Courts.

Private stations could sue the government to overturn the ban, in theory. But in reality they may have already tied their hands to better wisdom coming suo moto from New Delhi. After all, partly to give radio stations temporary relief from the viability crisis and recognizing that a new licensing system was under preparation, the Ministry granted time extensions to all private stations for license fee payments that became due this year. If private stations took the government to Court, the Ministry could just as well retort by cancelling the extensions and force the stations to cough up this years dues.

The Ministry can legally do this because the radio operators are signatories to the original agreements and also, it was their grossly overestimated revenue projections that partly caused the older bid-driven system to set steeply unrealistic license fees. Little wonder that despite the attractiveness of news programming none of the stations are making a big noise about the ban. Instead many stations are stealing their way under the ban by providing informal current affairs snippets and interviews in between the otherwise virtually non-stop music programming.

The only silver lining at the moment is that the New Delhi has not yet pronounced its final policy, indicating that there is room for change. Still, looking at the track record of the Broadcasting Ministry, it may be too much to expect the Ministry alone to shape a more open future for radio. The responsibility lies ultimately with the Cabinet, since in any case it must sign off on new policy. For its part, the Cabinet needs to look at one plain contradiction. New Delhi cannot have it both ways - holding off on instituting an independent regulator and at the same time throwing up its hands over the inability to enforce radio code. Indian radio desperately needs a course correction.