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Saturday, 09 July 2011 00:00
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Though the government conducted a hugely successful 3G/BWA auction in 2010, after the 2G scam blew up in its face, ironically, its appetite for auctions also took a big hit. The government’s most articulate voice, Kapil Sibal, argued that auctions weren’t a great idea, that they raised tariffs for the common man and were, in effect, avoidable—much the same argument, incidentally, made by the 2G scam’s main accused A Raja. Indeed, the anti-auction bug was so strong, despite the Ashok Chawla committee plumping for market-based solutions, a leading newspaper reported the committee as saying international experience showed auctions led to losses—clearly someone in the government was leaking selectively. Which is why the government’s decision to auction 839 FM radio slots shows a welcome maturity, more so given that many top media firms who are also in the radio business were opposed to auctions. The important thing to keep in mind is that auctions don’t raise tariffs, for consumers or advertisers—witness the fall in tariffs after the 2001 telecom auction and after Vodafone paid $11.1 bn for Hutch in 2007. In any case, the real reason for auctions is different—it is the only way to transparently choose when there are more bidders than licences.

 

Apart from the welcome decision on auctioning, the other FM decisions show the same anti-reform mindset of the past. Hiking FDI limits from 20% to 26% is a good example. What purpose do such low limits serve, ironically at a time when a government discussion paper is arguing for lifting all sectoral FDI caps—curiously, in 2008, Trai was in favour of a 49% cap. Ostensibly, the cap is in keeping with the cap in news ventures like newspapers and TV channels. As this newspaper has argued, the caps in newspapers and TV make little sense in a globalised India, more so at a time when the content of foreign media is freely accessible over the net anyway. In any case, since the government allows 100% FDI in the non-news general entertainment TV segment, why not allow the same 100% for FM radio stations that don’t offer news? And what is one to make to the decision to allow FM stations to now offer news, but only that taken from the state-owned All India Radio? Obviously the I&B ministry continues to remain oblivious to the sweeping changes in the rest of the country.

Last Updated ( Friday, 25 November 2011 08:52 )
 

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