MIB to launch digital FM in 13 cities; private FM ad rates raised 40%

The Ministry of Information and Broadcasting (MIB) is set to roll out digital FM radio broadcasting in 13 major Indian cities with an aim to modernise the radio industry while optimising spectrum use. 

Acknowledging the revenue challenges faced by private radio operators, MIB Secretary Sanjay Jaju has assured that the decision will not compromise their revenues, as the base rates for advertisements on private FM radio have been raised by 40% alongside ongoing efforts to unlock new opportunities for the industry’s growth.

Speaking at a key industry event in the national capital, Jaju disclosed that the ministry’s Frequency Planning Committee has identified new channels for the initial phase.

 “We have already identified channels in 13 metro and major cities. Our aim is to complete the process within the next few months and roll out digital radio broadcasting in these cities.” 

However, the shift to digital radio will involve a transition process, requiring support for existing operators. Regarding the revenue challenges faced by radio operators, Jaju acknowledged the pressures of the advertising market. 

“We have increased the base rates for advertisements on private FM radio by 40% to ensure that your revenues are not compromised,” he said, adding that efforts were being made to address other industry challenges.

The announcement comes at a critical time, as MIB and the Telecom Regulatory Authority of India (TRAI) are conducting public consultations on a digital radio broadcast policy for private broadcasters. 

The Union Cabinet has recently approved FM radio spectrum auctions in 254 new towns and semi-urban areas, marking a significant step in expanding the reach of private FM radio channels in India. 

Jaju highlighted that the transition to digital radio would create a host of new opportunities for the industry. 

“Digital radio is the way forward. It allows for multiple channels on the existing spectrum, enabling operators to optimise revenues while providing consumers with maximum value from radio listening,” he said.

(Trivia: Digital FM radio is a radio technology that uses digital signals to transmit sound, providing a higher quality sound than traditional AM/FM radio)

The transition to digital radio will also require significant upgrades to transmission infrastructure and technology. 

Jaju reassured the operators that the government was committed to minimising dependency on proprietary technologies and promoting open standards. “Our goal is to ensure that the transition is smooth and supported by modern technology,” he said.

There are four global digital radio technologies that are under the ministry's review, and Indian operators may be able to use "simulcast" options for both analogue and digital broadcasts. “This would help operators sustain revenues while also preparing for a smooth transition to digital,” Jaju noted.

As many as 20 companies have expressed interest in participating in FM radio auctions in the 254 towns and semi-urban areas approved by the Union Cabinet. “Next month, we’ll begin the auction process, and I encourage all 20 companies to make use of this great opportunity to expand into these unserved areas,” he said.

The ministry has also acknowledged concerns regarding non-refundable fees and the 2.5% annual license fee. “We have removed that condition in the current auctions, simplifying the process. It’s now entirely dependent on the top line you have,” Jaju assured. He also emphasised the ministry’s commitment to light-touch regulations to enhance ease of doing business. 

Organised by the India Cellular & Electronics Association (ICEA), in collaboration with the Association of Radio Operators for India (AROI) on the theme, ‘Future of Digital Radio Broadcasting in India,’ the event also saw a panel discussion on the challenges and opportunities in digital radio. 

The discussion featured insights from Preeti Nihalani, chief operating officer at Mirchi; Manoj Mathan, CEO of Mango FM; Ashruf El-Dinary, senior vice president of digital platforms at Xperi Inc.; and Nishant Goel, director at Gizmore. The session was moderated by Ramashish Ray, CEO of the Centre of Excellence (Noida).

The industry leaders spoke about the challenges associated with digital radio mentioned below: 

• The transition to digital radio entails high capital (capex) and operational (OPEX) costs for upgrading transmitters, antennas, and studio infrastructure, prompting industry stakeholders to seek government subsidies or financial incentives to ease the financial burden.

• Current licensing policies, based on legacy analogue regulations, are seen as outdated and need review to align with the digital age. In India, licensing fees are significantly higher than in international markets, with broadcasters paying 4% of revenue annually, including GST. In contrast, broadcasters in the United States pay a flat fee of around $500. 

• Additionally, the experts showed concern around uncertainty surrounding music royalties is a major challenge for digital platforms. While analogue broadcasters are covered under statutory licensing, digital platforms must negotiate directly with copyright holders, leading to increased costs and operational complexities.

• They also showcased concern related to the ad revenue associated with digital radio; as platforms like Spotify make revenue from subscriptions, and the radio relies on ad revenue. 

One of the major advancements discussed at the conference was HD radio technology, developed by Xperi Corporation. HD radio is a global digital radio platform with more than 2,500 radio stations, offering superior audio quality and multicasting capabilities.