NEW PLAYER: Worldspace is beamed from abroad and is a paid service in India

It’s turning out to be a high-decibel controversy. Private frequency modulation (FM) radio companies and India’s solitary satellite radio player Worldspace are engaged in a crackling fracas over the latter’s request to be allowed to install terrestrial repeaters (equipment that would enhance its satellite broadcast signals in the country). Last month, Worldspace Satellite Radio, which has been operating in the country for some years, requested the information and broadcasting ministry to allow it to put these up.

When the fact that it had sought government permission to set up terrestrial repeaters leaked, the newly formed FM radio body, the Association of Radio Operators of India (AROI), quickly raised an alarm. It shot off a letter to the ministry stating that Worldspace should not be granted permission for terrestrial repeaters as it would harm the fledgling FM radio industry.

There are several reasons why private FM radio companies are upset with Worldspace’s designs on the Indian market. For starters, it does not take rocket science to figure out that Worldspace is keen to introduce its mobile satellite radio service with the help of terrestrial repeaters, a territory monopolised by the FM radio companies till now. Referring to Worldspace’s India plans, a PriceWaterHouseCoopers and Ficci study observes: “In-car listening accounts for one-fifth of all radio listening hours and this is the trend that the company (Worldspace) plans to cash in on in India.”

Having roped in nearly 100,000 subscribers in the country, the company’s Bangalore based CEO Shishir Lall is bullish on this market. “We’ve grown 800 per cent over last year though on a small base. But we expect to grow substantially in the next few years,” he says. Lall says that in the US satellite radio brands such an XM and Sirius are big in car radio. “That’s a large part of the business. In India, too, it makes sense to launch car radio as Worldspace is a premium service with zero advertising,” he says.

For an uninterrupted car radio service, however, Worldspace needs terrestrial repeaters as these help prevent any drop in signals that may occur because of obstructions such as high rise buildings. Worldspace now offers 40 niche radio channels in the metros and is launching its subscription services in Goa, Trivandrum, Jaipur and Nagpur.

Needless to say, the thought of a satellite player encroaching on their market segment (car radio) has thrown the FM radio industry into a tizzy. Says BAG Films’ director (new media) and AROI chief Rajiv Mishra: “Why should a satellite radio player be allowed to put up repeaters? If they are installed you will be receiving signals in the terrestrial mode.” And that, clearly, is a major point of objection. Exclaims Mid-Day Multimedia’s chief financial officer Manajit Ghoshal: “For our FM stations, we’ve paid 10 years’ advance fee to the government. We bid aggressively on the basis of the current government policy. If the government changes the norms and invites competition mid way, it will harm radio companies.”

LOCKING HORNS: Worldspace India CEO Shishir Lall and Mid-Day Multimedia CFO Manajit Ghoshal

Mid-Day Multimedia’s FM venture, Radio Mid-Day, claims to have invested Rs 97 crore in acquiring seven frequencies for FM radio channels. Mishra backs Ghoshal’s argument when he says that the FM radio industry has coughed up Rs 1,300 crore as entry fee for frequencies in 91 cities. “And we will also share four per cent of our revenue with the government.” Worldspace, on the other hand, is beamed from abroad and is a paid service in India. “But it does not pay a penny to the government. It should be banned,” says Mishra.

Lall, on the other hand, says that satellite radio companies worldwide employ terrestrial repeaters. But those are mature markets, argue FM radio companies. India’s FM radio industry is in its infancy and “needs protection. Give us 10 years to grow,” says Mishra. FM industry representatives also feel that advertising on radio is not experiencing any significant growth. From its current 2 per cent share it is set to touch 4-5 per cent of the total mass media advertising.

Another bone of contention is that Worldspace is not really governed by any law of the land, simply because India does not have a satellite radio policy. A beginning was made last year when the Telecom Regulatory Authority of India (TRAI) sent its recommendations on satellite radio to the government. However, the FM radio companies feel that the TRAI’s recommendations are loaded in favour of satellite radio companies and do not create a level playing field between the two.

TRAI has suggested that 100 per cent foreign direct investment (FDI) be allowed in satellite radio. Worldspace is already a 100 per cent subsidiary of an American company and was set up after seeking government approvals in the absence of a policy on satellite radio. The FM companies are only allowed 20 per cent FDI.

Secondly, while news and current affairs programmes are banned on FM radio, Worldspace beams several news channels into the country.

Last but not the least, Worldspace has not had to pay any entry fee to launch its operations, unlike the FM radio companies. FM radio operators say that TRAI has not recommended any entry fee for either existing or new satellite radio companies. The recommendations also clearly state that satellite radio companies should be allowed to set up terrestrial repeaters. However, it adds that they should pay the government 4 per cent of their gross earnings in India.

Responding to the brouhaha on the subject, a Trai official says, “We have dealt with the issue in our recommendations. Besides, we had taken everybody’s opinion into consideration, including those of the FM radio broadcasters.”

In its recommendations the TRAI does not see the two as competing. While one is viewed as a free-to-air service that requires cheap radio sets, the other is a premium paid one, requiring expensive radio equipment. Also, while FM radio is advertising driven, satellite radio has no advertising. Some also argue that since the per capita income of Indians is low, satellite radio will have a limited reach in India. “So the view that satellite radio will ruin the FM radio industry does not hold good,” says a radio industry expert. He adds that while FM channels in the US may be feeling the heat with competition from XM and Sirius, radios stations are not closing down.

A Delhi-based radio industry consultant, however, views the battle as bizarre. “FM radio operators may stall satellite radio from going mobile, but they will have to contend with new radio or audio delivery platforms like Internet radio, DTH radio, digital terrestrial radio as well as competition from podcasting. How far will protection take them,” he asks. Good question. Another question here: Will satellite radio overshadow FM radio? “Not unless the content is good. The mode of delivery will not matter. It is content that will decide the winners and the losers,” concludes Lall.