Confirming the move, a senior I&B Ministry official said that the government will allow third-party service providers to set up infrastructure facilities and offer them on rental or lease to FM radio broadcasters. The Letters of Intent, which the Ministry will start disbursing to various broadcasters later this week, will contain an amendment in the original tender conditions to this effect. This is a departure from the conditions that were mentioned in the original tender documents for FM radio policy. Earlier, under a co-location clause various players in metropolitan cities had to share a common facility to install their transmitters.

The government had earlier auctioned over 100 FM frequencies in 40 cities across the country. Officials clarified that the government would not be directly involved in appointing or monitoring the infrastructure service providers. "We will give the broadcaster the option to avail the services of third party infrastructure service providers. The onus will be with the licensed broadcaster to select the service provider and make sure that they meet all the conditions in the tender documents," an official said. "The neck of the concerned broadcaster which will be on the block if the service provider fails to meet any of the tender conditions," a senior I&B official said.

As for demand for broadcasters for extra time of around six months to issue bank guarantees, officials indicated that the government might consider giving them around two to three months to furnish the requisite documents.

Third-party infrastructure service providers to be allowed for FM
The tender document has stipulated a 15-day period for furnishing bank gaurantees. The government is also likely to clarify that foreign portfolio investment by FIIs of up to 20 per cent will be allowed in FM broadcasting.The government move to open up the turf for third party service providers suits the FM broadcasters fine. According to a senior executive of one industry player, the industry will save on capital investments and would just have to pay out rentals for infrastructure services.

For service providers the move opens up a new business opportunity worth several hundred of crores with a second round of FM licencing expected over the year-end. According to an estimate by one such service provider, if the broadcasters themselves went ahead to set up infrastructure they would have to fork out in the region of around Rs 400 crore to Rs 450 crore. "They now have to just give out rentals and leave the headache of setting up and running the facilites to us," he added.