Prime Minister Manmohan Singh has constituted a Group of Ministers on FM radio 3 expansion, with Pranab Mukherjee Finance Minister as chairman.

The surprise element is the inclusion of A Raja, the controvresial minister of communication. The others in the GoM are Sharad Pawar and P Chidambaram.

Having worked out a three-year staggered auctioning of 806 FM stations between 2011 and 2013 under phase-three policy of private FM radio, around 160 FM stations across 60 towns will be initially auctioned in the first year beginning January 2011.

After 3G spectrum auction through internet which went without a controversy the Government has now decided to work out modalities for FM three expansion through the similar clock auctions-with e-way assistance.

The runaway success of ‘clock auctions’ used to select winners of 3G and BWA spectrum has prompted the government to take the same route to award FM radio licence as well. However, the method, which could help raise maximum revenues and improve transparency, does not find favour with FM radio operators, since they may be forced to make expensive bids.

Sources said  that the Cabinet secretary has issued a direction to use the 3G auction methodology to select FM radio licensees. The department of t elecommunications (DoT) will work with the information and broadcasting  (I&B) ministry to conduct the auctions.

The clock auction model, used for the first time in the country in 3G/BWA auctions, helped the government raise Rs 1,06,000 crore, more than three times the budget estimates of Rs 35,000 crore.

In the clock e-auction method, the government kept raising bids till equilibrium was reached in all the 22 telecom circles. This left room for bidders to enter, exit and re-enter, making the auctions a long-drawn process where prices far overshot estimates.