Regulations
Need for media blackout during spectrum auctions
The spectrum cost that has emerged today is about 20 times that of the 2001 cost, while the customer base has gone up by 240 times. Yet, there was a deliberate attempt by media to frustrate true market forces and let narrow interests determine the price of a scarce natural resource
 
Information dissemination is occasionally throttled to ensure fairness to one and all. Especially with respect to information that has a direct bearing on the financial health of a country, there are regulations that mandate a delayed release to public. This is done to enable stakeholders who are directly involved in a transaction to take independent decisions on their investments. These decisions are therefore based on internal merit and capacity to analyse trends and make projections. Any external influence would – in these cases - open up the floor to no less than retrospective accusations of fraud or duplicity. Two clear examples of this kind of information management are observed when enterprises are raising funds through depository receipts and when management boards meet and discuss forward-looking strategy for their enterprise. On both these occasions, it is a criminal offense to directly or indirectly reveal non-public information in order to manipulate investors’ minds.
 
Looking at initial public offering (IPO) related regulation in the US, we find that as per American securities law, there are two time windows commonly referred to as "quiet periods" during an IPO's history. The first one is from the period following the filing of the company's S-1 but before US Securities and Exchange Commission (SEC) staff declares the registration statement effective. During this time, issuers, company insiders, analysts, and other parties are legally restricted in their ability to discuss or promote the upcoming IPO according to the Securities Exchange Act, 1934. The other "quiet period" refers to a period of 40 calendar days following an IPO's first day of public trading. During this time, insiders and any underwriters involved in the IPO are restricted from issuing any earnings forecasts or research reports for the company. It is only when the quiet period is over that the underwriters will initiate research coverage on the listed entity. Additionally, the NASDAQ and NYSE (New York Stock Exchange) have approved a rule mandating a 10-day quiet period after a Secondary Offering and a 15-day quiet period both before and after expiration of a "lock-up agreement" for a securities offering. Thus, during a Quiet Period, a publicly listed company cannot make any announcements about anything that could cause a normal investor to change their position on the company's stock. The same applies in the UK, where the Prudential Regulation Authority and the Financial Conduct Authority mandate non-disclosure. In fact, in June 2011 the internet company Groupon was forced to amend its IPO filing after Bloomberg News published a statement from Groupon’s co-founder and Executive Chairman saying that “Groupon was going to be wildly profitable.” 
 
In India, similar regulations with respect to price-sensitive information are put in place through trade windows by the SEBI (Prohibition of Insider Trading) Regulations, 1992. But, unfortunately, such is the vindictive nature of India’s business culture that press information is now being used to influence other critical investment as well. It seems the time has come to extend the scope of Quiet Periods to other transactions such as spectrum auctions. 
 
Earlier, the Department of Telecom (DoT) auctioned spectrum in the 900MHz and 1800MHz bands over 10 days and 64 rounds. The auction pulled in about Rs60,000 crore for the government, of which close Rs18,000 crore will enter the coffers this fiscal itself, through upfront payments. By all means, it was a successful auction and with the bright prospects of data driven services, it is likely that the buyers of spectrum will roll out robust and profitable services for the 88.1 crore mobile subscribers in India. However, a peculiar trend was also noticed during the auction. The media left no stone unturned to influence opinion of transacting parties and manipulate investors’ minds in real time, while the auction was ongoing. The so called analysts’ first response in the media was to call the then ongoing auction “winner’s curse”, without bothering to explain the basis of this judgment. They raised hue and cry over spectrum pricing that was being determined through a transparent auction process and claimed that the companies had quoted high bids. This was followed by a number of other rhetoric statements that smelt of nothing but vested interests.
 
In 2001, when the customer base was only 25 lakh and tariff was Rs6 a minute, the spectrum contributed only 80 paise per minute to the tariff at the best. The same spectrum is being used even now when the customer base is anything between 50 and 60 crores. This is nearly 200 times of the then customer base in 2001. Therefore, the spectrum cost that has emerged today is about 20 times that of the 2001 cost. However, the customer base has gone up by 240 times. Therefore, if the operators pass on the cost of spectrum to subscribers, increase in tariff will not be more than a few paise. Thus, when Marten Pieters, the CEO of Vodafone, says that the mobile telecom industry has reached a point where annual tariff increases are needed to sustain itself. It is important to focus on the quantum of increase and not the superficiality of increasing tariffs in an industry where they have only decreased over the last 18 years.
 
None of the involved players entered the auctions without the required knowledge and understanding to participate effectively. However, newspapers such as Economic Times clearly implied so. In fact, in one particular article, the newspaper went to the extent of advising Bharti Airtel (India’s largest and most professionally managed telecom company) to pull out of race 900MHz at extant price points.  This created much panic among small investors and could have even been published with the aim of misleading Ministry officials. There was a deliberate attempt to frustrate true market forces and let narrow interests determine the price of a scarce natural resource. The media houses running this propaganda should either allow their conscience to operate for the benefit of India’s poor for whom revenue is raised, or clearly label such “analysis” as “paid news”.
 
Considering, neither of the above two alternatives will be adopted before an ideal world order is miraculously created, there is a clear need for regulation that mandates dissemination of information in a phased manner. While spectrum auctions are ongoing, no information should be released on a day-to-day basis and no “reportage” on the proceedings should be allowed. The minutest details of the auction may be dissected, analysed and presented before the public only when the whole process is over. But allowing rookie journalists to influence transactions that involve such phenomenal wealth would be allowing for a loophole that we would be daft to not address immediately. We must bear in mind that a single spectrum auction could significantly alter the fortunes of the telecom industry, or the country’s poor, or both. In the light of this, a blackout period should be mandated for the media for the sake of fairness and inclusive growth.
 
(BK Syngal is former CMD of erstwhile Videsh Sanchar Nigam Ltd (VSNL). He is a B Tech (Hons) and M Tech from IIT, Kharagpur, C Eng (UK), MIEE (UK) and Sr MIEE (US). He is also a member of the London Court of International Arbitration.)
 
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COMMENTS

Anand Vaidya

1 year ago

Paid media (NDTV, Times Now, Aaj Tak, Ind Exp, The Hindu etc) influences or tries to, not just auctions but a whole host of issues & non-issues. They need to be shut down forever. Honest, fearless media will then blossom in the nation

Emergency: A bureaucrat recalls the dark months
To counter inflation, the government stopped all new construction works, froze wages and salaries in the public sector, and imposed compulsory savings on income tax payers
 
The experience of the Emergency - 19 months of undemocratic rule in India, without civil liberties - is now a distant memory. For the young, it is a paragraph in history books. Those who do not remember history, it has been said, are condemned to repeat it.
 
The trauma of June 26, 1975, followed months of economic discontent, and political turmoil. Two bad agricultural years, and the phenomenal rise in world oil prices after OPEC was formed, sent inflation in India up to an unprecedented 15 percent in 1974.
 
Rising prices in food and essential commodities meant distress for rural and urban labour and hardship for fixed income families. To counter inflation, the government stopped all new construction works, froze wages and salaries in the public sector, and imposed compulsory savings on income tax payers. These measures, though they brought prices down in a few months, were highly unpopular. A countrywide strike of railway workers was put down with some severity.
 
The political opposition, earlier impotent against prime minister Indira Gandhi's popularity and large majority in parliament, seized on this opportunity to mobilize public support against the government, whom they charged with pervasive corruption. The working of parliament was disrupted with frequent rallies in Delhi demanding its dissolution and fresh elections. In Gujarat, the Nav Nirman movement against the then Congress (I) government led to sporadic violence.
 
Then Jayaprakash Narayan, or JP as he was called, the former socialist leader who had quit politics for Gandhian social work, came out of retirement, calling on students and youth to join him in a peaceful revolution for the moral regeneration of politics. JP's political aims were unclear, beyond removing Indira Gandhi from power. His movement evoked great enthusiasm in Bihar and Uttar Pradesh, and then spread to other states in the north and west. 
 
At this critical juncture, on the June 12, 1975, an order of the Allahabad High Court on an election petition unseated Indira Gandhi and barred her from elections for six years. The Supreme Court stayed the order, pending appeal, allowing her to continue as PM but without voting powers. Tension mounted in Delhi with daily rallies outside the PM's house and counter-demonstrations by her supporters led by her son, Sanjay Gandhi. At a major rally in Ramlila Grounds, JP called on the army and police to disregard orders to suppress demonstrations.
 
Indira Gandhi could have stepped down as PM in favour of another Congress leader, who could later dissolve parliament. The High Court order, based on technical infringement of electoral law, would very likely have been overturned by the Supreme Court. She would almost certainly have won another election with ease.
 
But the PM saw herself as the victim of a right-wing conspiracy; she would not risk even a temporary loss of power. Her advisers on the extreme left even told her that her life might be in danger, like those of Salvador Allende in Chile and Sheikh Mujibur Rahman in Bangladesh.
 
A way out for the beleaguered prime minister was found by the then West Bengal chief minister Siddhartha Shankar Ray, an eminent lawyer. This was to misuse a constitutional provision meant for dealing with armed insurgencies. After two or three days of secret preparation, with the help of a few trusted officials, an ordinance proclaiming a National Emergency was taken by Indira Gandhi to President Fakhruddin Ali Ahmed for approval, late on the night of June 25.
 
It was issued early on the morning of the June 26. The cabinet knew nothing till it was convened later, and then dutifully approved of the ordinance. In dawn raids, leaders and activists of all political formations in the opposition, from the RSS and Jan Sangh to Socialists, Congress (O), JP and his supporters - in all 60,000 people all over India - were taken in for preventive detention. Newspapers were shut down on the 26th and 27th. All India Radio had no reports beyond the promulgation of the ordinance. There was panic in the country.
 
In the course of the Emergency, more than 100,000 people were imprisoned without trial. Access to the courts was denied to detainees, the government arguing that all fundamental rights had been suspended during the Emergency, and even the writ of habeas corpus was not available to detenus'. Three High Courts disagreed with the government. But on appeal, a Supreme Court Bench, with some of India's leading jurists, upheld the government view. Only Justice H.R. Khanna dissented. 
 
Pre-censorship was imposed on all newspapers and journals. Owners and editors were intimidated; only the Statesman and the Indian Express continued to voice some dissent. The BBC office was closed and Mark Tully expelled. Kuldip Nayar was in jail for some months. Romesh Thapar, earlier close to Indira Gandhi, suspended his publication of Seminar journal as a protest against censorship. Public opinion in the Western democracies was critical of Emergency rule in India. Only the British Labour Party gave some support to Indira Gandhi.
 
One's most lasting memory of those days is of the fear that gripped the entire middle class, of arrest and detention, if any dissent was voiced in public. Politicians made no protests in or out of legislatures. Ordinary people would not talk freely, except among close friends. One understood what it had been like living under dictatorships in Europe.
 
On the morning of June 27, when the public was still in the dark, the prime minister spoke to secretaries assembled in South Block. She said her actions had been necessary because of a grave threat to the government, mentioning JP's Ramlila Ground speech. She said she had no intention of changing the existing governmental system, and called for the civil service to make governance more effective. 
 
In a few days, in an effort to make the Emergency popular, a 20-point programme of social reform was hastily put together: it ranged from the abolition of bonded labour to free exercise books in schools. This was then incorporated in the Five Year Plan. Sanjay Gandhi wanted to give priority to two elements: renewed emphasis on population control and urban slum clearance. These were then implemented in ways that they became 'excesses' of the Emergency.
 
Early in the Emergency, it was clear that cabinet ministers now exercised only nominal authority and that too in routine matters. All important decisions were taken by the PM herself, with Sanjay as her chief adviser, and a small group of junior ministers executed these orders. Some positions in key ministries could be filled only after interviews with Sanjay. 
 
Some civil servants were prepared to praise the Emergency, accept the new dispensation and further their careers. The vast majority simply kept their own counsel and continued to work as usual. A few known critics were moved out of positions of authority. No one resigned.
 
The constitutional five-year life of parliament was twice extended by emergency legislation, to avoid new elections. This gave time to Sanjay Gandhi to extend his influence through younger leaders in the state Congress parties. This group revived an old idea of replacing India's parliamentary democracy with an executive presidency, and pressed for convening a new Constituent Assembly. At the end of 1976 it seemed that India's liberal democracy would never revive.
 
Then in mid-January 1977 came the wholly unexpected announcement that Indira Gandhi - whether impelled by a desire to regain her democratic legitimacy, or misled by intelligence reports of her continuing popularity - had decided to dissolve parliament and hold new elections. Political leaders and party workers were released and allowed to campaign freely. Press censorship was relaxed. In the elections of mid-March 1977, the country gave its verdict on the Emergency. Congress (I) lost across India to the Janata Party formed by united opposition leaders after their release.

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Heavy rains kill 45 in Gujarat
Continuous rains have swollen many rivers and created a flood-like situation in Gujarat even as at least 45 people have following heavy showers in Saurashtra and south Gujarat, officials said.
 
Amreli district is the worst hit, with 36 deaths reported on Wednesday. The meteorological centre at Ahmedabad on Thursday predicted moderate to heavy rains in the coming days.
 
"The south-west monsoon has covered the entire Gujarat. Monsoon is active over Gujarat region and vigorous over Saurashtra," an official of Ahmedabad Meteorological Centre told IANS.
 
The official said: "Moderate to rather heavy rain would occur at most places in Gujarat region, Saurashtra-Kutch and in Diu, Daman, Dadra Nagar Haveli. The weather is about to remain same for the next five days.
 
"Floods too cannot be ruled out at the moment," he added.
 
According to All India Radio, 13 people died when two houses collapsed in Nani Vabhaniya village near Bagasara town of Amreli district.
 
Three people died in Bhavnagar district, two in Gaondal in Rajkot district and three lost their lives in Surat district due to the floods.
 
Gujarat Chief Minister Anandiben Patel, who reviewed the flood situation at a high-level meeting in Gandhinagar, urged people not to panic.
 
She also held meetings with senior officials and the Indian Air Force and discussed the situation with district officials.
 
The National Disaster Response Force (NDRF) and the IAF have been pressed into service for rescue and relief work in Amreli district. 
 
Additional companies of State Reserve Police (SRP) have been sent to all affected areas. Over 100 people were airlifted in Amreli while about 1,000 people were evacuated in Surat.

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