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This is an unofficial announcement of Commission action. Release of the full text of a Commission order constitutes official action. See MCI v. FCC. 515 F 2d 385 (D.C. Circ 1974).
| FOR IMMEDIATE RELEASE December 12, 2000 |
NEWS MEDIA CONTACT: Linda Paris (202) 418-7121 Maureen Peratino (202) 418-0506 |
OFFICE OF THE CHAIRMAN
STUDIES INDICATE NEED TO PROMOTE WIRELESS & BROADCAST
LICENSE OWNERSHIP BY SMALL, WOMEN- AND MINORITY-OWNED
BUSINESSES
Recommends steps to facilitate fair competition
Washington, D.C. - FCC Chairman William E. Kennard, joined by his colleagues Commissioners Susan Ness and Gloria Tristani, today presided over a public forum at which five studies on market entry barriers facing small, women- and minority-owned businesses were released. The five studies highlight the need for policy to promote wireless and broadcast license ownership among smaller firms as well as for women and minorities.
The studies provide evidence to address Supreme Court standards in Adarand Constructors Inc. v. Pena concerning federal programs that use race or ethnicity as a basis for decision-making. These reports further indicate that consolidation in the telecommunications industry since the passage of the 1996 Telecommunications Act has had a particularly harmful effect on the number of small, women-owned and minority-owned businesses in that industry.
"Together with the existing body of research in this area, these studies demonstrate a compelling governmental interest in developing programs to promote women and minority ownership," stated Chairman Kennard during a policy forum with the study authors and other experts held at the FCC in Washington, D.C. He said, "government has a role to play in ensuring that the doors to the new economy open wide to all Americans."
Kennard recommended four action items:
Congress should re-institute and reinvigorate the tax certificate program. "More than any policy, the minority tax certificate is recognized as having had the greatest impact in lowering barriers for minority broadcasters," Kennard said.
Congress should substantially increase funding for the Telecommunications Development Fund as one means of addressing the lack of capital by small, particularly minority- and women-owned, businesses. "A TDF increase should help both wireless and broadcast businesses," urged the Chairman.
The Commission should reexamine the means by which it determines minority ownership. "A more accurate ownership measure than the current one would decrease the likelihood of minorities being used as 'straw' participants without real opportunities for ownership," Kennard stated.
The Commission, industry and public interest organizations should collectively explore ways to promote opportunities for small, women- and minority-owned businesses in new rather than old media. "We need to continue forming partnerships to widen the circle of opportunity," stated Kennard.
The FCC conducted these studies as part of its mandate under Section 257 of the 1996 Telecom Act which directs that the Commission identify and eliminate market entry barriers for small telecommunications businesses, and Section 309(j) of the Communications Act, which requires the FCC to further opportunities in the allocation of spectrum-based services for small businesses and businesses owned by women and minorities.
The results of these reports, taken together, along with other information available, will allow the Commission to assess the extent of market entry barriers facing applicants for FCC licenses, and to discuss what actions it may take to ameliorate this problem.
The major findings of the five studies is attached. The full text of each study is available on the FCC's web site at www.fcc.gov.
- FCC -
MAJOR FINDINGS OF FIVE STUDIES
The five studies and their major findings are:
-
Content/Ownership Study:
Minority-owned radio stations were far more likely to choose a program format that appeals particularly to a minority audience;
Minority-owned radio stations were more likely to provide news and public affairs programming on events or issues of particular concern to minorities;
Minority-owned radio stations report greater racial diversity of on-air talent;
Of radio stations that reported tailoring national news stories to the local community, minority-owned stations were far more likely to tailor the story to minority community concerns; and
The same differences were not found in the case of television, and in most cases, including the areas noted above, there were no statistically significant differences between minority- and majority-owned television stations.
- Broadcast Licensing Study
During the time period in which the FCC's policy of awarding credit for minority ownership was in effect:
The number of minority individuals in an application positively influenced win rates in comparative hearings;
However, minority controlling ownership share did not increase the likelihood of an application being successful. These findings suggest that, although non-minorities included minorities in applications, such participation was non-meaningful (sham); and
Overall, there was a lower probability for an application with any type of minority ownership winning a license than a non-minority application winning a license, when controlling for other relevant variables;
During the time period of the FCC's policy of awarding credit for ownership by women, there was a positive and significant relationship between female ownership - both by additional numbers of women and by higher percentage of female ownership - and the probability of license award, suggesting that the FCC's policy of awarding credit for ownership by women was more effective than that for minority-ownership;
Both applicant assets and the total number of legal motions filed were strongly correlated with the likelihood of an applicant winning a broadcast license. If there has been discrimination in capital markets, then this would suggest that minorities and women might have been disadvantaged in comparative hearings, even though no license fees were required; and
Although a high percentage of licenses were awarded to singleton applicants without need for a comparative hearing, minorities were far less likely to be able to use this singleton process. That is, when original applications had higher proportions of minorities, they were statistically more likely to be challenged, despite the fact that such applications were entitled to credit for the minority participation in comparative hearings, and, as a result, were theoretically harder to challenge. While this phenomenon does not necessarily reflect discrimination, it does show that minorities were less able to obtain licenses without completing the lengthy and expensive comparative hearing process. This same result was not true for applications with more female participants.
- Auction Utilization Study
Measured across all wireless auctions through 1999, minority and women applicants were less likely to win at least one license than were non-minority applicants;
In an auction by auction comparison, the percentage of winning minorities is sometimes larger and sometimes smaller than the corresponding percentage for non-minority applicants. Similarly, women applicants won more frequently than did men applicants in certain auctions, but less frequently than men in other auctions;
The inclusion of installment payments in auctions increased the rate at which minority and women applicants won licenses;
In order to bid in auctions, an applicant must qualify by submitting a completed short form application and an upfront payment. Minorities and women qualified for auctions at significantly lower rates than non-minorities. The reasons for this result are not entirely clear, suggesting this is an area for future research; and
The differences in utilization rates between minority and women applicants and other applicants are generally less pronounced among small companies than among large companies.
- Capital Markets and Auctions Regression Study
Among applicants for wireless licenses, the applications for debt financing by both minorities and women were statistically less likely to be approved than the applications of non-minorities;
Among current broadcast licensees, minorities' applications for debt financing were statistically less likely to be approved than non-minorities' applications. The applications for women were also less likely to be approved than those for men, but this result was not statistically significant;
Minorities paid statistically higher interest rates on their loans than did other borrowers. However, there were no statistically significant differences in interest rates on the basis of gender; and
After controlling for relevant variables, both minority- and women-owned businesses were statistically less likely to obtain wireless licenses in FCC auctions than were businesses owned by non-minorities.
- Historical Study
Minorities and women repeatedly report encountering discrimination in their efforts to obtain capital to finance their broadcast and wireless businesses, discrimination in securing advertising on their stations, and discrimination by members of their communities and members of the communications industry;
Small telecommunications businesses generally, and those owned by women and minorities in particular, report that the market consolidation permitted by the relaxation of the FCC's ownership rules has created nearly insurmountable obstacles to those seeking to enter, or even survive as a small player, in the broadcast industry;
Minority-owned firms report that the repeal of the former tax certificate program - which, from 1978 until its repeal in 1995, provided tax incentives to encourage firms to sell broadcast licenses to minority-owned firms - has had a severe negative impact on their ability to obtain new stations; and
Interviewees believed that EEO enforcement has been uneven over the past fifty years. This reported uneven enforcement coupled with industry hiring practices has hindered the ability of minorities and women to obtain the work experience that could one day assist them to become broadcasters themselves.