[Congressional Record (Bound Edition), Volume 146 (2000), Part 18]
[Extensions of Remarks]
[Pages 27291-27292]
[From the U.S. Government Publishing Office, www.gpo.gov]



                 DEREGULATION CALLED BLOW TO MINORITIES

                                 ______
                                 

                         HON. JOHN CONYERS, JR.

                              of michigan

                    in the house of representatives

                       Friday, December 15, 2000

  Mr. CONYERS. Mr. Speaker, today I rise to voice concern about the 
increasingly insurmountable barriers that minorities and women in the 
telecommunications and broadcast marketplace are experiencing since 
passage of the Telecommunications Act of 1996. Recent studies have 
shown that since deregulation, minority- and women-owned companies have 
had a more difficult time getting financing for starting new ventures 
and expanding, and when they have received financing, it is often on 
less favorable terms than comparable majority run businesses. Adverse 
trends in the courts and in Congress have had a negative impact on 
small minority owned communication companies. It is imperative that 
Congress, the courts, the F.C.C. and the Bush administration help 
ensure that minority and women owned communications enterprises have 
equal opportunities in their abilities to compete in the marketplace. 
The following New York Times article is an excellent summary of this 
crisis.

                [From the New York Times, Dec. 12, 2000]

                 Deregulation Called Blow to Minorities

                          (By Stephen Labaton)

       Washington, Dec. 11.--The 1996 landmark law that was warmly 
     embraced by the Clinton administration and many Republicans 
     as a way to begin deregulating the nation's 
     telecommunications industry has had the unintended effect of 
     raising substantial new barriers for companies controlled by 
     minorities and women, new independent studies commissioned by 
     the federal government have found.
       The studies show that the wave of consolidation in the 
     broadcast, telephone and cable industries prompted by the 
     Telecommunications Act of 1996 had created ``nearly 
     insurmountable obstacles'' to those seeking to enter those 
     industries and to thrive.
       They also found that in general over the last 50 years, 
     companies controlled by minorities and women have been far 
     less likely to win government licenses for telephone service 
     and radio or television stations, even if they are qualified 
     to run those operations. In recent years, the studies found, 
     the 1996 law in combination with changes in tax law and 
     affirmative action rules, had made the problems for small 
     businesses particularly acute.
       ``Today small firms face barriers erected by deregulation 
     and consolidation in both wireless and broadcast,'' one of 
     the studies said. ``Minorities and women confront those same 
     barriers; and yet those obstacles stand high atop a 
     persistent legacy of discrimination in the capital markets, 
     industry, advertising and community--and prior F.C.C. 
     policies, which worsened the effects of discrimination.''
       ``The barriers to entry have been raised so high that, left 
     standing, they appear virtually insurmountable,'' the study 
     concluded. ``Minority, women and small-business ownership in 
     these industries is diminishing at such an alarming rate that 
     many we spoke with felt we had passed the point of no 
     return.''
       While it has long been known that minorities and women face 
     difficulties in a wide range of industries, the five studies 
     to be released on Tuesday by the Federal Communications 
     Commission conclude that barriers imposed by both the 
     government and the marketplace have taken a particular toll 
     in telecommunications and the so-called new economy 
     companies, where the lifeblood is the government license to 
     use a part of the airways.
       ``These studies confirm that small minority and women-owned 
     businesses are encountering significant difficulties in 
     participating in the new economy,'' said William E. Kennard, 
     chairman of the F.C.C. ``With consolidation in the past few 
     years it's clear that it's become harder for any business 
     that is small to participate as an owner of infrastructure, 
     whether it is cable
       In his more than seven years as the agency's general 
     counsel and then its chairman, Mr. Kennard, the first 
     African-American to head the F.C.C., has struggled against a 
     hostile Republican Congress and a lukewarm administration in 
     trying to find new opportunities for minorities and women. An 
     earlier study he commissioned showed minority broadcasters 
     often cannot command the same advertising revenues as other 
     broadcasters.''
       Mr. Kennard said he had hoped that the studies would 
     provide a blue-print for a Gore administration to take new 
     steps on behalf of small companies. He also acknowledged that 
     the prospect of a Bush administration may significantly 
     diminish the impact of the studies on future policy makers.
       Regulators and courts have long described the spectrum as a 
     public trust that needs to be managed in the best interests 
     of the public, but the studies conclude that minorities and 
     women have had a difficult time for the last half-century and 
     that it still remains especially difficult for them to win 
     licenses and get financing for their ventures on a footing 
     comparable to their rivals.
       In one study, entitled ``Whose Spectrum Is It Anyway?'' 
     researchers found that the 1996 law, following other adverse 
     trends in the courts and in Congress, had been particularly 
     hard on those small companies.
       In 1995 Congress eliminated a tax program intended to 
     encourage investment in small, minority- and women-owned 
     telecommunication companies. Around the same time, the United 
     States Supreme Court and other federal courts began to hand 
     down a series of decisions that made it significantly more 
     difficult for the federal government to carry out affirmative 
     action programs and take steps to assist minority businesses.
       The studies concluded that in the area of broadcasting, 
     ownership can have a deep impact on programming, and that the 
     lack of diversity among owners could lead to less diverse 
     kinds of programs. Minority-owned radio stations, for 
     example, were far more likely to choose a programming format 
     that appeals particularly to a minority audience, and were 
     more likely to have greater racial diversity of on-air 
     talent.
       The studies show that minority- and women-owned companies 
     have had a more difficult time getting financing for starting 
     new ventures and expanding, and when they have received 
     financing, it is often on less favorable terms that 
     comparable businesses run by white men.
       The F.C.C. had earlier encouraged small businesses by 
     permitting them to bid in license auctions and make payments 
     in installments. But after some businesses defaulted on those 
     loans, the rules were changed.

[[Page 27292]]

       On Tuesday the agency will begin what many expect will be 
     the largest auction in its history, for licenses to operate 
     mobile telephones, and all winners will have to make their 
     payments upfront.
       The studies also show that officials at the F.C.C. have 
     been inconsistent in their application of equal opportunity 
     guidelines, and that the agency ``often failed in its role of 
     public trustee of the broadcast and wireless spectrum by not 
     properly taking into account the effect of its programs on 
     small, minority- and women-owned businesses.''
       The studies, which are expected to be made public by the 
     F.C.C. on Tuesday, were conducted by KPMG; Ernst & Young; the 
     Ivy Planning Group, a consulting group based in Rockville, 
     Md.; and researchers from Santa Clara University and the 
     University of Washington.

     

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