Adelstein Sees Many Hurdles to Minority Bidding on 700 MHz

Under recent Supreme Court rulings on race-based government programs, it is wisest to give big media companies rebates for selling assets not only to minorities but also to small companies, McDowell said. One approach would be to apply the credits to deals involving “economically disadvantaged businesses,” he said. McDowell would support rules written to withstand legal challenges, he said. “Anything that is race-based may not withstand appeal,” he said, “so we have to broaden the definition.” FCC Chairman Kevin Martin and Commissioner Deborah Tate have supported extending applying the breaks to small companies if they are restored. Congress could further aid minorities by authorizing the Small Business Administration to make loans to finance small businesses’ purchases of broadcasters, McDowell added. The commission could do its part by letting private lenders use FCC broadcast licenses as collateral for loans, he said.

Adelstein also wants the tax credit restored, he told the conference. He said he has no opinion on whether credits should apply only to minorities, since he has not reviewed a June 28 high court ruling limiting public school use of racial criteria. But Adelstein believes that the FCC must do more to help minorities than he has since last year’s conference. “Things have gotten worse,” because there are fewer minority broadcast employees and fewer own stations, he said. “The FCC needs to do its part, and I don’t think we have done a very good job.” He said 14 recommendations by the FCC Diversity Committee are “sitting there” collecting “dust on the shelf,” and the agency has failed to act on a 1992 ownership proposal from the National Association of Black-Owned Broadcasters. “A lot of great ideas have been floating around for way too long,” he said.

Minorities will be helped by an FCC notice of proposed rulemaking arriving “imminently” on whether to let AM stations use FM translators to fill gaps in their coverage areas, Adelstein said. Minorities own a higher percentage of AM stations than FM broadcasters, he noted. Adelstein and McDowell said the FCC soon will release at least some of 10 studies it commissioned on minority participation in the industry and other aspects of media ownership. Adelstein suggested the reports lagged because of data collection and other problems, but at least some may be disclosed this month. A controversial proposal from Martin to guarantee minority-owned and other small programmers carriage on cable systems has stirred little enthusiasm among minorities, Adelstein said. “I'm not sure that does as much as I'd like,” he said in an interview.

Adelstein shares Martin’s goal of having as many companies as possible participate in 700 MHz bidding. Martin’s plan to require open access on a chunk of the spectrum seems like a good idea, Adelstein told the conference. He noted that the plan encompasses only larger blocks. “Smaller blocks can be very helpful,” he said. There needs to be a nationwide approach to auction rules, regardless of whether blocks are split up by geography or population, Adelstein said. “We should be comprehensive no matter what.”

Regardless of what rules the FCC sets, women and small businesses face many hurdles to success in the 700 MHz auction, said Adelstein. They may face greater challenges than in the 2006 FCC advanced wireless spectrum auction, since 700 MHz frequencies may cost more. “You've got to wonder how small businesses are even going to get a chance to participate,” he said. Against the backdrop of AT&T, Google and other large companies “fighting” over auction rules, Adelstein said, he wonders how small companies will get money from investors to bid. Last year’s auction netted $13.7 billion. Analysts expect a larger take from 700 MHz because of the spectrum’s excellent propagation qualities.

Adelstein said he hopes at least one company will win a large amount of spectrum, so it can sell wireless broadband access nationwide as a “third channel” competitor to cable and phone companies, which have more than 90% of the market. “We better get a third channel into the home, and quick,” he told reporters. “That’s why the 700 MHz auction is so important.” The crucial question is how to get large companies to bid, he said. “We do need to take very seriously what they say they need.”

Adelstein and McDowell said the FCC could do much better at getting information on broadband deployment and other subjects. McDowell wants the agency to do “a better job of data collection” for “the entire jurisdiction of the FCC,” he said. Adelstein said the FCC would do well to find out why some people do not buy broadband, and whether the reason is relatively high prices. “Other countries are getting more bang for their broadband buck,” he said. “Price is one of the bigger barriers” to getting broadband. The Universal Service Fund should support high-speed Internet service in rural areas, and the government should do a better job of measuring how many rural homes get broadband, he said. - Jonathan Make