STAFF EXECUTIVE SUMMARY

This Executive Summary outlines the purposes and findings of a series of
market entry barrier studies released by the Federal Communications
Commission (FCC) today. The FCC conducted these studies pursuant to
Section 257 of the Telecommunications Act of 1996, 47 U.S.C. § 257,
which mandates that the FCC identify and eliminate market entry barriers
for small telecommunications businesses, and Section 309(j) of the
Communications Act of 1934, 47 U.S.C. § 309(j), which requires the FCC
to further opportunities in the allocation of spectrum-based services
for small businesses and businesses owned by women and minorities. [^1]

The studies released today are as follows:

1.  Diversity of Programming in the Broadcast Spectrum: Is There a Link
    Between Owner Race or Ethnicity and News and Public Affairs
    Programming?: prepared by a team of researchers from Santa Clara
    University (hereafter "Content/Ownership Study");

2.  Study of the Broadcast Licensing Process: prepared by KPMG LLP
    Economic Consulting Services; consisting of three parts: History of
    the Broadcast Licensing Process; Utilization Rates, Win Rates, and
    Disparity Ratios for Broadcast Licenses Awarded by the FCC; and
    Logistic Regression Models of the Broadcast License Award Process
    for Licenses Awarded by the FCC (hereafter "Broadcast Licensing
    Study");

3.  FCC Econometric Analysis of Potential Discrimination: Utilization
    Ratios for Minority- and Women-Owned Companies in FCC Wireless
    Spectrum Auctions: prepared by Ernst & Young LLP (hereafter "Auction
    Utilization Study");

4.  Study of Access to Capital Markets and Logistic Regressions for
    License Awards by Auctions: prepared by Professor William Bradford
    at the University of Washington (hereafter "Capital Markets and
    Auctions Regression Study"); and

5.  Whose Spectrum Is It Anyway? Historical Study of Market Entry
    Barriers, Discrimination and Changes in Broadcast and Wireless
    Licensing 1950 to Present: prepared by the Ivy Planning Group LLC
    (hereafter "Historical Study").[^2]

# The Applicable Legal Standards

Section 257 authorizes the Commission to eliminate any identified market
entry barriers facing small businesses and businesses owned by women and
minorities. Any programs designed to remove specific market entry
barriers faced by minority-owned businesses must follow the standards
set forth by the Supreme Court in [Adarand Constructors, Inc. v.
Pena]{.underline}, 515 U.S. 200 (1995). In [Adarand]{.underline}, the
Supreme Court held that any federal program that uses racial or ethnic
criteria as a basis for decision-making must serve a compelling
governmental interest, and must be narrowly tailored to serve that
interest. Although gender-based classifications need only satisfy
intermediate scrutiny, [see]{.underline} [United States v.
Virginia]{.underline}, 518 U.S. 515, 531-33 (1996), the FCC sought to
examine together the justifications for implementing race- and
gender-conscious measures, because any programs that might be developed
would likely assist both women and minorities. If the evidence regarding
the experiences of women and minorities would satisfy the strict
scrutiny standards applicable to race-based provisions, then any
programs the FCC might develop would also be able to meet the
intermediate scrutiny test applicable to gender-based classifications.
Accordingly, the FCC undertook these studies to help determine whether
it has a compelling interest under the strict scrutiny standards to
support programs promoting license ownership by women and
minorities.[^3]

There are two federal interests that could potentially provide the
necessary factual predicate to meet the strict scrutiny test. First,
there is the FCC's interest in promoting the broadcast of a diversity of
views. It was on this basis that the Supreme Court upheld two FCC
programs in [Metro Broadcasting, Inc. v. FCC]{.underline}, 497 U.S. 547
(1990). These programs were: (1) an enhancement for minority ownership
in comparative hearings for broadcast licenses; and (2) the FCC's
distress sale policy, which provided special procedures for the transfer
of broadcast licenses to minority owned firms. Through these policies,
the FCC sought to promote the broadcast of a diversity of opinions and
information by facilitating diversity of ownership among broadcast
stations. However, it is not clear whether the Supreme Court would find
that this interest is a compelling one. [Metro Broadcasting]{.underline}
was decided under the intermediate scrutiny standard before
[Adarand]{.underline} dictated that strict scrutiny should apply to
federal programs. Moreover, in the employment context, the United States
Court of Appeals for the District of Columbia Circuit has held that
promoting broadcast diversity does not constitute a compelling
governmental interest. [See]{.underline} [Lutheran Church - Missouri
Synod v. FCC]{.underline}, 141 F.3d 344 (D.C. Cir.), petition for
rehearing denied, 154 F.3d 487, and suggestions for rehearing en banc
denied, 154 F.3d 494 (D.C. Cir. 1998). Nonetheless, the
[Adarand]{.underline} decision only overruled [Metro
Broadcasting]{.underline} to the extent that it applied intermediate
rather than strict scrutiny, [Adarand Constructors, Inc. v.
Pena]{.underline}, 515 U.S. 200, 227 (1995), and in his dissent in
[Adarand]{.underline}, Justice Stevens provides a lengthy argument in
support of the diversity rationale\'s ability to survive under strict
scrutiny. 515 U.S. at 257-58 (Stevens, J., dissenting).[^4] Accordingly,
the possibility that this First Amendment interest would be accepted as
compelling has been left open.

Second, there is the FCC's interest in remedying past discrimination.
The FCC has already found in the Section 257 proceeding that
discrimination can be a market entry barrier. [See]{.underline} [Market
Entry Barriers Notice of Inquiry]{.underline}, 11 FCC Rcd 6283.
Moreover, the governmental interest in remedying past discrimination has
been found by a majority of the Supreme Court to meet the compelling
interest standard. [See]{.underline} [Adarand]{.underline}, 515 U.S. at
237; [City of Richmond v. J.A. Croson Co.]{.underline}, 488 U.S. 469,
509 (1989) (plurality opinion); [id]{.underline}. at 511 (Stevens, J.,
concurring in part and concurring in the judgment). As the Supreme Court
stated in [Adarand]{.underline}, \"\[t\]he unhappy persistence of both
the practice and the lingering effects of racial discrimination against
minority groups in this country is an unfortunate reality, and
government is not disqualified from acting in response to it.\" 515 U.S.
at 237.

To establish such a compelling interest, the governmental actor must
show \"\'a strong basis in evidence for its conclusion that remedial
action \[i\]s necessary.\'\" [Croson]{.underline}, 488 U.S. at 500
(quoting [Wygant v. Jackson Board of Educ.]{.underline}, 476 U.S. 267,
277 (1986)). It is not sufficient to rely on general societal
discrimination. [Croson]{.underline}, 488 U.S. at 499. Rather, the
government must show that it is remedying either its own discrimination,
or discrimination in the private sector in which the government has
become a \"passive participant.\" [Croson]{.underline}, 488 U.S. at 492
(plurality opinion); [id]{.underline}. at 519 (Kennedy, J., concurring
in part and concurring in the judgment). Under the passive participant
theory, a governmental actor must possess evidence that its own
practices are \"exacerbating a pattern of prior discrimination,\" and
must \"identify that discrimination, public or private, with some
specificity,\" to establish the factual predicate necessary for
race-conscious relief. [Croson]{.underline}, 488 U.S. at 504. In this
regard, an inference of discriminatory exclusion may arise \"when there
is a significant statistical disparity between the number of qualified
minority contractors willing and able to perform a particular service
and the number of such contractors actually engaged.\"
[Croson]{.underline}, 488 U.S. at 509 (plurality opinion);
[id]{.underline}. at 530 (Marshall, J., dissenting).

# The Research Questions Derived from the Legal Standards

The five market entry barrier studies released today explore a series of
research questions posed by this strict scrutiny standard. They have
been designed to examine both the diversity rationale and the remedial
rationale and to evaluate whether the evidence supports them. No single
study was designed to provide the definitive answer to this question.
Rather, the studies should be evaluated together, along with other
studies conducted in the field, to determine whether a compelling
interest exists.

To probe the diversity rationale, the Commission contracted for the
Content/Ownership Study. Specifically, this study was designed to
examine whether the evidence shows that there is a nexus between the
race or ethnicity of broadcast licensees and the content of the
programming their stations provide. This study initially sought to
measure the impact of station owners' gender as well, but the
researchers were unable to gather sufficient data for women-owned
stations. This study was based on survey data and used a sampling
methodology that matched minority-owned stations with majority-owned
stations without controlling for format. Additional research may be
required to investigate the impact of format and provide further
analysis of the impact of demographic and economic data.[^5] The study
also asks whether promoting a greater diversity of racial and ethnic
groups among owners creates a greater diversity of programming on the
airwaves. Given the First Amendment values behind the diversity
rationale, the study focuses on speech that courts have held to be at
the core of the First Amendment's protections: news and public affairs
programming. In this regard, the study also examines whether the race or
ethnicity of station owners affects the quantity of public affairs
programming and whether it impacts the likelihood of stations to cover
particular issues.

The remaining four studies all examine questions raised by the remedial
rationale. Here, the FCC must ask whether there has been discrimination
against minorities or women in the distribution of FCC licenses, either
directly by the FCC, or through the FCC's passive participation in
private acts of discrimination.

For the past fifty years, there have been four different methods by
which an applicant could obtain an FCC license: comparative hearings,
lotteries, auctions, and purchases on the secondary market. The FCC
issued broadcast licenses through the comparative hearing process from
the late 1940s through 1993, when the program was suspended in the wake
of the decision in [Bechtel v. FCC]{.underline}, 10 F.3d 875 (D.C. Cir.
1993).[^6] Under this process, singleton applications were granted
provided that the applicant met basic minimum qualifications. If,
however, the Commission received more than one application for a
particular station, it referred the matter for a comparative hearing
before an administrative law judge. In comparative hearings, the FCC
evaluated competing applications for broadcast licenses according to a
list of criteria set forth in a 1965 Policy Statement which sought to
carry out the Commission\'s goals of furthering the \"best practicable
service to the public\" and the \"maximum diffusion of control of the
media of mass communications.\"[^7] From the late 1970s through the end
of comparative hearings, the Commission awarded an enhancement to
applicants with ownership interests by minorities and women. Following
the suspension of comparative hearings, the Commission turned to
auctions for distribution of broadcast licenses. The first broadcast
auction was held in 1999.

As for licenses for wireless voice/data services, the FCC has issued
these through lotteries and auctions. In 1981, Congress authorized the
FCC to assign a broad range of licenses by lottery,[^8] and lotteries
were used for several years thereafter. Then in 1993, Congress sharply
restricted the FCC\'s authority to use lotteries and, instead, gave the
Commission authority to use auctions to award licenses for the rights to
use the radio spectrum.[^9] At present, auctions are the sole method for
obtaining commercial licenses -- broadcast or wireless -- directly from
the FCC. Finally, both broadcast and wireless licenses are also
available through purchases on the secondary market. When licensees seek
to sell or transfer their licenses, Section 310(d) of the Communications
Act requires that they seek the Commission\'s approval. 47 U.S.C. §
310(d). However, Section 310(d) only permits the FCC to determine
whether the proposed sale is acceptable, and prohibits the Commission
from considering whether any person other than the proposed new licensee
would better serve the public interest, convenience, and necessity.

One of the first research questions raised by the remedial rationale is
the extent, if any, to which minorities and women may have been
underrepresented in obtaining FCC licenses. As noted above, the Supreme
Court has recognized that an inference of discrimination may be drawn
\"when there is a significant statistical disparity between the number
of qualified minority contractors willing and able to perform a
particular service and the number of such contractors actually
engaged.\" [City of Richmond v. J.A. Croson Co.]{.underline}, 488 U.S.
469, 509 (1989) (plurality opinion); [id]{.underline}. at 530 (Marshall,
J., dissenting). Following this analysis in [Croson]{.underline}, the
lower federal courts have relied on a variety of \"disparity indices\"
and \"utilization ratios\" in assessing whether the government has shown
the necessary inference of discrimination.[^10] Such data may assist the
FCC to ascertain whether the evidence regarding participation by
minorities and women in the market for FCC licenses creates \"an
inference of discriminatory exclusion\" under [Croson]{.underline}.
[See]{.underline} 488 U.S. at 509.

Two of the studies examine these utilization issues. The Broadcast
Licensing Study calculates various measures of utilization for the
distribution of broadcast licenses in the comparative hearing process
and the Auction Utilization Study explores utilization measures for the
allocation of wireless licenses through auctions. Both of these studies
calculate and present multiple measures of utilization, which are
explained at length in the reports.

Two points, however, are important to note here. First, in adapting the
legal standards for utilization calculations to the FCC licensing
context, the studies have followed a conservative approach.
[Adarand]{.underline} and [Croson]{.underline} were both cases involving
government contracting. Thus, to determine whether minority owned firms
were underrepresented in obtaining government contracts, governments
were directed to examine the utilization of minority firms compared to
the total pool of qualified firms. [See]{.underline}
[Croson]{.underline}, 488 U.S. at 501-02. In government contracting,
this task is facilitated by the fact that most agencies maintain lists
of eligible and qualified contractors. Thus, they may evaluate how often
the minority and women owned firms win contracts compared to what one
might expect based upon the number of such firms in the pool of
qualified firms. In FCC licensing, however, there is no such list of
qualified potential licensees. Nor are there any requirements for
education or experience in order to acquire an FCC license. Thus, there
is no readily apparent potential pool of qualified bidders.

Further, in some previous studies seeking to document discrimination in
an industry, the researchers have attempted to expand the pool of
qualified applicants by including those persons who would have applied
had they not been barred by discrimination which prevented them from
reaching the application stage.[^11] For example, such persons may have
suffered discrimination in obtaining financing, and thus could not form
the business entity necessary to compete. \"But for\" discrimination
earlier in the process, these persons would also be included in the
applicant pool.

In contrast to such previous studies, in the utilization studies
released today, FCC staff directed that researchers follow a
conservative approach. Specifically, the pool of qualified bidders was
defined as those who actually applied for the licenses. Not only does
this approach exclude any discrimination prior to the application stage,
but unlike the contracting context, it does not include any pool of
qualified bidders who simply chose not to apply for a particular
license. In short, these studies attempt to adapt and apply the judicial
standards to the licensing context using a narrow definition of the pool
of minorities and women who may be "willing and able" under
[Croson]{.underline}.

In addition, it is important to note that utilization ratios are based
upon legal doctrine and the body of case law that has been developed in
the wake of the Supreme Court's decision in [Croson]{.underline}.
Therefore, FCC staff asked contractors to calculate these utilization
ratios to satisfy the applicable legal standards. Although utilization
ratios are the only calculations widely recognized by the courts, to
comport with prevailing econometric practices, the FCC has also asked
contractors to supplement these numbers with substantially more rigorous
and methodologically sophisticated econometric analysis. Specifically,
FCC staff asked contractors to conduct logistic regression analyses to
review the licensing process while controlling for relevant control
variables. The portion of the Broadcast Licensing Study entitled
"Logistic Regression Models of the Broadcast License Award Process for
Licenses Awarded by the FCC" presents such calculations for the award of
broadcast licenses. The Capital Markets and Auctions Regression Study
includes this type of analysis for the award of wireless licenses by
auction.

The second research question under the remedial rationale is whether
there is evidence that the FCC was unwittingly a passive participant in
private discrimination. As noted above, the Supreme Court in
[Croson]{.underline} observed that discrimination requiring remediation
could either be discrimination by the governmental actor or by its
\"passive complicity\" in the discrimination of others. Specifically,
the research questions presented ask whether the FCC has unwittingly
perpetuated patterns of private discrimination through its rules for
license allocation? In this regard, the Capital Markets and Auctions
Regression Study explores whether and to what extent discrimination in
capital markets may have affected applicants for FCC licenses. This
study is based on data from a survey of current broadcast licensees and
applicants for wireless licenses through FCC auctions. Unfortunately,
many survey respondents declined to answer questions regarding their
credit ratings, so the study was unable to control for credit ratings in
particular. However, the study controls for whether collateral and
personal guarantees were required, which reflect, to some extent, credit
worthiness. While there already are numerous studies of capital market
discrimination in various sectors of the economy, this Study examines
the experiences of people seeking financing in connection with their
attempts to acquire broadcast and wireless licenses. The study seeks to
determine whether firms owned by minorities and women experienced
greater difficulty in obtaining funds than did other firms, thereby
putting the women and minorities at a competitive disadvantage in
obtaining FCC licenses. [^12] It also examines whether minorities and
women have had to rely on different financial strategies in order to
obtain the financing they require. The findings of this study could then
assist the FCC in determining whether, for example, auctions have
perpetuated patterns of disadvantage created by discrimination in
capital markets. Moreover, the Auctions Regression portion of the study
explores whether when controlling for other relevant variables, race and
gender are statistically significant variables in predicting applicants'
success in auctions. This analysis will help determine whether
minorities and women have been disadvantaged in obtaining wireless
licenses through FCC auctions. A premise of this study is the hypothesis
that the failure of minorities and women to qualify as applicants is due
in large measure to discrimination in capital markets. An additional
premise is that capital market discrimination may have constrained the
bidding budgets of minorities and women who have qualified for auctions.

Another study relevant to the passive participation inquiry is the
Broadcast Licensing Study, which explores in detail the comparative
hearing process for distributing broadcast licenses. The logistic
regression portion of this study asks which applicant characteristics
were statistically significant in determining the likely license winner.
This analysis will help determine whether the FCC's stated criteria for
comparative hearings were truly determinative. Moreover, among the
numerous variables measured in this study are the applicants' assets,
liabilities, and the number of legal motions filed. These variables
permit the researchers to measure the impact of financial qualifications
and of applicants' access to, and fees spent on, attorneys. In this way,
the study can help determine whether comparative hearings may have
perpetuated patterns of disadvantage that may have been caused by
discrimination in capital markets. In addition, this study examines the
extent to which licenses were allocated according to the FCC's stated
rules, including the rules permitting credit for participation by
minorities and women. As noted above, from the late 1970s through the
end of comparative hearings in 1993, the FCC's stated policy was to
award a positive credit to applicants with some ownership or management
by minorities or women. The study examines the effectiveness of this
policy, and whether it may have been manipulated by non-minority
applicants who sought to benefit their applications without providing
meaningful participation for minorities or women. This analysis will
permit the FCC to evaluate whether the FCC perpetuated patterns of
disadvantage by condoning such actions.

Finally, the FCC's potential passive participation in private
discrimination is evaluated in the Historical Study. Through numerous
interviews, this Study examines the stories behind the numbers and
reviews the real life stories of real people who have sought FCC
licenses from 1950 to the present. Courts have recognized that this type
of evidence can be helpful in illustrating statistical findings, and
that in establishing a pattern of discrimination \"the combination of
convincing anecdotal and statistical evidence is potent.\" [Coral
Construction Co. v. King County]{.underline}, 941 F.2d 910, 919 (9th
Cir.1991). As the Supreme Court has noted, anecdotal evidence may "bring
the cold numbers convincingly to life.\" [International Brotherhood of
Teamsters v. United States]{.underline}, 431 U.S. 324, 339 (1977). The
Historical Study examines a variety of barriers to entry encountered by
minority- and women-owned firms, such as limited access to capital and
discrimination in broadcast advertising. The interviews covered a
cross-section of people by year, method of license acquisition, type of
license, type of FCC acquisition rules, race/ethnicity, gender, and size
of business. Further, the Study asks whether the FCC has exacerbated
barriers to entry for minorities and women through such means as the
lifting of ownership caps and underutilization of programs designed to
promote minority and female license ownership.

# Key Findings

As a Staff Executive Summary, this document does not take any position
on the conclusions of the studies or on whether the studies, when viewed
together, show that the Commission has a compelling interest to adopt
programs promoting license ownership by minorities and women. Each of
the studies provides only one piece of the evidence, and each of the
quantitative studies has been subject to some difficulties in data
gathering. However, when they are considered along with the body of
existing research and any further research that may be done in this
area, the studies should enable the Commission to begin to assess the
extent of market entry barriers facing applicants for FCC licenses, and
to discuss what actions the Commission may take to address this issue.

Each of the five studies released today contains its own introduction or
executive summary outlining its major findings. This Section lists
examples of those key findings from each study.

1.  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.

2.  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
    suggests 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.

3.  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 installments payment 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 as 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.

4.  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.

5.  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.

[^1]: In addition, the Commission has full authority and power to
    conduct an inquiry for "any question \[that\] may arise under any of
    the provisions of \[the\] Act" pursuant to Section 403 of the Act.

[^2]: One additional study that was also undertaken as part of this
    initiative was released in January, 1999. That study was When Being
    No. 1 Is Not Enough: the Impact of Advertising Practices On
    Minority-Owned & Minority-Formatted Broadcast Stations, prepared by
    the Civil Rights Forum on Communications Policy (hereafter the
    "Advertising Study"). This study provided substantial anecdotal
    evidence that advertisers often exclude radio stations serving
    minority audiences from ad placements and pay them less than other
    stations when they are included.

[^3]: If the evidence warrants the adoption of programs to promote
    ownership of FCC licenses by minorities and women, any such programs
    must also be narrowly tailored to further the particular compelling
    interest upon which the program is based. The studies only examine
    the compelling interest prong of the strict scrutiny test, because
    any narrow tailoring inquiry would be part of the process of
    developing a specific program.

[^4]: In addition, at least one federal appeals court has held that
    promoting diversity can be a compelling government interest. In
    [Wittmer v. Peters]{.underline}, 87 F.3d 916 (7th Cir. 1996), [cert.
    denied]{.underline}, 117 S. Ct. 949 (1997), the Seventh Circuit held
    that governments may have a compelling interest in ensuring
    diversity among law enforcement officers, specifically corrections
    officers. The Court found that it may be necessary to promote
    diversity to ensure the effectiveness of law enforcement, when a
    significant percent of the population under the authority of the law
    enforcement officers are themselves minorities.

[^5]: However, there are previous studies that provide evidence of a
    relationship between owner race and the content of programming.

[^6]: ^?^ In [Bechtel]{.underline}, the Court held that factors used in
    the comparative hearings process were \"arbitrary and capricious.\"
    10 F.3d at 887. Following that decision, the FCC suspended all
    further comparative hearings.

[^7]: ^?^ [See]{.underline} Policy Statement on Comparative Broadcast
    Hearings, 1 F.C.C.2d 393 (1965), modified, 2 F.C.C.2d 667 (1966).

[^8]: ^?^ Omnibus Budget Reconciliation Act of 1981, Pub. L. No. 97-35,
    95 Stat. 736-737, [amended]{.underline}, Communications Amendment
    Act of 1982, Pub. L. No. 97-259, § 115, 96 Stat. 1087, added Section
    309(i) to the Communications Act. Some broadcast licenses for low
    power television stations were also distributed by lottery.

[^9]: ^?^ As part of the Omnibus Budget Reconciliation Act of 1993, Pub.
    L. No. 103-66, § 6002, 107 Stat. 312, 387-392, Congress added
    Section 309(j) to the Communications Act of 1934. 47 U.S.C. §§ 151
    [et seq]{.underline}.

[^10]: ^?^ [See, e.g.,]{.underline} [Contractors Assoc. of Eastern Penn.
    Inc. v. City of Philadelphia]{.underline}, 6 F.3d 990, 1005, 1007
    (3d Cir. 1993) (relies on \"disparity index\" measuring percentage
    of minority contractor participation in city contracts divided by
    the percentage of minority contractor availability in Philadelphia
    area, to find inference of discrimination sufficient to defeat
    summary judgment); [Associated General Contractors of California,
    Inc. v. Coalition for Economic Equity]{.underline}, 950 F.2d 1401,
    1414-16 (9th Cir. 1991), [cert denied]{.underline}, 503 U.S. 985
    (1992) (relies upon comparison of percentage of available minority
    firms and percentage of contracts awarded to such firms to support
    inference of discrimination sufficient to defeat preliminary
    injunction against program). It is important to note that the
    existence of any statistical disparities would not be sufficient to
    demonstrate discrimination, and this data should not be taken as a
    suggestion that minorities and women should be represented among FCC
    licensees in any particular numbers.

[^11]: ^?^ [See, e.g.]{.underline}, Opportunity Denied: A Study of
    Racial and Sexual Discrimination Related to Government Contracting
    in New York State at Appendix A pages 32-41 (copy on file with the
    FCC\'s Office of Communications Business Opportunities); [see
    also]{.underline} [Contractors Ass\'n of Eastern Penn. v. City of
    Philadelphia]{.underline}, 6 F.3d 990, 1008 (3d Cir. 1993) (noting
    that the small number of firms owned by Hispanic or Asian-American
    persons \"itself may reflect barriers to entry caused in part by
    discrimination\" but requiring statistical evidence to support
    theory); [O\'Donnell Constr. Co. v. District of
    Columbia]{.underline}, 963 F.2d 420, 427 (D.C. Cir. 1992) (same). By
    contrast, other studies have explicitly avoided making such
    calculations, and have simply noted this fact. For example, in
    calculating utilization of minority firms in federal procurement,
    the Commerce Department chose this latter strategy and noted that
    when it calculated the relative capacity of minority and
    non-minority firms, \"to the extent that differences in size, age,
    or number of firms reflect discrimination against small,
    disadvantaged businesses, this analysis does not take direct account
    of such discrimination, which may be substantial.\" 63 Federal
    Record 35714, 35718.

[^12]: The Advertising Study, which was released in 1999, see supra note
    3, examined another type of private discrimination that may
    disadvantage minorities seeking FCC licenses. Specifically, it
    explored the extent to which discriminatory practices among
    advertisers have prevented minority-owned stations from earning the
    revenues they might otherwise be expected to obtain.