FEDERAL ADVISORY COMMITTEE

ON DIVERSITY FOR COMMUNICATIONS IN THE DIGITAL AGE

Fifth Meeting of the

Federal Advisory Committee on

Diversity for Communications in the Digital Age

December 10, 2004

2:00 P.M. to 4:00 P.M.

Held at

Florida Memorial College

Smith Conference Center

15800 Northwest 42nd Avenue

Miami, Florida

MEMBERS - ALPHABETICALLY

> Jenny Alonzo

Decker Anstrom

Andrew Barrett

Matthew Blank

Maria Brennan

Benita Fitzgerald-Mosley

Anthony Gee

Joan Gerberding

Steve Hillard

Pricilla Hill-Ardoin

David Honig

Jamie Howard

Julia Johnson

Ginger Lew

Alfred C. Liggins

Vonya McCann

Francisco Montero

Henry Rivera

Riley Temple

Lauren Tyler

Terdema Ussery

Alex Wallau

Kelvin Westbrook

Jim Winston

Roscoe Young

OTHER SPEAKERS

> Michael K. Powell, FCC Chairman
>
> Charles Davidson, Commissioner Florida PSC
>
> Kenneth Schisler, Chairman Maryland PSC
>
> Braulio Baez, Chairman Florida PSC
>
> Daryl Bassett, Commissioner Arkansas PSC
>
> Edward Hurley, Chairman Illinois Commerce Commission
>
> Linda Blair, Designated Federal Officer; Acting Chief, FCC OSP
>
> Dane Snowden, Chief, FCC CGB

\* \* \*

**\* \* \* P R O C E D I N G S \* \* \***

JULIA JOHNSON: Ladies and gentlemen, hello. If you could, we\'d like \--
I\'d like to take the opportunity to call the meeting to order. I guess
the time is now about 2:40, and I\'m Julia Johnson, Chair of the FACA.
And I\'d like to call the meeting to order and ask the federally
designated officer to indeed call roll.

Ms. Linda Blair (ROLL CALL AS FOLLOWS:)

LINDA BLAIR: Jenny Alonzo.

JENNY ALONZO: Here.

LINDA BLAIR: Decker Anstrom.

LINDA BLAIR: Andrew Barrett.

LINDA BLAIR: Matthew Blank.

UNKNOWN VOICE: I\'m here for Matthew Blank my name is Ray Gutierrez.

LINDA BLAIR: Maria Brennan.

LINDA BLAIR: Benita Fitzgerald-Mosley.

BENITA FITZGERALD-MOSLEY: Here.

LINDA BLAIR: Anthony Gee.

ANTHONY GEE: Here.

LINDA BLAIR: Joan Gerberding.

LINDA BLAIR: Steve Hillard.

STEVE HILLARD: Here.

LINDA BLAIR: Priscilla Hill-Ardoin.

YVETTE MOUTAN: Yvette Mouton here for Priscilla Hill-Ardoin.

(REPORTER REQUESTED CLARIFICATION)

YVETTE MOUTON: Yvette, Y-V-E-T-T-E, Mouton, M-O-U-T-O-N.

LINDA BLAIR: David Honig.

DAVID HONIG: Here.

LINDA BLAIR: Jamie Howard.

LINDA BLAIR: Julia Johnson.

JULIA JOHNSON: Here.

LINDA BLAIR: Ginger Lew.

GINGER LEW: Here.

LINDA BLAIR: Alfred Liggins.

LINDA BLAIR: Vonya McCann.

LINDA BLAIR: Frank Montero.

FRANK MONTERO: I\'m here by conference phone.

LINDA BLAIR: Thank you.

LINDA BLAIR: Henry Rivera.

HENRY RIVERA: Here.

LINDA BLAIR: Riley Temple.

LINDA BLAIR: Lauren Tyler.

LAUREN TYLER: Here.

LINDA BLAIR: Terdema Ussery.

LINDA BLAIR: Alex Wallau.

LINDA BLAIR: Kelvin Westbrook.

KELVIN WESTBROOK: Kelvin Westbrook, I\'m here.

LINDA BLAIR: Jim Winston.

LINDA BLAIR: And Roscoe Young.

MARVA JOHNSON: Marva Johnson on behalf of Roscoe Young.

JULIA JOHNSON: Thank you, Marva. I would like to start off by thanking
those that really made this possible. Chairman Powell, you have an
outstanding staff. Richard Lee, I thought I was a Control monster, but
he\'s got me beat and he has made this a flawless event. Richard, as
well as Jean Ann Collins, Meribeth McCarrick, Linda Blair---she\'s done
an extraordinary job of getting us, and keeping us, focused. So with
that, I wanted to thank you. And Stacey Meaders of the Net
Communications team who volunteers my time and her efforts towards this
venture.

(LAUGHTER)

JULIA JOHNSON: I wanted to thank them all. And Mr. Chairman, I wanted to
thank you again for your commitment in supporting the work of the FACA,
that you\'re actively involved and that you are here.

MICHAEL POWELL: Well, welcome, again. When we set out to start this
Committee, we knew had a noble purpose trying to find interesting ways
to bring about the American dream to a greater cross section of the
American population in one of the most innovative additions to the
Information Act. And it\'s easy to kick off one of these things with
bold and colorful rhetoric. You hold your breath, though, to see if you
selected a collection of people who have the commitment, the boldness,
the vision, the innovativeness, the aggressiveness, and the passion to
take the words and make them something real.

We do. And if I ever had any doubts about it, today erased every last
one. I have rarely seen a project committee, in such short order, start
to get a collection together of individuals and entrepreneurs, who have
much to say about the path you can take, the tools you can use, and the
resources that are available to try to change the world. And we saw that
this morning.

And we were inspired at lunch to continue that effort and that vision. I
have seen the recommendations that have been made previously; I\'ve seen
the recommendations that were here today. And every time I read them, I
smile because they are thoughtful, aggressive, bold, innovative, all the
things that we talked about, and give much food for thought, and much
effort.

Every member of this Committee should be commended, and I have to
comment that the smartest thing I have ever done \-- and I\'ve been
around for seven years in this job -- is to select Julie Johnson to
chair it, and tell her, you go for it, pull no \-- hold back nothing,
bring together the best and produce the best that we can.

And we are by no means close to finished. But if where we\'ve gotten so
far is any indication of whether we\'ll realize the promise that we\'ve
set out for ourselves, we\'re going to have a really good time. And I
would just leave with you a couple thoughts that are very, very
important: We have, for example, Henry Rivera over here, a former
colleague, FCC commissioner who chaired a Commission on diversity, and
made a very significant contribution to communications in America.

But he\'d probably back me up on this: We\'ve all sat at these things
before. We\'ve all been to conferences; we\'ve all been to panels,
we\'ve all talked about diversity; we\'ve all talked about trying to
help. Somehow the sun sets, and everybody goes home and it doesn\'t look
a lot different three years later when they do it again.

We can\'t let that happen. And so as we think of what we want to do, and
the things that we want to do, think hard about how to institutionalize
them, in a way that lives beyond any one person, any one collection of
people, any one institution, and even the Commission itself, ways that,
years from now, we will continue to see the footprints, and the
fingerprints of this effort continuing to be implemented and continuing
to be developed.

That\'s my greatest hope for what you\'re doing, that, no matter what
the recommendations are, the specifics will change over time. And the
challenge is: How do we make it stick in a way that we will be talking
about, will this meeting be taking place in ten and fifteen years from
now and be bearing fruit? That\'s the challenge. Because there are
plenty of people who get together to talk about these things.

Sadly, there are too few of them who make a lifelong contribution in the
way that truly changes minds, changes opportunities, and makes the world
a lot better place.

So I am extremely pleased with where we are; I love being a personal
partner and working hard with you to try to get where we want to go. And
thank you for allowing me to be here with you, and thank you for all
your work, and we really look forward to today\'s meeting. Thank you
very much.

(APPLAUSE)

JULIA JOHNSON: Thank you, Mr. Chairman. One other preliminary
announcement: Everyone\'s aware of who the members of the actual FACA
are. The ones sitting around this room, as well as those who are not
here and as well as the subject matter experts who are all listed on the
web site, except for one special group of subject matter experts.

At the recommendation of the Committee, we established a group of
subject matter experts made up of state regulators to help us,
particularly on some of the convergence issues, as well as issues that
cross different industry areas, many of which the state regulators may
indeed regulate both industries as questioned, while at the federal
level, the duties and responsibilities are separate.

Four of our experts are with us today. And towards the end of this
meeting, we\'ll have the opportunity to dialogue with them and several
of the Committee members, on opportunities with respect to new
technologies, specifically broadband, kind of keying off of the comments
that were made by Susan Story, CEO of Gulf Power, as well as looking at
career advancement opportunities and best practices, and ways in which
states can facilitate and partner with the FCC and other agencies in an
effort to make sure, at a minimum, that the message is communicated, and
that the platforms are open and available to all.

With that, let me introduce the Chairman of the Maryland Commission,
Chairman Schisler.

(APPLAUSE)

JULIA JOHNSON: Chairman of the Illinois Commission, Chairman Hurley.

(APPLAUSE)

JULIA JOHNSON: Chairman of the Florida Commission, Chairman Baez.

(APPLAUSE)

JULIA JOHNSON: Commissioner from the great state of Arkansas,
Commissioner Bassett.

(APPLAUSE)

LINDA BLAIR: Commissioner from the state of Florida and Chairman of the
PSC, Charles Davidson.

(APPLAUSE)

JULIA JOHNSON: And with that, I\'d like to turn our attention to our
Subcommittee reports, and we\'ll start with the financial issues report
and discussion. Ginger?

GINGER LEW: Thank you, Julia, Mr. Chairman. On behalf of our Chair
Commissioner Barrett and other members, we are pleased to provide a
summary of our activities over the past year.

The Financial Issues Subcommittee held a hearing on January 10th and
heard from entrepreneurs, lenders and venture capitalists, with regard
to issues about venture capital. Subsequently, members held
consultations with financial experts as well as additional entrepreneurs
to get a further and deeper understanding about some of the challenges
and issues that confront them.

On June 14, the Subcommittee again met and submitted a number of
recommendations to the full FACA. Those can be found on our web site,
the FACA web site. Today the Financial Issues Subcommittee has submitted
the following three resolutions which were adopted by the full
Committee.

The first urged the Commission to support the adoption of a small
business tax credit.

The second urged that \-- urged the Commission to reaffirm the distress
sale program with one modification: A review of the value-added and
genuineness of the assignee.

The third resolution dealt with incentive-based initiatives. The FACA
urged the Commission to grant waivers for a company that invests in and
incubates a small disadvantaged business, or sells assets to a small
disadvantaged business.

Today the Subcommittee will present two recommendations for the FACA to
consider.

The first deals with the Community Reinvestment Act. It is an initiative
to increase capital access to funds that invest in communications
companies led by diverse entrepreneurs.

The second resolution is a proposal for a foreign ownership waiver for
small disadvantaged businesses in order to increase capital.

That concludes our report.

JULIA JOHNSON: Thank you. One clarification, for purposes of the
reports, we would ask that, at the end of all reports, that we have one
motion that the Committee accept those reports. With that, Steve?

STEVE HILLARD: Ms. Chairman, and Mr. Chairman. First I want to say I\'m
honored to be here again, and I was late getting here after lunch. I was
humbled and honored to be there to hear the speakers today. That was
great.

I just want to give a brief report on the activities of the Transactions
Subcommittee where we\'ve been, where we\'re at \...

JULIA JOHNSON: Your mic.

STEVE HILLARD: On the activity of the Transactions Subcommittee, where
we\'ve been, where we\'re at today, and where we -- what the outlook for
2005 is.

Where we\'ve been is, I think the core of the activities of the
Subcommittee have been substantial due diligence and outreach through a
long list of interviews earlier in the year, which we reported, I
believe was in May or June, to the full Committee.

Some of the core observations of that were really that the importance
that was \-- the feedback we got of programs that have real practical
incentives, and economic advantages, among others, as being one of the
most important kinds of programs to make a real practical difference.

In that light, we recommended a number of specific recommendations with
general policy directions that were approved by the full Committee
earlier in the year.

They really came down to looking again to support within the limits of
this body, and the Commission itself, to support congressional enactment
of a tax-oriented incentive program with \-- with its legacy being the
tax certificate program, as being one that routinely, and almost to a
person \-- of all the interviews we did \-- suggested that was something
that continues to be worth focus and attention, notwithstanding the
budget and other issues. That is a worthy topic.

The second was to suggest to the Commission a program of protection
enhancement of the Spectrum auction rules that do have, if you will,
some economic coin.

Third was to identify ways that the Commission might look to do some --
in effect, create its own kind of economic and regulatory incentives
through what we called, at the time, \"diversity credits\" or "analysis"
program. And that is \-- the best one, that is clearly still under our
wing, if you will, for being fleshed out earlier this year to come back
with some pragmatic, and if you will, executable suggestions.

Today, we have the \-- the Subcommittee will make a proposal on some
particular aspects of merger review that we wanted to commend to the
Committee to consider recommending to the Commission.

In terms of 2005, there are four or five things that will be on our
agenda. We think, frankly, that this is probably the most important
year, having gone through a lot of work, getting ourselves grounded,
getting, I think, the Committee up and running, and feeling, Chairman
Powell, that we really do have some wind at our back to move forward
with some recommendations. And that\'s pretty exciting.

One of them, from our Committee standpoint, would be to complete a Best
Practices review of those aspects that are within our, sort of, ambit.
And one of those, I think, is in addition to some transactional matters.
It\'s really to look to the other part of our heading, which is
outreach, and both to the private and the public sector, to recognize
those matters that aren\'t simply created by regulation or statute, but
the important aspects of private sector, which some of the discussions
today were right on point.

Second is some thoughts on some of the existing programs with regard to
Spectrum auctions at a time when the Commission will approximately
double the amount of Spectrum that\'s available in the private sector,
or coming up on the horizon.

Third will be this seeking to develop and articulate to the Committee a
diversity credits program, and it will be assessed, and if worthy,
recommended to the Commission. And then last, and maybe, as I indicated
earlier, particularly important, is to pursue the concept of
congressional examination of possibly something that has some of the
aspects of the tax certificate program in a newer and better and
workable kind of way.

So that\'s a little bit of where we\'ve been, where we\'re at today, and
where we\'d like to go in the future.

MICHAEL POWELL: I just thought I\'d provide a little bit of an update,
with respect to one of your recommendations, which we\'ve all talked
about for years: the tax credit. I\'ve been encouraged that in the last
two or three weeks, I\'ve had a number of meetings with senators and
congressmen who seem to have a stronger and renewed interest in pursuing
this again, as we talked about, what are some of the things that we
might try to do in the next Congress that picks up in January. So I was
very encouraged by that. And we\'ve had some success in beginning to get
key leaders from both the House side and Senate side to start talking
about this to harmonize certain aspects of their differences in their
legislative approaches.

And so I just wanted to let you know, I mean, this has been a long time,
but there is some activity now again. People are up in the bullpen, and
they\'re talking to members about legislative strategy and ideas about
doing these things.

I wanted to give you a sense that they\'re \-- we\'re far from saying
it\'s moving, but we certainly still have interest, and we still intend
to put a lot behind that come January.

JULIA JOHNSON: Thank you, Mr. Chairman, and thank you, Steve, for the
report. Next we\'ll have New Technologies. Mr. Honig.

DAVID HONIG: Good afternoon. It is such a privilege to be here at this
school, which has so much history behind it, and which, in very recent
days, has done so much to be on the cutting edge of this field that we
all love so dearly.

The purpose of the New Technologies Subcommittee is to examine media,
telecommunications and information technologies relating to the
creation, processing, delivery and interactive response for content, and
make sure, to the extent that we can, that Commission rules don\'t
impose various entry \-- barriers to entry \-- or there are other
barriers to entry that would stand in the way of full access to
participation in those technologies by all Americans, including
minorities.

There are six voting members of the Subcommittee, Riley Temple, our
Chair, who could not be here today. Kelvin Westbrook who is seated to my
left; Anthony Gee seated to my right; Benita Fitzgerald Mosley who is
seated to my left; and Roscoe Young, who is represented by Marva
Johnson.

We have three subject matter experts: Susan Jin Davis, who isn\'t here.
And Stan Little \-- Stan, where are you? Are you here? And Ari
Fitzgerald, who could not be here. And Marva Johnson has done an
extraordinary amount of the work in the last year and a half that we\'ve
been in operation, and I would like to give her the microphone and ask
her to just describe what we\'ve done up to this point.

MARVA JOHNSON: And he actually didn\'t tell the truth. I didn\'t do the
work, I just got to report on it and help coordinate. Our team has been
very active, and I\'m very proud to work with a group of individuals who
committed themselves to the objectives of our Subcommittee, and put the
focus on getting these Subcommittees worked on. So it\'s a wonderful
opportunity for us all.

Just so you guys can go back in time with me, when we first met \-- I
think it was in January of last year, we said that we wanted to approach
our objectives in three phases. We wanted to focus in on low hanging
fruits, and then we wanted to move forward to efforts in phase 2 that
would create business opportunities for new technology, about things
that were optional, things that were voluntary, and that did not require
any regulation.

And then we\'d save phase 3 for things that might be harder to tackle as
issues. And one of those phase 3 issues that we would like to tackle is
education.

So, just in terms of a status report, we\'re not going to make any
recommendations today. In terms of where we are with our phase 1 and
phase 2 activities, we \-- back in the May meeting, we made a suggestion
for the development of a Supplier Diversity Council.

That Supplier Diversity Council is moving forward, and we\'re working
with the industry to establish a home permanently for that program, so
that we can insure that it\'s going to have some ongoing and continued
success.

We had a great session here today. We invited in six new technology
entrants to present to the FACA, as well as other industry participants,
in order to kick off our program.

We are excited about having wonderful support at the Executive Council
level. Julia has been wonderful in helping to bring to the table
companies like Cingular and MasTec, and to hear the commitment
reiterated again this afternoon I think gives us confidence that we\'re
going to be able to accomplish some of the objectives of this vital
diversity effort. Anthony Gee said earlier today, that he would like to
make at least ten \$500,000,000 companies. And then he changed it and
said he\'d like to see ten \$100,000,000 companies.

So we would like to see ten more MasTecs, we had a very fruitful and
productive meeting this morning and I know we\'re all excited about the
opportunities in the industry moving forward for this initiative. So
that was one of the things that our team helped to shape, and move
forward.

One of the things that David will talk about is our next steps as it
relates to that effort.

Also, we made several recommendations on Spectrum, and without getting
into all of them, because we were pretty busy, I did want to make note
of the recommendations that we made around the Spectrum licensing
Auction 58 rules. And the C block Auction 58 resolution that we proposed
earlier in May was actually accepted, and the Commission, when it issued
its decision to \-- not to change the rules and to continue to enforce
the existing designated entity rules, we believe that that\'s going to
create a lot of opportunity and the auctions will go forward in January.

So our Committee has been very busy.

DAVID HONIG: To conclude the report, first I\'d like to acknowledge an
achievement. This last October, I believe it was, September or October,
this Subcommittee passed out, and it was adopted by the full Committee,
a recommendation for the retention of the designated entity rules in
Auction 58.

The Commission, in fact, retained those rules. And in the Report and
Order adopting and retaining those rules, cited to the recommendation
that the Diversity Committee provided. So that\'s a win, and since --
and thank you, Mr. Chairman, and thank the Commissioners, please. Give
them a hand for actually delivering.

(APPLAUSE)

DAVID HONIG: We have a recommendation and the Commission actually adopts
it. That\'s a wonderful thing, and seldom seen in government, especially
at the warp speed that they acted.

In the future, the Supplier Diversity Program that we saw played out
this morning was germinated here. It, of course, will not continue to be
in operation, having been germinated and incubated here, but rather,
we\'ll find it a home in the non-profit sector.

There is a working group, the members of which are Julia Johnson,
Anthony Gee and Marva Johnson, that will be convening to think through
where the home should be, how it will sustain itself, and what \-- how
this should evolve in terms of providing good value to entrepreneurs,
and to large companies, and what industry segments it should be in. And
as Julia mentioned at lunch, those who are interested in participating
in that dialogue, please give Stacey Meaders your card.

In the future, this Subcommittee, among other things, may take a look at
a number of additional areas, this field being so vast. The question of
telephone penetration in the digital divide of the Universal Service
Fund, insular status and so forth, the DTV transition, making sure that
the poor are not left out and that there are entrepreneurial
opportunities, for small and minority and female-owned businesses.

And to build out WiFi towers and WiMax in large cities, whereas we
remember from the history of cable thirty years ago, if it\'s done
right, there could be some very substantial opportunities for minority
and female-owned businesses.

And the question of technological literacy, who teaches convergence so
the next generation of people, at schools, such as this, will be able to
be players from the day they graduate in this field.

That concludes our report.

JULIA JOHNSON: Thank you very much. And our final report, Jenny Alonzo.

JENNY ALONZO: Thank you very much, Julia, our Chair, and the Chairman,
for allowing us to be here. We ditto the sentiment of the other
Subcommittee chairs.

The Career Self Advancement Subcommittee, upon being formed last fall
embarked on seeking Best Practices from the telecommunications industry,
and outside the industry.

We have conducted most of our meetings via conference calls and e-mails.
Very charged e-mails, interesting e-mails. Loved them. But it\'s been a
great work in progress. So we thank you for the support, and in
particular thank the FCC staff for being so available and resourceful on
our behalf. So thank you.

Our first phase was to reach out to industry organizations and
foundations in seeking Best Practices that these entities might be able
to provide on behalf of their prospective industries.

We reached out to 30 trade organizations and four foundations. We got
six responses. Basically what we were told is that, you know, these
organizations are not staffed heavily, and therefore the resources
weren\'t there to fully understand what their prospective industries
were doing.

So at that point \-- and by the way, that was \-- a summary of that was
presented in the January 26 meeting, back earlier this year.

At that point the Committee decided to reach out to the companies
directly. And we decided that, in addition to companies in the
telecommunications sector, we were also going to reach out to private
entities outside the industry, in areas such as hospitality, banking, et
cetera, to understand what they had been doing in the areas of diversity
and, you know, be able to help us identify Best Practices.

We had been hearing great stories about companies such as the Verizons,
and the Fords, and et cetera, so we wanted to understand what was
happening there. At that point, phase 2, we went out to 33 corporations
in and outside the industry, and we got 18 responses. We were very
pleased with that. It was a very involved process. So the matter that 18
were able to participate is actually a great indication of how valuable
people felt this outreach was, and were willing to communicate and share
their best practices.

We presented a draft title of that -- a reach-out title, "Workplace
Diversity, a Global Necessity and an Ongoing Commitment," otherwise
known as Best Practices report. We summarized that on June 14, and
presented a report that I believe is still on the site, if I\'m not
mistaken, so it\'s available for anyone to read.

We also at that point presented a landscape for why the Committee needed
to look at the EEO-based career advancement strategies, in order, you
know, to help further the work in this area of career advancement and
development.

We had attempted to present some resolutions back then, but because some
of the Committee members were not as knowledgeable in the area of the
EEO, you know, rules, there was an uncomfortable level as to full
support of what was being presented.

So we decided that, in this next phase, we were going to really be
making some attempts at focusing that. Therefore, in the third phase, we
revisited the Best of the Best Practices.

The idea here is that the report was very extensive; there seemed to be
some overriding Best Practices that came out, regardless of the industry
being represented. And we have submitted that Best of the Best Practices
report for this meeting. So I believe handouts are around.

So today, we are going to walk you through what that is. We\'re also
recommending a web-based resource directory that we are recommending be
housed on the FACA web site, as a one-stop shop for corporations to be
able to identify Best Practices that they might be able to adopt, and
understand where the history of that best practice is, and perhaps, you
know, additional resources that they can obtain.

And finally today, we will be walking you through a revision to the EEO
rule on career advancement and recruitment, again, an effort to provide
a more attainable manner by which companies can help effect change in
this area.

The Committee has been absolutely great \-- one other thing, by the way,
that we need to vet as a Subcommittee, but was brought to my attention
by Linda Blair, is an initiative that the Homeland Security Committee,
NRIC, did back \-- earlier this year on behalf of the FACA on Best
Practices for Homeland Security. And what they did was provide some
resource materials; for instance, a DVD and a pamphlet, which, as
Subcommittee, we will be looking to do the same with our Best of the
Best, and provide some, hopefully, some in-depth material that can be
used at, you know, academic institutions and job fairs and things like
that. So we\'re very excited about that.

Thank you so much for putting that forth.

At this point, that ends my report.

Thank you.

JULIA JOHNSON: Thank you. Any questions?

Seeing none, is there a motion to accept the report?

HENRY RIVERA: Moved.

ANTHONY GEE: Second.

JULIA JOHNSON: In the interest of time, are there any objections? Seeing
none, they are approved. Presentation of resolutions and action items.
Again, Ginger Lew, if we could start with you, I believe you have a
couple resolutions to present.

GINGER LEW: On the Community Reinvestment Act, David Honig \[inaudible\]
will have more information on this.

In the June 14, Financial Subcommittee report, the Diversity Council
adopted a recommendation to increase access to capital by women and
minority entrepreneurs in both licensed and unlicensed Spectrum
opportunities.

The June report noted that banks that place money with private equity
funds that are licensed by the Small Business Administration through the
Small Business Investment Companies Act receive a community reinvestment
credit.

The Financial Issues Subcommittee proposed that the Commission direct
the FCC to work with the U.S. Treasury Department, and to \-- with the
SBA to expand the application of the Community Reinvestment Act grant to
encourage financial institutions, and place capital in private equity
funds led by women and minority fund managers. Subsequently we prepared
a white paper which is now before this full Committee.

Just for the record, I would like to just provide a little bit more
information about the CRA because I think it\'s very helpful in terms of
filling out our understanding of potential impact in terms of access to
capital.

Under the current SBIC program, it is our understanding that there are
fewer than six private equity funds that are licensed by SBA, that are
led by emerging fund managers. That\'s out of something like 200 plus --
247 funds. SBI fund managers manage \$37 billion. National Association
of Investment Companies' members manage \$65 billion. The National
Association of Investment Companies, the trade association for funds
managed by people of color, has \$5 billion under their management.

In 2003, the Kaufmann Foundation looked at the performance and rate of
returns for minority-led private equity funds. The period studied was a
15-year period that went up to the year 2000. Studies showed that the
NAIC funds performance, the IRR performance, compared favorably, if not
better than other majority-led funds.

For example, NAIC members, the rate of return was 23.9 percent. For the
S&P 500 it was 17 percent. For the private equity performance index,
which is prepared by Venture Economics and the National Venture Capital
Association, it was 20.2 percent. Of the fund \-- NAIC funds that were
surveyed, 75 percent invested in broadcast and communication
opportunities led by people of color.

So if the pool of funds under management by them continues to be
severely limited, we have a de facto situation where the entrepreneurs
themselves have limited access to capital.

For example, in 2000, NAIC members raised \$1.3 billion, of which only
10 percent came from banks. Therefore, the Financial Subcommittee was
seeking to find a way to increase the availability of money to private
equity funds led by people of color.

We believe that this would be a direct benefit, and increase the capital
available to communications firms led by women and people of color.
Accordingly, we submit the two resolutions that are before you today.

Madam Chairwoman, would you like me to go through the resolutions?
They\'re in the book.

JULIA JOHNSON: Yes, I think all of the members have the benefit of the
resolution? Do you want to present both? That would probably \...

DAVID HONIG: Sure. The second resolution for this Subcommittee is
entitled adoption of a declaratory ruling on section 310(b)(4) waivers.
And when you see 310(b)(4) your eyes might glaze over, but let me tell
you that this is huge, because this is a portion of the Communications
Act that\'s been \-- that the Commission can waive around, but has not
done so since once, since 1916. So we\'re talking about the first
substantive change in an 88-year-old rule.

This rule, the relevant text of which is printed on the back of the
recommendation, has a famous double negative, and you have to read it
together with another provision, so let me sum up what it means in
practice. In practice it means that, unless the Commission affirmatively
finds that grant of an application would serve the public interest,
where that application proposes more than one-quarter of the capital
stock of a company, an American licensee is going to be owned or
operated by aliens \-- this is for broadcast or telecom \-- it won\'t be
approved.

Now, there is \-- there\'s only one case, actually an after-the-fact
ruling of a Purple Cow, involving a broadcast station that\'s ever \--
where the Commission has ever approved over this 25 percent. However, in
the telecom field, many of us are familiar with the foreign
participation orders from 1997 under which there is now a procedure,
several screens being in place, which allows telecom investments in the
United States where there\'s a process to have reciprocity for
investments in the home countries of firms that want to invest in
telecom here. And that has worked \-- although it\'s complex \-- that
has worked reasonably well.

We thought that perhaps the time has come to carve out a fairly modest
waiver policy for broadcasting. And here\'s how this would work. There
would really be two components. One is that if you come from a country
which is a member of the WTO \-- that\'s the same as occurs on the
telecom side \-- and you pass some other screens relating to national
security, law enforcement, trade, foreign policy, and have a process for
reciprocity within five years, then your nationals could invest in U.S.
broadcast companies up to the level of 49 percent, no more than 25
percent, as now, could be voting.

Further, if your country is in NAFTA, that is, U.S. and Canada \-- well,
in this case, Canada and Mexico, or is a member of the Caribbean Basin
Initiative, you could have a 49 percent interest, all of which could be
voting. And think of the demographics of those countries, and you\'ll
see where this is going. This would be limited, however, to investments
in companies which are owned by socially and economically disadvantaged
businesses, the definition of which would be developed by the
Commission, using the record evolved in the Section 257 inquiry which
has just been briefed and concluded and in which the Commission now has
full record of the socially and economically disadvantaged definition
that is comparable to the one that was approved in the Tenth Circuit,
the *Adarand* case, and in *Concrete Works*. And it is a model which is
also found in Senator McCain\'s version of this tax certificate
replacement bill that we hope this year may finally come to be adopted.
Now, this is, as I mentioned, quite huge. The reason it\'s so huge is
that, first, it would provide an enormous source of potential capital
for disadvantaged broadcasters, particularly minorities, in this
country, from overseas, where they have well-established barriers of
access to capital here.

Further, because of the reciprocity provisions, it would open up foreign
broadcast markets to American-owned companies, and we think that that --
those are opportunities which are going to be especially attractive,
obviously, to U.S. minority-owned firms. Because of those benefits,
we\'re of the opinion that this could, as a practical matter, have an
impact comparable to the impact in magnitude that the tax certificate
policy had between \'78 and \'95, when it was responsible for 200
minority-owned broadcast stations.

The Commission, we are recommending, adopt a declaratory ruling to this
effect, because it\'s unlikely, of course, that people in business will
apply for the first waiver \-- well, I guess the second waiver in 88
years, investing time, money, effort, expertise, due diligence, to be
the first one out, unless the Commission has expressly said, well, we
invite this.

So the recommendation asked the Commission to issue a declaratory rule
saying that it would favorably entertain these kinds of applications.

And that concludes the proposal.

JULIA JOHNSON: Thank you. Any questions on either of the
recommendations? Question from the Chair.

MICHAEL POWELL: Ginger, the Community Reinvestment Act issue would be,
those are joint regulations by \...

GINGER LEW: The joint rules are promulgated by the Office of Commerce
Savings, the Federal Reserve, the Federal Home Bank. And I don\'t know
\-- there\'s one more in there.

MICHAEL POWELL: So this would be an effort on our part to get them to
modify; right?

GINGER LEW: It would be to initiate an interagency effort between
Treasury and SBA, because I believe the issue of \-- if the private
equity funds don\'t have capital available, then they in turn have a
very difficult time to make investments in the telecommunications
broadcast opportunities, and we have the historical data which
demonstrates, A, the lack of private equity funds available from banks
to non-SBIC funds.

Secondly, we have data from the Kaufmann Study which shows that those
funds that are led by people of color do, in fact, invest in broadcast
communication opportunities led by diverse entrepreneurs.

JULIA JOHNSON: Thank you. Any other questions?

Seeing none \--

LINDA BLAIR: Excuse me. We have one over here.

(SPEAKERPHONE DIFFICULTIES)

JULIA JOHNSON: Let\'s take these, at least for purposes of the vote,
we\'ll take the Community Investment Act recommendation first. Is there
a motion?

LAUREN TYLER: So moved.

JULIA JOHNSON: Second?

DAVID HONIG: Second.

JULIA JOHNSON: Any further discussion necessary? Seeing none, I think we
didn\'t \-- we can try to do this by voice vote. And see how well that
works, for purpose of efficiency.

All of those in favor signify by saying aye.

Opposed? Approved unanimously. Thank you.

The Foreign Ownership Rule Proposal.

HENRY RIVERA: I\'ll move.

KELVIN WESTBROOK: Second.

JULIA JOHNSON: Any further discussion? Seeing none, we may have some
votes of absentia in this particular case. But all in favor signify by
saying aye.

Opposed?

YVETTE MOUTON: Abstains.

JULIA JOHNSON: Thank you very much. Show it approved as well. Next,
Steve Hillard, we\'ll go into the transactional transparency outreach.

STEVE HILLARD: Thank you. The Transactions Subcommittee does have a
proposal for the full Diversity Advisory Committee. I\'ll give a short
introduction \--

I\'m sorry. Thank you.

The Transaction Subcommittee does have a recommendation. I\'ll give a
brief introduction, and maybe ask David Honig to carry on in a little
more detail in the proposal.

We decided to address, and begin addressing some matters in the domain
of mergers and acquisitions, because it\'s one of the dominant
transaction forms in the industry, and, as I think the Commission has
recognized previously, it does have a material effect on diversity.

So we have crafted \-- reviewed and crafted a proposal that has asked
for a policy statement by the Commission on how the divestiture remedies
are, if you will, fashioned, to create some practical opportunities to
enhance diversity. And with that, David, maybe you can carry on the
proposal.

DAVID HONIG: Sure. In the eyes-glazed-over category, again, 214(a) and
310(e) of the Act are the provisions as we know that \-- under which the
Commission has to approve transactions, including mergers.

There is a very careful balance the Commission has to strike; that is,
it cannot put its thumb on the scale and demand, without a very strong
showing, that a merger be structured in a particular way, or the
divestitures go to particular people, either in a general or granular
way.

However, there is a line of cases that has been established over the
years since 1978, under which the Commission has recognized that it\'s
in the public interest to have companies that are merging, and must spin
off properties, to find ways to spin those properties off in a manner
that promotes the public\'s interests, and in particular, in a manner
that fulfills the objectives of Section 257 to reduce market entry
barriers.

Recently in the Comcast AT&T order, which is cited in your materials,
the Commission held that the evaluation that it renders, when it passes
on a merger transaction, necessarily encompasses the, quote, \"Broad
aims of the Communications Act,\" unquote, which includes among other
things, preserving and enhancing competition in relevant markets,
insuring the diversity of voices made available to the public and
accelerating private sector deployment of advanced services.

Now, there is a line of cases, both involving broadcast and telecom,
encouraging or finding that these transactions, when there are spin offs
to small businesses, women and minorities, serve the public interest.

But what this resolution would do, is ask the Commission, in effect, to
memorialize this as a matter of policy, because once something is
memorialized by the Commission as a matter of policy, that then becomes
an additional reason, an additional inducement for companies to go off
on their own and consider, when they\'re structuring their transactions,
all other things equal, to consider doing this.

A couple of points that are critical: You\'ll see in the synopsis here
that it is not the intention of the Subcommittee that the proposal would
alter the circumstances under which divestitures are, or will be made, a
part of transactions submitted for Commission approval.

Further, there has been one minor modification made to the language that
you have before you, so what I\'d like to do is read the recommendation
as voted out and as amended too late for publication to include.

It reads now as follows. The first sentence is exactly as it appears
here: "In order to insure that a transaction is in the public interests
and it would promote diversity of ownership, divestiture remedies should
be fashioned to promote practical opportunities for small businesses,
women and minorities, to own and operate media and telecommunications
services."

And the following sentence is then added: \"For example, the Commission
should consider making it a general policy to extend the divestiture
deadlines where a company, when divesting assets has actively solicited
bids for spin-off properties from socially and economically
disadvantaged businesses, and it appears that the disadvantaged
businesses in the relevant industry face barriers to capital access, and
thus are likely to require additional time to secure financing.\"

This additional sentence tracks a couple of decisions that the
Commission has rendered in the last ten years, finding that barriers to
access to capital can be overcome by small and minority and female-owned
businesses, but sometimes that takes a bit more time, so that when a
company reaches out to, and makes an effort to work with these
companies, and it needs more time at the back end to close everything
out, that is a reasonable justification for an additional amount of time
to wrap up the spin-off work attendant to the merger.

So that concludes this recommendation.

JULIA JOHNSON: Thank you. Any questions? Is there a motion?

GINGER LEW: So moved.

JULIA JOHNSON: There\'s a motion. Any second?

JENNY ALONZO: Second. As amended.

JULIA JOHNSON: Any discussion as to the motion or the amendment? Seeing
none, all of those in favor signify by saying aye.

Opposed?

Show it approved unanimously.

Thank you, Steve.

And with that, it\'s our understanding that New Technologies, as we are
aware you were pretty busy on your recommendation of supplier diversity,
and again we thank MMTC for bringing that forward.

With that, I believe we can go to Career Advancement. And I know the
agenda reflects that we will start with the regulatory initiative, but
it\'s my understanding we\'ll start with the Best of Best Practices
report and then go to the on-line Diversity Resource Directory, and
finish with the regulatory industry for career advancement.

JENNY ALONZO: Thanks.

JULIA JOHNSON: Jenny Alonzo.

JENNY ALONZO: I want to thank the Committee members that have worked
really, really hard at getting this work done. Henry Rivera, Decker
Anstrom, Matt Blank, Maria Brennan, Benita Fitzgerald Mosley, Joan
Gerberding, Pricilla Hill-Ardoin, David Honig, and Vonya McCann.

We had the benefit of subject matter experts' involvement which has been
very, very helpful. Actively, Sylvia James from Holland & Knight, Dan
Mason, Jenell Trigg, from Leventhal Senter & Lerman.

And new to the Committee, but very committed \-- as a matter of fact,
she\'s here, that\'s how committed she is \-- is Debbie Smith from the
Walter Kaitz Foundation. So thank you very much for all of the help and
support.

At this point, let me walk you through \-- I\'m not going to read the
full report of the Best Practices. I will just take you through the top
line.

We decided, again, to dissect, or identify from the full report what was
the cream of the crop, basically. What out there has been mentioned
again and again and again as being a model, and an initiative that has
helped particular companies reach their diversity efforts.

You know, we heard during lunch from Ralph de la Vega, and he cited the
report, and I think it\'s wonderful because basically a lot of the
things that he mirrored -- or talked about is the kind of stuff that we
were hearing out there. So it\'s just great, great synergy. It was
perfect.

You know, everyone in America, everyone seems to be talking about
diversity today. There are widespread pronouncements about the financial
and social virtues of fostering a diverse work force, both in terms of
attracting and retaining talented employees, and of making the
organization\'s products more attractive to a broader group of potential
customers. His examples today are just completely in line with that
statement.

The push for diversity is certainly present in the communications
industry; however, as the very existence of the FCC\'s Advisory
Committee on Diversity for Communications in the Digital Age makes
clear, progress today has been uneven. The Subcommittee on Career
Advancement therefore has attempted to develop a list of the Best of the
Best Practices which we hope will provide useful guidance on a practical
level for increasing diversity of ownership and fostering career
advances by minorities and women in the communications industry.

This list was distilled from surveys sponsored by the Subcommittee of 18
responding companies' hiring retention promotion and procurement
practices, a review of the scholarly and business research studies and
the collective managerial experience of Subcommittee members.

The Best of the Best Practices identified for the Subcommittee include:
direct support from the CEO and top executives; direct communication for
diversity efforts throughout the organization; adopt specific goals and
objectives, and set measurable evaluation criteria; incorporate
diversity goals and objectives in the performance appraisal and
compensation processes; ad, provide training and guidance to management
and staff.

Those are the five, which again, are considered to be the Jewels of the
Nile. And the Committee would \-- is recommending that the FCC formally
adopt and recognize these as, you know, the Best of the Best; that in
working with the FCC, we\'re able to spread the message and get it out
there. And we talked about the mechanism that was put forth by doing a
DVD ROM and other resource collateral materials.

And you know, I hate using the word \"evangelize\" when we\'re talking
about \-- I\'m always told that\'s not a proper word to use in the world
of politics and stuff, but that\'s sort of what it really is, to get
folks to come on board and understand and accept the fact that these
initiatives are proven performers, really. That\'s what we\'re hearing.

So, you know, at this point, I would like to open it up to any
questions, rather than go into the specific details of each one. I think
they\'re very self-explanatory, you know, in their own right. So\...

JULIA JOHNSON: Any questions?

EDWARD HURLEY: Am I allowed?

JULIA JOHNSON: Certainly.

EDWARD HURLEY: I noticed on page 2 of your report \--

JULIA JOHNSON: I\'m sorry, Chairman Ed Hurley from Illinois \[Commerce
Commission\] is speaking.

EDWARD HURLEY: On page 2 of your report, you\'re talking about a CEO,
creating a new VP/Chief Diversity Officer. And I have found in my
experience that this seems to be a rather common position in large
corporations. The way I read it here, I get the impression that you had
seen it in your workplace file.

JENNY ALONZO: It\'s a rather common practice, but that\'s only been the
case in the past year or so.

EDWARD HURLEY: Oh, in the past year?

JENNY ALONZO: Yeah, I mean, very few companies had established, you
know, folks in charge of this area, to a large extent. I don\'t remember
specifically. I think out of the companies that we reached out to, maybe
out of the 33, maybe like five had done it prior to the past 18 months.

EDWARD HURLEY: I didn\'t realize it was quite that new. But the reason
it caught my eye was because recently I\'ve had three or four people
approach me about filling such positions in their organizations.

JENNY ALONZO: That\'s right. It is a very aggressive initiative right
now. And I think, folks, from the discussions we\'ve had, there has been
some apprehension, because, as I think it was Jose mentioned this
morning, that folks feel a little uncomfortable being cited as the
\"diversity niche,\" et cetera.

And so what it turns out is that a lot of people are realizing that that
is the best way of recruitment, in identifying the practices that allow
you to represent your consumer-based best.

EDWARD HURLEY: It\'s actually an area that I have given great thought
to, requiring at least someone spend time on that at the Commission in
Illinois itself, in other areas of the government, that an officer be
appointed to be looking at those particular issues.

JENNY ALONZO: That\'s great.

JULIA JOHNSON: Thank you. Any other questions.

JENNY ALONZO: No, at this point, I just want to mention that the way the
Subcommittee was able to attack these three areas that we\'re
recommending today was by identifying additional subcommittees, or
sub-subcommittees as we\'re calling them.

And I want to thank Ray Gutierrez, who is here representing Matt Blank,
and Vonya McCann, for leading the charge in identifying the Best of the
Best. So thank you very much.

JULIA JOHNSON: Thank you. With that, the on-line diversity resource
recommendations?

JENNY ALONZO: Yes. Obviously the Best of the Best Practice is a natural
for the resource, on-line resource directory. But the directory is
designed to do more than that. And on this particular initiative, I want
to thank Jenell Trigg who has one \-- who is one of our subject matter
experts, in leading the charge on this particular recommendation.

I am not going to just walk you through briefly on what this is,
exactly. I think most people know what we mean. But let me just, for the
record, walk you through it quickly.

Be it resolved that the Federal Advisory Committee On Diversity for
Communications in the Digital Age consistent with its mission to develop
proposals and tools that will help foster diversity in the
telecommunications industry, recommends that the Federal Communications
Commission consider the development of, in partnership with the FCC, an
on-line directory that is designed to help telecommunications companies
enhance recruitment, career advancement, and diversity efforts.

It is the Diversity Committee\'s desire that this valuable on-line
resource will be hosted on the FCC web site. The directory\'s
tentatively called, "FCC Diversity Resource Directory."

The objective is to provide a one-stop resource for the industry \-- for
industry executives, human resources personnel, and/or employees to go
to for assistance and recruitment efforts or in development of a program
that will enhance development of a company\'s human capital.

The directory will contain detailed information on the diversity efforts
implemented at various organizations, diversity studies performed,
employment research, trade association, and foundation programs and so
on. The information contained in the FACA Diversity Resource Directory
would be tools that companies can use to implement their EEO programs
and other regulatory requirements pertaining to employment in supplier
diversity as well as career advancement for all personnel.

The \-- we\'re working with the FCC staff to identify, how do we move
forward. There is a tremendous openness and reception to getting this
done. We want to target a launch of February 2005.

At this point, the Steering Committee for this initiative is going to be
reaching back to organizations and companies to identify materials to,
you know, populate the site.

You know, we need to determine criteria that is going to be put forth to
determine what gets on. It\'s not just going to be a, you know, a dump,
whatever, I think it\'s okay, kind of a place.

We will have all materials vetted through the Career Advancement
Committee before they are put forth to the FCC, and we will do that on a
monthly basis. We will review things that are sent to us, and then we
will convene with FCC staffers to determine, you know, what gets placed,
has it met the criteria, and if it does, then how soon can it be done.

So we need to establish the mechanism and the process to make this as
easy as possible for all of us, including, obviously, the FCC staff.

So at this point, I would like to recommend that the Commission accept
this proposal.

JULIA JOHNSON: Thank you very much. I think we\'re now prepared for the
vote. We\'ll go back to the first recommendation, Best of the Best
Practices report.

Is there a motion?

STEVE HILLARD: Motion.

JULIA JOHNSON: Second?

MARVA JOHNSON: Second.

JULIA JOHNSON: Any discussion? All in favor say aye.

Opposed? Accepted unanimously.

On line Diversity Resource Directory recommendation. Is there a motion?

STEVE HILLARD: Motion.

JULIA JOHNSON: Second?

MARVA JOHNSON: Second.

JULIA JOHNSON: Discussion? Question?

KELVIN WESTBROOK: I have one question. From a timing standpoint, after
this Advisory Committee is no longer in existence, would it be your
position that the FCC staff, or some other organization would take
responsibility for screening the information before it gets posted to
the web site? Could you comment on that a little bit?

JENNY ALONZO: Sure. And that is one of the things that we need to
determine, and that, you know, the Steering Committee is going to be
taking up in the next couple of weeks, you know, what is the viability,
and you know, the support process, long-term, for this resource.

There\'s a lot \-- you know, school of thought that a lot of these
organizations have staffers that will be charged with getting that
information to the FCC once we\'re no longer in existence. But again, we
have to address that. We have to look into what kind of work does that
create for FCC staffers, if they\'re now, then, going to have to be the
first filter for that process. So it is one of the things that we will
be looking at.

JULIA JOHNSON: Other questions?

MARVA JOHNSON: I have a comment, not a question. I just wanted to make
sure that we take note that we should work with you \--

JULIA JOHNSON: I can\'t hear you. I\'m sorry.

MARVA JOHNSON: I\'m sorry. I\'ll try to speak loud. It\'s a comment, not
a question. I wanted to say that we should work together because one of
the things we looked at is opportunities for there to be more -- a
resource center within the FCC that would create opportunities for
diverse companies to look for other diverse companies to do research, to
gather critical information, and navigate the regulatory process. And I
think that we can link some of the same concepts and your concept in the
database.

JULIA JOHNSON: Excellent. Any other questions or comments? Seeing none,
all of those in favor signify by saying aye.

Opposed?

This is approved unanimously.

And finally, the Regulatory Initiative for Career Advancement. Is there
a motion?

JENNY ALONZO: That one, we hadn\'t presented yet.

JULIA JOHNSON: Did you need to have the content approved or add
something -- the concept approved or \--

DAVID HONIG: There\'s actually a written recommendation in the package.

JULIA JOHNSON: You\'re saying you want to go ahead and tee it up. I\'m
sorry, okay.

JENNY ALONZO: And at this point I\'d like to pass the microphone to
David who, along with Henry, and I believe Decker, led the charge in
looking at the EEO area for us.

Thank you.

DAVID HONIG: First I think that the \-- I want to commend all of the
members of this Subcommittee who, I think, in a very careful way, made
sure that the recommendations and the total body of work produced
struck, I think, just the right balance, recognizing that some of what
needs to be done in this area can be done voluntarily by companies, will
be done voluntarily by companies, and some, historically, needs to be
done through regulation.

We already have a regulatory structure in place. The example that you
see before you actually is drawn from the broadcast rules, but there are
similar rules for other technologies. And it\'s this template with which
we begin.

There was an extensive ruling, and actually a couple of them over the
last several years, relating to what a broadcast licensee, cable or
MVPDM \[MVPD\] \-- I\'m going to get the initials wrong \-- is expected
to do during the term of its license, by way of outreach.

Those rules were broadcast, or memorialized in Section 73.2080 of the
rules, and subsection (c) contains essentially a menu that was worked up
through public comment, and this menu, Outreach Prong 3, contains six
different initiatives that a company could hypothetically undertake,
examples being \-- they\'re aimed mostly at outreach \-- examples being
having job fairs, or participating in them, or developing relationships
with educational institutions, and coming to speak to students and so
forth.

And the idea is that if you -- if you\'re a broadcaster, if you have ten
or more fulltime employees, you would show that you performed four of
those sixteen \-- you choose the four \-- and if you have fewer than ten
fulltime employees, you would show that you performed two, and you pick
which two.

That rule has gone into effect, and it\'s not a final order, but it has
generated essentially no controversy. It is a race and gender-neutral
policy, which seems to be working reasonably well. I want to especially
take note of Deepak Massand, who gave a presentation this morning. One
of the technologies he spoke of actually is aimed at assisting
broadcasters to show compliance with this provision. One difficulty, as
we got into this, and studied it with our experts and people that our
Committee has interviewed over the last year, is that, especially in
broadcasting, this industry is not growing in terms of the number of
employees. In fact, it\'s shrinking.

And because of consolidation, and the fact that no \-- very few new
stations, relatively, are coming on line, we realized that outreach
alone was not a realistic, or sufficient strategy to insure diversity in
this industry. And that, therefore, we needed to also encourage the
Commission to tweak this rule to some extent, and shift emphasis to also
include career development, to be sure that those who are in the
industry now won\'t be in a position of stagnation, and to be sure that
those who are not in the industry and might wish to choose to major in
it in school, or work in it later, will have the comfort of knowing that
their advancement in the industry will be commensurate with their
skills, ingenuity and initiative.

Consequently, we developed, and actually did this in the form of a red
line, which is what this basically is, of the existing rule, in which,
what we\'ve done is basically create two menus.

One menu would be the one devoted to outreach, consisting of 13 of the
16 items that we had \-- that we now have \-- the 13 that are related
specifically to outreach. Three that happen to be related to career
advancement would be moved into a new career prong containing seven
items which are also among these Best of the Best initiatives.

And I\'ll read them briefly. One is to promote \-- participate in
in-service training and professional development programs; to have a
formal mentoring program; to train management and employees on
preventing discrimination; to have a corporate level Diversity
Committee; to cooperate with employment affinity \-- employee affinity
groups in your company; to link incumbent diversity goals to
compensation and bonuses to the extent permitted by law; and to
establish and assess retention and termination criteria.

Basically, in terms of shifting efforts, companies of ten or more
employees would choose three of the first 13, devoted just to outreach,
and three of these seven devoted to career advancement. And they could
choose which ones. If you are a small company, and too small, perhaps,
to have a formal outreach program, you could -- you would still do just
two activities, but they could be drawn from either list.

So as before, this would be a race and gender-neutral initiative, and
it\'s proposed to the Commission for consideration, and they would need
to do a rule-making, of course, and it\'s proposed as something that the
Commission could put out in a notice of proposed rule-making.

And that concludes the recommendation.

JULIA JOHNSON: Any questions?

Is there a motion?

STEVE HILLARD: Motion.

JULIA JOHNSON: A second?

JENNY ALONZO: Second.

JULIA JOHNSON: Any further discussion? Seeing none, all those in favor
signify by saying aye.

Opposed?

Show it approved, again, unanimously.

Thank you for your presentation.

With that, Committee members, that concludes our formal presentation of
the resolution and action items. I want to congratulate each of you on
your work.

We also, though, have a public comment period, that we\'d like to go
ahead and initiate. If there are any members of the public that would
like to provide comments, please come forward to the microphone, and/or,
actually \-- there are some people, perhaps, participating by phone.

Any members present today, to provide public comments?

If you could please, announce yourself, that would be helpful.

UNKNOWN VOICE: Chairwoman Johnson, Chairman Powell, Committee members,
my name is Anthony Lepor \[phonetic\]. I represent broadcasters
throughout the country including here in South Florida, some of whom are
with me today.

And on behalf of these minority-owned broadcasters, we\'d like to
applaud the efforts to date of the Committee, and encourage the
Commission to take its recommendations to heart, and urge the Committee
to continue its efforts to foster greater diversity in the industry.

Any efforts, including those posed today, that will enhance the ability
of small broadcasters, small communication companies to not only
survive, but grow in this environment, is well appreciated, believe me.

Being a voice in the wilderness, we applaud the efforts and we like to
know that there are people out there working towards helping us all
survive and to grow in this industry.

And so we would just like to take this opportunity to let you know your
efforts are appreciated. You may not hear that a lot, but we are out
there and we do appreciate the work that you do.

JULIA JOHNSON: Thank you very much for your comments and your
participation.

UNKNOWN VOICE: Is there anyone on the telephone that has any questions
or comments?

MICHAEL POWELL: Well, I guess I can be a member of the public.

(LAUGHTER)

MICHAEL POWELL: I just want to highlight a couple of things that I heard
that would give more food for thought, that I think Jenny mentioned.
DVDs that we use in other areas, this has become an enormously
successful way to popularize Best Practices.

We have found that people develop them, and then there\'s real
difficulty in any kind of implementation.

I would really encourage us to team up with the idea of, we usually do
this with a well-done DVD, supporting written materials, glossy cover.
Sometimes we\'re able to send, depending on the situation, we send them
out to companies. We could make them part of materials available in
order to encourage compliance with EEO.

So I think that\'s a very important place to take \-- next to take Best
Practices, which is to talk very seriously about how to implement them.

And one of the reasons we carefully select members for the FACA is that
you all work for companies that do this, and you\'re challenged to go
home and get it done there first. And normally that kind of seeding
really starts to take off from there, so I\'d really encourage you to do
that.

We only glanced over it, but I really \-- I think David mentioned it,
and Marva, about education, and we were talking about this last night. I
think this is enormously critical deficit in the country as a whole.

If you walked into the average classroom today, you know, they may have
a computer, but the idea that there is really a technical literacy
curriculum, or focus on how to try to bring kids at a younger age,
everything from elementary to high school, into a better understanding
of the world that they\'re certainly very effective consumers of, but
whether they\'re developing the skills of literacy and opportunity, I
think we\'re not doing that great as a country.

The FCC itself has started to want to try to make a contribution. We
initiated a web site this year called \"Kid Zone.\" And I would
encourage you to look at it. It\'s really an attempt to have a space on
the FCC site just for kids to explore communications and technology.

If you walk into a school, as I\'ve done, and take a quiz, you\'ll be
shocked, when every 5th grade -- practically three-fourths of the 5th
graders will raise their hand and say they own a cell phone.

All of them will say they own an X-Box. Most of them have a television.
Most of them have all of this stuff. And you realize they\'re very
familiar with it, as a product. And they\'re actually very curious
about, well, how does the cell phone work? And why does it work? And
what\'s really behind the television set? And what\'s really behind the
Internet?

And we tried to build a little site to be educational. And then we
popped -- we sent out materials to schools and teachers throughout the
country, in an effort to try to stimulate the idea of an educational
curriculum.

And so I would urge the Committee, if it says \"education,\" to think
about ways that we could engage organizations who are probably better at
this, but to let them know about our interests in trying to insert in
the national debate about education, the importance of technical
literacy and growth opportunities for people, you know, kids who are
going to be really the cornerstone of the Information Age.

I will tell you, we talked about this at dinner last night, some of the
most senior CEOs of some of the most powerful tech companies in this
country are terrified of this problem. They are very concerned that
America is not doing a good job for educational competitiveness for the
Information Age. They start talking about outsourcing. They\'re very
concerned that we are not replenishing at the pace the revolution is
moving with our own labor force which has an opportunity.

So if we\'re going to talk about an opportunity, there\'s no opportunity
if we\'re not helping on the educational side of getting people
positioned for Information Age careers.

And so there are things like the Bill and Melinda Gates Foundation that
we talked about last night, that has a whole program about minority
scholarships and technology education. We need to know more about that.
What is their identified need? How are they doing it? Why do you think
it\'s important?

So like Jenny\'s good work on Best Practices, it would be interesting if
somebody could do Best Practices, instead of a compilation of best
efforts in technical education, or commitment to minority and female
opportunity, and maybe we could either see ideas there, or at least
capture comprehensively for policy makers what\'s going on out there in
the United States, and try to make a bigger debate on it to the
legislature and to the President and to others, who I think ultimately
have to bear that responsibility for the country.

So I just really wanted to, I think, gloss on education, but I think
it\'s really important, and I want to thank for you bringing it up.

JULIA JOHNSON: Any other comments?

LAUREN TYLER: Mr. Chairman, although I have experience in investing in
media, at the end of every meeting you bring up the children. And I am
the mother of five kids and I hear this.

And I\'m wondering, as part of this Committee, we should have another
subcommittee dealing with children, because this is something that you
feel so passionate about, this is your committee, we, I think, agree
with you that it\'s very important, so I want you to consider that. I am
happy to serve on it. But we have the five groups, or three groups,
however you want to cut it.

But I think you\'re hitting on a very, very important point that I think
all the parents, as well as non-parents in this room, really agree with
you. So just bringing up that for your consideration.

MICHAEL POWELL: I think that\'s a good idea. Let me tell you a funny
story. I take trips a lot of places to see technology. One of the most
famous technical labs ever was Xerox Park out in Silicon Valley where
really the original mouse was created, the foundation for Apple
McIntosh. And a lot of breakthroughs.

And I was shocked to see in a room, there were nothing but 12 year olds
in there, and they were all over the place. And I asked what they were
doing, and they were very passionately convinced of the idea that really
understanding the way the human brain has changed and the way consumers
are interacting, you have to actually watch these children. They do not
use technology in the same way as adults do. They are passionately
multi-taskers in a way that we\'re not -- we think we\'re multi-taskers
when we have two windows open in Windows. They would laugh at that. They
have 12 things going simultaneously and seem to be in tune with all of
them.

They\'re incredibly dynamic and special thinkers. I\'m convinced the
education system keeps pounding on them in a linear way, and their minds
are multimedia, multidimensional, and I think that the system is just
starting to mis-target kids.

I\'m not sure how we turned that into this mission, but I do believe, if
I were a business, and you asked me to find out where your market\'s
going to be, you better go hang out with 12 year olds playing Halo 2 on
a video game for about an hour. And you\'ll get a pretty good idea.

So if it\'s part of your final report or recommendation the idea of how
can we bring them into this question; how can we use them as insights,
and list them as what needs to happen next, I would certainly applaud
it.

JULIA JOHNSON: Mr. Honig.

DAVID HONIG: Along those lines, since we are here convening, and we
don\'t see each other this way very often, this might be a good time to
consider whether the Committee could in fact create a new subcommittee
that is dedicated to this question of technical \-- technological
literacy, or proceed through a committee of the whole to do that, so
that we\'ll have a charge for the next few months to begin to take this
up.

I think that\'s an excellent idea, and it\'s something that perhaps we
could consider a motion to that effect now.

JULIA JOHNSON: Certainly. And as you\'ve raised the issue, I guess the
options would be a special, additional Subcommittee, or a committee as a
whole, that, kind of, each committee has a subtopic on education?

What would be the pleasure, or the conversation surrounding either
option?

Let\'s start with the standalone subcommittee \-- or whichever one you
like. We\'ll start with the most favorable option.

JENNY ALONZO: From my perspective, I mean, if Lauren chairs a standalone
subcommittee, I would \-- you can count on me to participate on that,
because kids \-- that\'s my passion.

JULIA JOHNSON: Do you think it deserves a new special focus that we do
it as a special subcommittee and bring those members interested into
that subcommittee?

JENNY ALONZO: I think so, because I think from a career advancement
perspective, our plight would probably extend to the college level. I
don\'t think that we would be going at, you know, a granular level that
you\'re looking to hit. So I don\'t know if by having it as a, you know,
a subset of the other committees, if it\'s going to get the same level
of attention.

JULIA JOHNSON: I guess, let me ask one legal question of our designated
federal officer: How would we go about, or can we \-- or what would the
process be if we decided we wanted an additional subcommittee?

LINDA BLAIR: It may be that we have to amend the charter, which
unfortunately I only have the first page of. I think the subcommittees
are set forth in the charter, if anybody has a copy of that, it would be
great to check. If that\'s the case, I believe the Chairman is the one
who makes that amendment, and we can certainly \-- let\'s see if that\'s
the case. (Reading)

What we have here is we have a listing of missions of the \-- of the
objectives. And one of those objectives is the impact of newly emerging
technologies on diversity issues. I don\'t know if we can put it into
\-- I think we can work this through.

MICHAEL POWELL: No question we can do it some way. What we might suggest
is let us go back and make sure we understand the parameters of what you
have to do formally.

It might be easier to just roll it into something, and that doesn\'t
implicate a change, or we\'ll find out exactly the right way to change.

I also think you may want a discussion about what kind of \-- what the
scope of what you\'re trying to do, and that answers the question of
where it goes. Because the conversation last night was more than the fun
about kids on Ed\'s spot. It was about incubator programs and
universities that promote new entrepreneurial activity like at Stanford
and MIT, there was a discussion about whether HBCs could be brought into
some of those programs in a mentor relationship.

So, you know, from what I\'ve heard, we might want some time thinking
about the scope, and then maybe the organization sort of follows. But
that\'s just a suggestion.

LINDA BLAIR: Actually, just looking at the language, it says subject to
the approval of the Chairman of the Commission, the Chair may establish
for specific purpose a Subcommittee, and it sounds that in a general way
\--

MICHAEL POWELL: Domine, domine, do whatever you want. (Indicating
blessing)

(LAUGHTER)

JULIA JOHNSON: With that, I\'ll take it as my responsibility to work
with the small core group to come up with some parameters and scopes,
and then we\'ll present that via e-mail process for the group\'s
consideration.

Any final closing remarks?

Seeing none, let me go over a couple matters before we adjourn. Once we
adjourn, several of our state subject matter experts will still be here,
and Committee members, many of whom stated that they would like to sit
down and meet and do a short brainstorming session on how this
partnership might work.

Jenny Alonzo with Career Advancement, Dave Honig with Marva Johnson,
everyone is welcome to join us. It\'s getting late in the hour. We\'re
going to try to meet in one of the corners. We have a special dedicated
room, but I know some people have planes to catch. So we\'ll do that
immediately following adjournment.

As well, for those of you who will be staying overnight, there\'s a
group that will be meeting at 6:30 in the lobby for dinner. If you\'re
interested, please let David Honig know.

And finally, I wanted to again finish by thanking the FCC and the staff
\-- I forgot our Special Agent Dane Snowden, for -- we call him \"The
Peace Keeper\" so thank you for your help and efforts.

And a special, special thanks to Stacey Meaders. She has been the
dedicated source from my office, and boy, is she dedicated.

(APPLAUSE)

JULIA JOHNSON: Thank you very much, and with that, we\'re adjourned.

(ADJOURNMENT OF MEETING AT 4:14 P.M., DECEMBER 10, 2004)

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