FEDERAL COMMUNICATIONS COMMISSION

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THE ADVISORY COMMITTEE ON DIVERSITY FOR

COMMUNICATIONS IN THE DIGITAL AGE

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MONDAY

JUNE 14, 2004

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2:00 p.m. to 5:00 p.m.

Federal Communications Commission

445 12^th^ Street, SW

Commission Meeting Room (TW-C305)

Washington, DC

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This transcript was produced from a recording provided by the Federal
Communications Commission.

P-R-O-C-E-E-D-I-N-G-S

(10:20 a.m.)

Ms. Johnson: Good afternoon. I'm Julia Johnson, and I wanted to call
this meeting to order today and start off by thanking the FCC, Chairman
Powell, the Commission and the staff for bringing us here again today.
And, more specifically, the men and women that make up our committee. I
thought about the diversity of opinion, thought, ideas, suggestion, and
what I would call this esteemed body, and I came up with "Motley Crew".
And I say that because Mr. Chairman and commission, you've put together
a group of people that think very differently within sub-committees,
within the organization, but it has made us stronger, it has allowed us
to put forth our first set of recommendations, suggestions,
implementation items that we are hopeful that will be useful to you, Mr.
Chairman, and the commission as you move forward. And, more importantly,
it's a first step for us. I had several members already call me saying,
"What next, when do we get to do step 2; I'm not satisfied with step 1".
And I think that's the kind of individual and the kind of organization
that you wanted, and it's one that we truly appreciate, from the members
of our committee to our subject matter experts. I know Ari and Janelle
and Marva and there's Stacey Meaders, there's several individuals in the
audience who will all be participating in today's meeting, as we move
this forward. And I wanted to just quickly overview the agenda and then
turn it over to you Mr. Chair for remarks and guidance and to the
Commission also. We've tried our best to communicate with the offices.
We respect and look to you all for your comments and your guidance as we
move forward. But we thought we'd have our subject matter chairs after
comments from the commissioners provide sub-committee reports just to
bring the world up to date with respect to what has happened and
transpired over the last several months. From there, after we've passed
upon their official reports, and entertained questions between the
members, we will go into presentations of resolutions and items that
require official vote of our membership. Towards the end, we will then
take comments from the public and questions for the last wrap up
sessions for today. And, with that, if there are no other preliminaries
as it relates to the attendance, that's being noted, and taken care of,
and Jane, did you \--

Ms. Howard: I just want to mention that Commissioner Copps had wanted to
be here for the beginning, and he has a scheduling conflict, and he will
be joining us later on.

Ms. Johnson: Any other preliminary? Jane, Maureen and her group, they've
been, as you all know, stars and just tremendously valuable to this
process and keeping us on track. Thank you Jane, Maureen.

Mr. Powell: I think my first order of business will be to bring a
copyright trademark infringement against Julia, because Motley Crew we
already used for the commission, so. You can't have it. Really, I always
feel it's redundant but important to just welcome you and express my
deep gratitude for your commitment to this cause and to this public
service effort. It really is important that you understand, that we
understand that your work is a lot more than coming to this meeting,
which is every several months, but that it goes on day in and day out by
phone call, by e-mail, by instant message, and, you know, we keep track
of that and are very encouraged. I'm as encouraged about the commitment
of this set of individuals as I am by almost any Federal Advisory
Committee I've been associated with. Not only the quality of talent and
range represented by this group, but it's unwavering commitment to spend
extra-curricular time, if you will, from your day jobs on such an
important subject that's difficult to find workable real world solutions
to is deeply noted, deeply appreciated, and we thank you.

It seems to me I grow ever more heartened as this group lengthens in the
time it has spent on these issues as it starts to bear some fruit. I
look forward to the sub-committee reports, but just I'm already
enormously pleased to begin to see product. We talked about this when we
first got together, the importance of this being more than discussion.
That it begin to drive toward workable solutions and real product. And
I'm just enormously pleased to see the beginnings, just the beginnings
of that in the form of Best Practices and Guidelines that we'll hear
some more about, I assume, today and many of the other recommendations
that have been going forward.

We know it's easier to articulate the importance of this issue than it
is to work through the complexities of having had to bring it into
reality, and I think your expertise and resources and thinking have led
to that. Indeed, speaking of product, more than words, I do want to make
you aware of an announcement. Tomorrow, we are going to issue a public
notice by the media bureau to comment on ways to further the Section 257
Mandate, and to build on our earlier studies, often referred to as the
Adoran Studies. Here's a copy of the press release that we'll be
releasing probably in the morning that seeks comments specifically on
constitutionally permissible ways to advance diversity with specific
consideration of how to reconcile the constitutional jurisprudence of
not only Adoran and Crosen, but to take into account the recent Supreme
Court rulings in *Gruder* and *Gratz* in an effort to find a middle
ground that will advance what the Commission can permissibly do and help
empower you all as we develop further rule makings on how to advance our
diversity interests and our opportunity agenda. I would be remiss if I
didn't say that I want to commend those who raised these concerns with
us, helped craft ways to go about trying to get these studies back on
track. That's what we expect from you all, and I appreciate it. And,
hopefully, this will put some more fuel in the tank for taking us where
we're trying to go. And so I just wanted to let you all be the first
ones to know that and let you know we look forward to working on that as
we start those rule makings. So, with that, again I want to thank you
for being here, thank you for your commitment, and anxiously look
forward to the sub-committee presentations and the work that you've done
so far. So, thank you.

Ms. Johnson: Thank you Mr. Chairman. Mr. Adelstein.

Mr. Adelstein: Thank you. Madam Chairman, I really want to thank you for
all your leadership on bringing us to this point and all the work that's
been done by all the members of the committee, and for all of you that
brought yourself here today and have done so much to make this final
product that we have, not a final product, but finally getting a
product. We're glad to see that you're putting pen to paper, and making
some real progress, and I look forward to hearing more about your
recommendations today. I got a chance to look at the draft
recommendations, and I think that you've really begun to dug in and
thinking about where we can go. And it's helpful, you know. At each
meeting we've had, I've tried to stress the importance of trying to
think outside the box, and coming up with new ideas and challenging us.
And there's some ideas like that here. Some of them are like the tax cut
ideas and the Community Reinvestment Act are good. I used to work on
those issues a lot on the Hill, but of course now I'm in a position
where I can't do much about them. So, we want to hear about things even
more that we can do, and there are some things in here on that front.
And we have room for even more thoughts and expertise from you on areas
that are directly within our jurisdiction. For example, I saw some good
ideas on wireless and auctions that we can look at. Come up with a
rationale to try to promote minority ownership through that. But I
really do think that you need to push us as hard as you can. As the
Chairman indicated, that's what you're here for, and that's what we
need. You know, we have to do more here at the Commission, and I think
all of us are committed to trying to achieve the goals of this
committee, but we need you to be as far reaching as you can in your
recommendations for us to able to accomplish that in areas within our
direct jurisdiction.

We have a lot of questions; we have a lot of big issues before us that
we need your input on. We have digital television transition we're in
the middle of. We need to hear more about that. What are public interest
obligations that we need to put on broadcasters? We want to hear more
about that. And, as Chairman mentioned, Adoran. What about Adoran? How
do we deal with that? How can the Committee help us to understand, what
the based on preferences are and *Gruder* and Adoran.

And, finally, I'd like to comment on the Chairman's announcement, which
is a very important one today. I'm really pleased that we're putting out
tomorrow for comment the Section 257 studies, that were released in
December of 2000. A lot of work and effort was put into those studies,
and it's time for us to use them in the way they were intended. And I
think it is right that us being pushed on that's helpful to get those
things finally out for comment. We need to do that.

Another area that I'd like to see from input from you on, I've been
reading a lot in the paper just today and recently about the debates
surrounding the Nielsen Media Research New Local People Meter, and
whether that's going to have an impact on so many aspects of what we're
talking about here today. Implications of how you measure minority
viewing will flow to many other areas in the industry. While I know that
a lot of members of Congress and the GAO and scholars and some courts
are looking at this right now. I think the FCC should also understand
fully how the new system works to ensure that all television audiences,
whether they be Spanish speakers or other minorities, are fairly and
accurately represented, and we need to get the bottom of this as well as
all the others that are looking into this, and we need your guidance in
getting that done. So you have a burdensome and sometimes frustrating
mission before you, but anything worth doing is worth going through the
pain to get there. So, I encourage you to continue those efforts, and I
thank you for all that you've done up to this point.

Ms. Johnson: Thank you. And thank you for your support. With that, we
can go into our sub-committee reports. I believe first is financial
issues, and Frank Montero is going to lead in that discussion.

Mr. Montero: Thank you, Madam Chairwoman. I wanted to start by, first of
all, thanking Ginger Lew of the Telecommunications Development Fund who
did an incredible amount of work in compiling all the white papers on
this report, and also to thank Allison Alexander and Michelle Talburn,
Ash Johnson and Piper Rudnick who volunteered a lot of their time in
compiling this information. And, lastly, but certainly not least, to
thank Commissioner Rivera for his original report, which was
ground-breaking, and it's still as relevant today as it was when it was
originally released. The Financial Issues sub-committee presents a
summary of the key issues and recommendations relating to the financial
barriers facing minorities in the broadcasting and telecommunications
industry. These issues and recommendations are based on initial research
conducted by the members of the Financial Issues sub-committee. These
are initial recommendations, inasmuch as we are continuing to review
additional issues, such as the desirability of diversionary interest and
broadcast licenses and the potential expansion in our amendment to
existing government initiative programs to foster greater access to
capital for socially and economically disadvantaged businesses,
including, particularly, women and minority-owned businesses.

In 1982, the FCC determined that lack of financing posed the single
greatest obstacle to minority ownership of telecommunications
properties. Unfortunately, as we revisit the issue in 2004, the obstacle
has remained, as evidenced by the continuing low levels of ownership of
broadcast stations and of FCC licenses and new services.

In 1997-98, NTIA conducted a comprehensive study of minority-ownership
of full power commercial, radio, and television stations in the United
States. The study culminated in the release of a written report and
painted a dismal picture of the ownership opportunities for minorities.
Specifically, the NTIA report, which focused on minority broadcast
ownership for the 1 year period between August of 1997 and August of
1998, concluded that, "Although minority ownership of broadcast stations
had increased over prior years, the increases were not commensurate with
the overall growth of the broadcasting industry". The NTIA report also
concluded that, "Access to capital remains one of the significant
impediments to ownership for minorities". The NTIA report predicted that
these trends would continue to keep minority ownership at relatively low
levels. A prediction that, distressingly, appears to be correct.

In 2001, approximately 8,751 television and radio stations filed FCC
Ownership Reports. Of the stations that filed the report, only 303, that
is 3.5%, identified one or more minorities who, in the aggregate, had a
greater than 50% voting interest in the broadcasting licensee entity.
These more recent numbers are just 4/10 of 1% higher than the aggregate
minority ownership numbers reported in the NTIA Report reported for
1997-98. The lack of significant change highlights the need to examine
the driving forces behind this lack of progress.

Numerous factors have contributed to the lack of progress of minority
ownership of broadcasting and telecommunications businesses. Including,
the evolution of the FCC's multiple ownership rules, the elimination of
the Minority Tax Certificate Program, and the thresholds for determining
minority ownership and control with respect to the issuance of tax
certificates, consolidation within the broadcasting industry, the use of
competitive bidding to award licenses for spectrum based services, and
the limited success of the FCC in achieving congressional goals to
promote the acquisition of such licenses by minorities, and the lack of
incentives for increased minority ownership for non-spectrum based
services.

In 1981, the FCC created the Advisory Committee for Alternative
Financing for Minority Opportunities in Telecommunications, chaired by
former FCC Chairman, Henry Rivera, which explored ways for minorities to
finance the acquisition of telecommunications properties. That advisory
committee, comprised of many industry leaders in finance and
telecommunications, summarized its major recommendations in a report to
the FCC entitled "Strategies for Advancing Minority Ownership,
Opportunities in Telecommunications." The Rivera report focused on
barriers to capital faced by minority entrepreneurs in
telecommunications. Although the Rivera report was released more than
two decades ago, its key recommendations remain applicable today. The
Rivera advisory committee studied the ability of minority entrepreneurs
to purchase an existing telecommunications system. The recommendation
and key findings to improve financing for minority broadcast
entrepreneurs generally fall within three categories. One: Educating the
minority entrepreneur; Two: Educating the lending and venture capital
community; and Three: Changing FCC rules.

The Rivera report offered a number of suggestions for educating minority
entrepreneurs including developing a primer to help minority
entrepreneurs, increasing the level of awareness in the minority
business community and of the risks involved in telecommunications
ventures, and preparing a tax bibliography and collect materials that
discuss various tax advantages.

With respect to educating and lending, the lending and venture capital
communities, the Rivera report suggested helping lenders become more
aware of the existence and availability of federal and state loan
guarantee programs, surveying financial institutions to augment existing
surveys to determine the kinds of financing available, and exploring the
benefits that investment banker's could provide to minorities.

The Rivera report recommended a number of changes to FCC policy and
rules with regard to improving opportunities for minorities including
granting rules waivers to permit an established broadcaster to acquire
equity interest in a minority controlled property, that otherwise would
exceed multiple ownership limits; clarifying the 1978 statement of
policy on minority ownership in broadcasting facilities to indicate that
minority general partners holding more than 20%, but less than 50%
interest can exercise control and meet the test for tax certificates at
distress sales; amending the multiple ownership rules to permit venture
capital companies to increase their equity participation in minority
operated entities; expanding the tax certificate policy to include such
non-broadcast properties as cable, common carrier and land mobile;
adopting a capitalization feature for tax certificates to enable share
holders with less than controlling interests in a minority owned or
controlled entity to sell their interests to the controlling
shareholders and become eligible for tax certificates; and exploring and
expanding the rights to sellers as creditors, including the rights of
reversionary interests in a broadcast licensee in those cases where the
seller provides financing.

On January 20, 2004, the on Financial Issues heard from financial
advisors and experts, who identified potential barriers to capital
access. In addition, suggestions were made to address some of these
issues. A copy of the comments is now located FCC Advisory Committee's
web page in the FCC's website. Subsequently, some committee members,
including myself, held one of more meetings with industry experts to
gather further information. While most of the information is anecdotal,
some consistent themes emerged. The Senior Lenders sub-group reached out
to representatives of the National Bankers Association, the American
Community Bankers, and the Independent Community Bankers of America. The
purpose of these sessions was to discuss, One: establishing an education
program for local and regional banks on valuation and structuring loans
to the broadcasting and communications industries; Two: establishing an
education program for banking regulators on valuation, assessing and
charactering loans to the broadcasting and communications industry; and
Three: Establishing an education program for secondary market purchases
of senior debt on valuation, structuring and the relative security of
loans to the broadcasting and communications industry.

In terms of going forward, the Financial Issues would like to submit the
following proposals for consideration and review by the full committee.
The Subcommittee recommends that these proposals be recommended to the
Commission for its consideration.

One: Reinstatement of a tax deferral program. The FCC's tax certificate
policy used tax deferrals to encourage owners of broadcast and cable
properties to sell their business to minorities. Resurrecting as much as
possible the tax certificate policy would address many of the obstacles
facing minority entrepreneurs and enable them to obtain sufficient
capital to acquire licenses and compete in broadcast and
telecommunications services, even those services that are subject to
competitive bidding. If adopted, the policy would apply not only to
broadcasting and cable properties, but to all spectrum based and
non-spectrum based telecommunications services.

We've placed on the Advisory Committee's web page, a white paper on tax
incentive programs, which contains and discusses the sub-committee's
recommendation to the committee that it commend to the Commission the
profound value of the reinstitution of a tax deferral program.

Two: Adopt incentive based plans to promote broader access to capital.
Since 1973, the Commission has periodically adopted, or administered
incentive based plans to foster minority ownership. The comparative
hearing policy, the tax certificate policy, the distress sale policy,
the Clearchannel eligibility criteria and the Mickey Leland rule. Each
of these incentives were premised on enabling a regality to receive
otherwise unavailable benefits when it took steps to advance minority
ownership. This win/win paradigm consistently enjoyed nearly universal
support from the industry, the civil rights community and members of the
FCC.

The Subcommittee has proposed four proposals, each of which is outlined
in the white paper on incentive based regulations, a copy of which is on
the FCC's web page, the Advisory Committee's web page, and incorporated
here by reference.

These proposals contemplate, One: Waivers of the structural ownership
rules, including sales of stations to socially and economically
disadvantaged businesses, incubator and financing programs and share
times.

Two: Waivers of the attribution rules.

Three: First place in line for future monopolies.

Four: Waivers of the construction permit expiration rule.

The Subcommittee regards these proposals as worthy of consideration as
means to promote broader access to capital and it recommends that the
committee commend these proposals to the commission.

And finally, Number Three: Retention and improvement of the distress
sale policy. In 1977, Chairman Wyling convened the Minority Ownership
Taskforce to address the extreme under inclusion of minorities in
broadcast station ownership. One of its recommendations was the adoption
of a policy under which a broadcaster, in a hearing for non-renewal or
revocation of its license, could elect before the hearing to sell the
station to a minority owned company for no more than 75 percent of the
fair market value. In this way, the licensee in the distress of possible
loss of license can avoid the hearing while still incurring substantial
financial penalty, save the commission the time and expense of trying
the hearing and subsequent appeals, and place the station in the hands
of a qualified operator who would have few other opportunities to
acquire a station.

The distress sale policy is still in effect. It has resulted in
approximately thirty transactions involving the sale of approximately
forty stations to minorities. Its history and operation are detailed at
length in the Subcommittee's white paper on the distress sale policy.
Again, a copy of which is on the Advisory Committee's website and
incorporated herein.

The Subcommittee recommends that the Committee express the sense of the
body that the Commission should, One: Reaffirm the viability and routine
applicability of the distress sale policy, and Two: In the operation of
the distress sale policy, assess each distress sale purchaser's ability
to promote diversity. For example, by requiring a showing of the bona
fides of the purchaser's company, its commitment to promoting diversity
and providing service for a substantial length of time and its plans to
serve the needs of the public and to correct any deficiencies in station
operations caused by the distress sale summon.

In addition to these three recommendations, the FCC has several ongoing
issues which it is considering, which may result in additional proposals
being submitted to the committee at a later time. Moreover, as I said,
the backup materials on these three proposals located in the on the
Advisory Committee's website, and I invite all of you to review those
materials. Thank you.

Ms. Johnson: Thank you Frank. Any questions as it relates to the report?
And as a point of clarification, we will take up the resolutions in the
next phase of our discussions. So, to the extent that there are
substantive questions regarding the resolutions, we'll take those up in
Phase Two. Any questions as to the report in general? Seeing none, is
there a motion to accept the report? Motion second. Show it approved
without objection. Thank you.

Next, we will have the Transactional Transparency and Outreach. Mr.
Hillard.

Mr. Hillard: The members of your staff that have assisted us, and also
the Commission staff, the members of the Transactional Subcommittee, and
our advisors and also thanks to Chairman Powell and each of the members
of the commission for their support in our endeavor here.

As, in a summary sort of way, we have come to call our Transaction
Subcommittee focus essentially enhancing, looking for measures that can
enhance the accessible and visible deal flow that promotes diversity of
ownership and other participation in the communications industry. That
has some overlap with the financials, and in many ways, as you'll see,
cooberates some of the findings of the Financial Issue Subcommittee that
Frank just gave the report on. For our purposes, we've engaged in
addition to kind of weekly well-attended conference calls and
discussions. In addition, about fifteen to twenty hours of phone
interviews with a host of public and private entities to really lay the
foundation for our Subcommittee's consideration.

I wanted to I think share with you for starters the core of our
conclusions thus far and maybe the paradigm observation, that both has
some immediate relevance, but also some lessons underneath it. Time
after time with a consistency throughout our interviews, to bordering on
near unanimity, was the observation that the most important thing that
the Commission could do to promote diversity, is to achieve the
reinstatement of a tax certificate program.

Now, that's a measure obviously which ultimately, as Commissioner
Adelstein indicated, up to Congress. But it does point out I think some
important factors that also doesn't take us, if you will, off the hook.
As we began to study that observation, what it meant, we concluded that
underneath that were some very important observations. And, essentially,
come down to three observations that we made in our report to the full
Committee. And if I could just leave those, because they're about a
sentence each, and about as compressed as we can make them.

First, is that FCC programs which create demonstrable economic
advantages targeted to diversity are profoundly superior and more
effective than any other single programs or policies in promoting this
goal. In effect, where the Commission is either given by virtue, and
we'll get to in a second, by Congress, an economic coin that it can use,
or creates, in effect, a significant economic advantages. Our due
diligence has shown that that far surpasses other programs. It doesn't
take anything away from the importance of a broad based approach, but
this was a fairly compelling observation that came to us.

Second, is that Congress has created basically two authorizations,
historically, which would place such programs that have a kind of
economic coin under the stewardship of the Commission. The first was the
tax certificates, and the second was the designated entity program that
accompanies the federal auction of FCC licenses protocol.

Third was that these stewardships and authorizations are subject to
removal by Congress, if it perceives abuse or lack of effective and
proactive use of the authorities. Case in point, I think we've all come
to recognize as a significant loss, was the repeal of the tax
certificate program and I think it was circa 1995.

So, basically looking at will Congress or will the Commissions be able
to create this kind of program with a specific economic coin, we viewed
it as being an especially effective tool. And on that basis, at this
point we've made, in addition to our formal recommendation, which we'll
get to a little bit later in the meeting today, thee recommendations of
actions that the commission could take.

One is again, I think echoing some of the other recommendations already,
is that the commission, we recommend to the full Committee to then
recommend to the Commission, that it consider taking a unified public
and high priority role in advocacy of creation of a tax deferral or tax
incentive program. We haven't at this point tried to measure what those
specifically should be. We felt the weight of our recommendation should
really be to the importance of a concerted and unified and really public
approach on that. Something that really goes well beyond what has been a
historical process, I think is fair to say, a certain amount of fanfare,
but really inability to move it either by initiatives by folks in
Congress, or otherwise to really move it to the goal line. I think the
current budget difficulties probably underscore the importance of this
becoming a priority -- our recommendations become a concerted priority
to the Commission.

Second, is that with respect to the designated entity program, as the
one kind of remaining economic coin program, brought to the commission
by Congress, two aspects were, which the Subcommittee wished to make
observations. One is the need to have a program of very conscience and
continuous maintenance and kind of upgrades, if you will, of the rules.
This is to ensure that they're, like the process that folks pointed to
at the time of the repeal of the tax certificate, whether it was a
perceived process of abuse. To make sure that that public perception is
avoided.

One example we posed was the question of, for example a high network
test as one of the criteria so that the program wouldn't be subjected to
criticism, in affect a subsidy for the rich. This is really part of an
approach of an ongoing maintenance of a special set of tools that
Congress has entrusted to the Commission.

The second is enhancement. This is again a toolbox, a set of measures
which the Commission has been granted substantial flexibility. The
Commission would observe that there has been a lot of pressure to create
in effect a decline of both the measures and expanse of the designated
entity tools. We would suggest that this is kind of a paradigm of the
low hanging fleet, if you will, with upcoming auctions and other matters
of substantial breadth that the Commission could consider in making sure
that those measures are fully utilized.

Then, lastly, we have proposed and received I believe, an indication of
support from the commission, provide expertise and analytical help, that
again I think echoing some of the comments of the recommendations of the
Financial Issues Subcommittee, a specific program where the Commission
may be in effect able to create its own economic advantage coin. We've
characterized this as a kind of diversity credits program. This is not a
recommendation at this point, but really a signaling of an area of
interest by the Subcommittee to explore that and come back in the future
with some suggested, some specific measures and how they might be
implemented by the Commission. We look forward, as a Subcommittee, to
refining these measures and working with all the other subcommittees.
This has been an area of very earnest effort by all of the members of
our Subcommittee and our assistants. And at that point, Madam Chairman,
I'm open to any questions or additional comments.

Ms. Johnson: Any questions? Is there a motion to accept? Oh, I'm sorry.
Mr. Chair.

Chairman Powell: Just one point Steve. Because I think it should direct
your work perhaps in a more productive way. The point about sort of an
integrated high profile role of the Commission and lobbying. It is
important, and I understand we have legal restrictions that prohibit us
from lobbying, and so we can push that line to a point, but my
observation is the kind of concerted push necessary to get this
legislation more from bill stage to reality stage is bigger than this
institution will legally be permitted to engage. And so, it seems to me
one of the things the Committee can do usefully is to discuss and
explore sort of legislative organizational efforts within your own group
or through organizations that you work with, etc., etc., etc. to create
the kind of effective advocacy necessary to move legislation further. I
don't offer what this is, but only to suggest that you know at the end
of the day you all have a lot of connections beyond your recommendation
to government organizations, and thinking about the best way to employ
those efforts might be the most productive path. We've done a lot of
talking about the tax certificate, we've written up ads, not to say we
can't do more, but I think one of the things we always bump into is how
much we can permissibly do without being contravening the lobbying
restrictions.

Mr. Hillard: I take that as a very productive comment. I think it's
good.

Ms. Johnson: Any other comments or questions? Is there a motion to
accept? Show it approved then? Show it approved without objection? Thank
you. Next report, Mr. Riley Temple, the Chair for New Technology.

Mr. Riley: Thank you Madam Chairman. I am, this is my inaugural, this is
my debut as the Chair of the Subcommittee on New Technologies, and I
don't know whether a thank you as an order or not. But I'm here. The New
Technologies Subcommittee has three sets of recommendations to talk
about today. I won't go into the detail on that on those recommendations
right now, because we will do that during the time set aside for
presentation of the resolution and action items, and they're rather
detailed. I will tell you that we have spent the last, the time in
between the two meetings, convening many taskforces and working groups
to develop these recommendations. And, Mr. Chairman, I do think the
comment with respect to lobbying is a timely and apt, with respect to
some of our recommendations as well because we do have some
recommendations which will call for rule changes and/or legislation. And
so it's very helpful to be reminded of the limitations that the
Commission operates under with respect to that and that our job is not
finished by simply making the recommendation, but also to find out ways
in which we need to achieve it.

I want to briefly mention that and to thank the people who have helped
us to develop these recommendations, before I go on to discuss them.
And, they include, Pete Renee of Cilantro, Sabrino Calhoun of Cochs,
Depac Masand of Latara, Keith Machen of Inflection, Tony Cooke-Bush,
Lynn Kennedy, ex-commission Tyrone Brown, and here at the Commission, we
consulted with several people here as subject matter experts, not to
seek approval, by to help us to frame the issues and to make the
recommendations stronger and more inherently consistent with the other
recommendations that were coming forward. Particularly, Michelle
Ellison, John Malletta, Jane Mago, Ray Stewart, and of course Kyle
Dixon. And we want to thank you for all of your help.

Today, we will, you have before you on the FCC's web page, some
recommendations for diversifying ownership in the FM radio band that
were developed by the Subcommittee with the help of David Honig. And the
recommendations, we've come up with nine ways, and asked the FCC to
study the means by which these can be achieved. We will not bring those
up today for your consideration. They're not quite ready. Unfortunately,
David had an illness in the intervening time and we were not able to get
them ready for your consideration, but we would ask you to please study
those and we will prepare them for your consideration at our meeting in
September. David, did you want to take a second to talk about those?

Mr. Honig: Only to say that we were blessed to have the input from a
number of experts, both engineers and attorneys in the NAB and in
private bar, in communications companies in taking, and actually a must
longer list of potential FM reform ideas, narrowing it down to nine and
focusing those so that they would be achievable. And, we were trying to
do this with the idea that these were low hanging fruit, were race
neutral and were mostly de-regulatory and we hope to have them ready of
course in September, but it was encouraging to know that there are
actually are as many as possibly nine such things that the commission
could do that meet all of those criteria.

Mr. Temple: Thank you. Speaking of low hanging fruit, it was our
objective in these recommendations to only look at those issues and come
up with recommendations that were easily recommendable. I think we
exceeded our goal of low hanging fruit and I think we've exceeded it by
much.

What you will hear about today is something that is technology specific,
which are a series of recommendations promoting access, opportunities
and spectrum-based technologies and emerging technologies.
Recommendations that would require FCC rule changes or legislation and
those that would not. They would address access to capital,
recommendations to facilitate access to communications properties and
opportunities and investments, and regulatory reduction recommendations
for unlicensed services and technologies and license spectrum.
Additionally, not technology specific, is our series of recommendations
regarding a supplier diversity program, which is a detailed proposal and
program designed to assist minorities and women to seek business
prospects and contacts within the communications industry and looking at
the development of programs for mentors, the initiation and development
of a resource center and business development programs. That is our
report Madam Chairman, we will talk about it further later in the
meeting.

Ms. Johnson: Thank you. Any questions regarding the report? Seeing none.
Is there a motion to accept?

Mr. Powell: So moved.

Ms. Johnson: Is there a second?

Committee Member: Second.

Ms. Johnson: So then, accepted without objection. Thank you. And,
finally, Career Advancement, Ms. Jenny Alonzo.

Ms. Alonzo: Hello everyone. Thank you Madam Chairman. I want to say
Madam Woman. First I want to thank the Committee members who very
graciously gave of their time to help us put together this Best
Practices Report. First, of course, is Henry Rivera from Bisson &
Elkins, Decker Anstrom from Landmark Communications, Matt Wang from
Showtime Networks, Maria Brennen from AWRT, Benita Fitzgerald-Mosley
from Women in Cable and Communications, Joan Gerberding, formerly of
Nassau Media Partners and AWRT, Priscilla Hill-Ardoin from SBC, David
Honig from MMTC, and Vonya McCann from Sprint. In addition, we want to
thank the subject matter experts who definitely helped kept - keep us
sane. Weldon Lathan and Sylvia James from Holland & Knight, George
Rivera, formerly president of the U.S. Hispanic Chamber of Commerce, Dan
Mason from Dan Mason, LLC, Punan Mather from MGM Grand Mirage, S.
Jenelle Trigg from Levanthal, Centre & Lerman, and Lou Visconti of
Diversity, Inc. And, of course, we want to thank the FCC staffers, Jane
Mago, Jamila Bess-Johnson and Maureen McLaughlin, who were very, very
helpful in helping us get through this process. And then of course, our
fabulous leader, Julia Johnson. So thank you so much for all your help.
The Committee wants to formally let you know that we so much appreciate
your work. In addition, the Committee wants to publicly thank the Law
Office of Fatima Faffana & Associates, who helped put together the Best
Practices Report. It is a fine document, and one that took painstaking
hours, and we're just very thankful that she stuck with us and didn't
throw in the towel.

The Committee was formed in September of 2003, and at that point, we
established that we wanted to reach out to the industry and seek best
practices initiatives. Our first attempt was reaching out to industry
organizations and foundations. We basically went out to thirty
associations and four foundations. Unfortunately, the response at that
time was not very good, it was about six responses. What we got from the
field was that a lot of these organizations are just not set up to
understand what the internal, you know, best practices are of the
corporations that they service. So we then decided in January that we
were going to reach out to corporations directly. And at that time, we
made a list of about thirty-three, basically companies who are well
known for their diversity efforts, and we're happy to report that
eighteen responses came back, and with some wonderful best practices
programs. So, at this point, I would like to direct you to our report
titled, Progress Reform Recommendation for the Career Advancement
SubScommittee. It's in the back of the book that in the report section.
Right. Okay. We have submitted for the review of the Advisory Committee,
a draft report entitled, Workplace Diversity, A Global Necessity and an
Ongoing Commitment, further known as Best Practices Report. Shortly
after we have received input from the full Committee in today's meeting,
we will recommend that the report be posted on the Advisory Committee's
web page, and that the Advisory Committee ask the Commission to take
steps to notify regulatees of the existence of the Best Practices
Report, and encourage regulatees to review it carefully. We also
recommend that the commission help promote this report, and participate
in industry conferences promoting the best of the best practices. Once
the Subcommittee has had the opportunity to review and approve the best
of the best.

As mentioned, we started back on January 26^th^ looking at corporate
diversity initiatives. And, we asked the companies that we've added to
focus on -- I'm going to have you turn to next page, because at this
point I think it's kind of explanatory from the last meeting that we had
the organizations focus on those five specific points. So, I'd rather
take you to what we asked the companies to focus on in this second wave,
as of January. That is, we asked them to focus on recruitment, post
hiring job placement, mentoring, management training, work assignments,
including rotation into revenue producing work, opportunities to serve
on the visible Committee or industry taskforces, committees and
projects, performance evaluation, rating, and testing standards
untainted by prejudice, compensation and benefits, access to informal
networks of communication, favoring a harassment free or family friendly
working conditions, layoff and termination criteria. The Subcommittee
commission Fatima Faffana, as noted before, an attorney in private
practice specializing in media and telecom diversity issues, to review
the companies responses and help us draft the Best Practices Report
under the guidance, of course, of the Subcommittee. A draft is provided
today, and the full report will provide a, shortly upon receipt, of
comments from the members of the full Committee. We commend it to the
Advisory Committee, and ask that it be provided to the Commission for
its review and edification.

Chapter 9 of the Best Practices Report, the role of the FCC's Diversity
Committee, contains respondents' suggestions on the subject of our own
work. Two companies suggested that a recurring report or benchmark on
diversity best practices would be useful. We note that broadcast cable
and other multi-video program distributors must file EEO program data,
identifying steps they have taken to broaden their outreach efforts and
means to prevent discrimination. While these steps primarily involve
recruitment rather than career advancement, they do provide a starting
point for an annual review of industry best practices.

Consequently, in the coming months, we will explore whether and how the
Commission should undertake a best practices benchmarking study. In
considering its next step, the Subcommittee has reviewed the 2003 report
by the Radio Television News Directors Association; RTNDA's report
provides this longitudinal data on minority employment and key
broadcasting positions. As you can see, the numbers are definitely on a
downtrend. It appears from these statistics, that in just two years,
minority employment has declined 26 percent in total TV news workforce,
39 percent in total radio news workforce, 59 percent in TV general
managers and 56 percent in radio general managers. According to an MMTC
2001 study, 52 percent of minorities employed in broadcasting work for
minority owned stations. Thus, the actual number of minorities employed
in non-minority owned businesses, or stations, is far lower than the
RTNDA's statistics indicate. MMTC also reports that the 2003 statistics
given above, are about the same as twenty years ago. In light of these
statistics, coupled with the shrinking number of broadcast jobs, and
only slow growth in cable jobs overall, it appears that recruitment
based missions alone are no longer an adequate strategy by which the
Commission can promote equal opportunity and diversity.

A meaningful EEO program, regulatory strategy, must also focus on career
development and retention. We may consider drafting a regulatory
proposal along these lines, and then will consider whether and how the
Commission might need to gather statistical and anecdotal information in
order to develop such an initiative. Consequently, we will consider
whether it might be desirable for the Commission to conduct field
hearings on employees' and employers' experiences with career
advancement initiatives and on the methods used in fostering career
advancement. Going forward, the Subcommittee will seek resource
assistance, for example, fiscal, additional staffing, etc. from the
Commission, including data on its internal workplace diversity efforts
and statistical tools for the purpose of understanding what has worked
for the Commission itself. We respectfully submit this report. Thank
you.

Ms. Johnson: Thank you. Any questions? Is there a motion to accept?
Second? So then, accepted without objection or question. Thank you. Any
comments as to the first phase or any of the Subcommittee reports?
Seeing none -- I'm sorry Mr. Chairman?

Chairman Powell: Just one overall comment that I wanted to make having
heard the Subcommittee reports. While valuable, it would seem to me it's
still a lot seemed very broadcast centric still. And I think that's fine
as far as it goes, but I have to say I look forward into the future and
I think we're talking about diversity in the digital age, I see an
enormous amount of transformation going on and a lot of emerging
technologies in industries that are probably going to dominate the
communication cosmos for the generation of our children. And I it would
seem to me that if we're staying on mark, we should be focusing a little
more deeply as well on those technologies and those industries that are
really showing that kind of progress. For example, in the new emerging
technologies, because I think it would recommend slightly different
strategies. For example, I think there's an enormous component about
generationally, about diversity for emerging technologies. I mean this
has probably passed us by. This is for whether my 15-year-old's picture
in diversity in these industries when they begin to be dominant in his
adult life are different than what's gone before. And I think it is
important to be working on the more mature industries that have a
history, but I also think that it's just as important to be exploring,
more aggressively, both the statistics, the representation, the
strategies for a lot of other things. Because I think also, there are,
if you take that, so there's the notion that maybe part of efforts
should be focused on youth, educational programs, high school programs,
college-level programs that exposed minority children and women to these
experiences could be more important in those fields than it is in almost
any other field. There's also new communities that are, in essence,
traditionally not the core regulatees of this institution. The entire
software industry lives, largely outside of direct FCC responsibility,
but it may be the most critical industry segment of the information age,
of these all. All of these things are quickly going to become software
run and organized. And so who's writing that software? Who's employing
those people who write the software? Who are the software entrepreneurs
who are -- you know, today Decker and I were joking about how, was it
Starz is experimenting with movies on real networks. Well, if that's
where movies are going, then I sure hope that that's an area of focus
for diversity, because I do believe, in a not so distant future, that
stuff is going to supplant a lot of what we're thinking about. So I
think that this whole new communities we need to think about how to sort
of reach out and bring into our process and to be thinking about them.
Particularly, since a lot of them are not direct regulatees of the
Commission.

I also think there a lot of folks out there doing very, very interesting
things. And how do we find them and network them? How can we introduce
people to people who are doing these things? You know I've been to
Silicon Valley five times in the seven years that I've been here, and I
think there are some fascinating minority activity in the Valley. How do
we get more people to meet, know them, network with them, watch careers,
join with them in developing things. And I think that would be
important. And, I think that again, not to belabor the point, but when I
think about how to make sure my child is in employable in the 21^st^
century, and that he doesn't come home to live in my basement, I just
don't know how he's not going to be technologically literate. What are
the technology literacy programs? How do I make sure that he's both
technology literate and seems to have the skills that are going to be
placed a premium on in the future. There's a big debate about that by
the way, in the outsourcing literature. So, why do the jobs go to India?
How can they be kept in the United States? And what's the education, the
public policy, the programs that make that happen. You know I would just
love to see a little more effort on those things too. Because I'm not so
sure that I want whatever we do to be great for a year or two, and then
becomes overtaken by a sort of secular events that are transforming the
industry. And I also just think there's probably talent out there that
we could tap into, if we're looking more broadly. So, that's not meant
to be too much of a criticism, and I think the work has been terrific,
but I did see almost the center of most presentations revolved around
sort of the broadcasting experience.

Mr. Montero: Could I make a comment?

Chairman Powell: Sure.

Mr. Montero: Because, Mr. Chairman, you actually based, or you may not
remember, you made a very similar observation during our last meeting in
the winter where you said the focus tends to always drift back to
broadcasting. And it got me thinking about, and he's right. Why are we
always coming to broadcasting? I'm on the Transactional Committee and on
the Finance Committee, and after having so many discussions with people,
it occurred to me that certainly one of the reasons, from the financing
part, and from the transactional part, why it always drifts back to
broadcasting, after discussions with people, is because broadcasting is
one of the few telecommunications industries that I think still has a
very vibrant secondary market. I mean, there aren't very many
telecommunications sectors out there where you see hundreds of
properties changing hands every month. Maybe thousands during the course
of a year. I mean there's been a lot of consolidation, but you also have
a whole lot of cable systems changing hands. You don't see a whole lot
of satellite television providers changing hands, or satellite radio
companies changing hands, or I-LAX. Maybe you have a secondary market in
C-LEX, although C-LEX have gotten dinged up so bad. But having -- in the
market -- but in broadcasting is, and particularly radio broadcasting,
is one of the few communications sectors that this Commission regulates,
where you have a lot of properties changing hands, there's still a very
vibrant secondary market, and people are still making money. I mean the
values are going up. So there's actually something to invest in and with
the hopes of making money back. And I think that's why. That's where the
money is happening, that's where the transactions \-- again from my two
areas, where the money is going and where the transactions are happening
tends to be in broadcasting, and particularly in radio broadcasting. I
don't see very many venture capital funds or entrepreneurs out there
saying, "You know what, I'd like to buy a bunch of cable systems, or I'd
like to but, or I want to see if we can invest in".

Chairman Powell: Let me make just one quick point. I think that's fair,
except for the goal of diversity seems to be not to be sort of condemned
to the hand me downs of what exists. I mean, Jeff C. Trodden, who's the
CEO of Vonage, who's changing the way phone companies service, and
probably for centuries on end could be black. I could go on and on in
the changes I've seen just in two years that are about invention and
entry. And I think that that's important. I don't mean to -- your
point's well taken and these industries are always a challenge. But
sometimes the greatest opportunity is before they truly have matured and
risen to the point where capital demands, mass market demands have put
them well out of reach. I mean sometimes you have to sort of grow a
garden as opposed to buy one you know in full bloom. But I think that to
me, I could be wrong, but my greatest hope is for those statistics to
really be moving about minority representation. A lot of focus has to be
put on sort of initial growth as well. Because, I just don't know that I
believe there's enough out there. But I see what you're saying.

Ms. Johnson: Mr. Temple.

Mr. Temple: I think, Mr. Chairman, your comments obviously are very well
taken, and certainly the New Technologies sub-committee took it to heart
and our recommendations today focus on supplier diversity with high
regard to technology, and also spectrum, non-broadcast spectrum based
recommendations. All that being said, this is still very much the
beginning of our process, and since we talked earlier about low hanging
fruit, since the broadcast industry is there to be analyzed very quickly
and fairly easily, I think we would be remiss if we did not cover that
territory very early on and get it out of the way. Which I think is what
we're doing.

Ms. Johnson: Decker.

Mr. Anstrom: Just briefly, and I appreciate we've got an agenda to stay
with as well, but I do think the Chairman's point is an important one
though, and just take another minute on this, which is to take the
example about where the DC funds are today. I mean there are literally
hundreds of companies being born this year that are going to grow off of
broadband. That don't have anything to do with any of the commission's
regulatory activities. And it may be that we don't have a regulatory
solution, but I for one would hope, and I was pleased going through the
sub-committee reports that there are elements of this that we really
keep an eye on using things like best practices to really spotlight ways
in which the commission can use its bully pulpit, frankly, if nothing
else to bring to light and to recognize people and companies that are
doing it right in these new emerging industries. And maybe there's not a
regulatory role for the commission, but in some ways we've made it much
more impactful by highlighting, well here's someone who's done it really
well and challenging people to do that. And I think the two fit together
very well, in terms of focusing on traditional industry. But the big
growth, fifteen, twenty, thirty years from now, is going to be in things
that are being invented today by the VC funds.

Ms. Johnson: Anthony.

Mr. Gee: As a representative of the private equity venture capital
world, I think we did struggle in the New Technologies sub-committee to
deal with technology. And part of the \-- I think the way we addressed
it was looking at capital, to be very frank with you. Both capital and
sort of the networks that you talked about. How in fact do you get the
new entrepreneurs to be able to partner with, in some cases, the more
established companies, so that they can get their first ten, twenty
customers? How do you create the next Vonage? How do you get capital and
access to the entrepreneurs that sort of need it most, because I think
you're right. If you look at the landscape in the next five, ten or
fifteen years, it probably would be very different. The problem is, if
in fact we don't get capital to those entrepreneurs of color, then in
many cases it may be the same. Just new players.

Ms. Johnson: Commissioner.

Commissioner Copps: This is just a comment on this discussion. I
certainly agree with the Chairman that there is so much yet for me to do
and the new technology space, trying to get people into the emerging
industries is as critical as anything, but I just want to underscore
that the efforts on broadcasting are so critical because the effects of
ownership in broadcasting reach far beyond just the economy and just the
nature of the workplace. It affects everything we see as a culture, and
the knowledge and information that people get to make decisions, the
impressions that people make about different types of cultures and
different types of ethnic groups and different types of activities that
are happening in this country and if there's not diversity, and it was
extremely disturbing to see some of the numbers that we saw today about
the ownership. I think it's going to have a really negative impact on
our society as a whole if we don't get those numbers up in broadcasting.
Not that I have any special bias, I think every aspect is important, but
the externalities, if you will of the importance of having minority and
diversity ownership in broadcasting are in some ways more profound and
more exaggerated than in any other field that we oversee or regulate.

Ms. Johnson: Steve.

Mr. Hillard: Madam Chairman. First of all I agree with a number of the
comments the Chairman just made about the new and developing industries.
I think one of the things that we found in our discussions was we tended
to focus on license transfers, if you will, and either from the
commission and creating them under the best measures program, or
transfers of broadcast licenses. In part, because it seemed to be the
most effective place for this commission as a regulator to create
programs that could have an effect there. We struggled a lot and have
had ongoing, and will be having more discussions about some new
industries and that sort of thing. But I think part of it is there's a
natural tendency to focus there not because of, well there's always more
vision that could be applied, but it's a place where the commission can
apply the tools that make an effect kind of in the present. Maybe an
additional factor is the importance of ownership and getting into the
business tends to build places of entry and new technologies and that
sort of things for parties, and this is a place where the commission can
put its shoulder to the wheel if you will to make some differences in
who gets involved both in telecom and broadcast.

Ms. Johnson: Mr. Chairman, stay tuned. We hear the challenge, and we
understand the opportunity. And I don't remember which sub-group, but
often times you start off with the low hanging fruit being the comfort
zone. You're challenging us to go beyond that, and I'm hearing from the
committee members in the different sub-committees that we're stepping up
to that challenge in that there's been conversations regarding
commercialization of military research and how do you field the
technologies and determine what's out there, and put those entrepreneurs
with those venture capitalists and do some things in the new technology
area. That those ideas are being followed, I believe quite a few,
through Mr. Riley Temple's group, as well as others, and I think in the
coming months you'll see the next phase with those kinds of ideas, and
partnering with other agencies and looking for different intellectual
capital to bring to the table to find and ferret out those real new
opportunities unexplored.

Chairman Powell: Just giving one last point and then I'll leave it
alone. Lest I be accused of techno-ecstasy or something. The only reason
it's a challenge, because Steve, your point raises a good one, which is
in the seven years watch our portfolio expand exponentially, we have way
more rules than, or influences than you may think at first blush if you
really surveyed the depth. Just look at our meeting agenda. We've done
everything from unlicensed spectrum for wi-fi, broadband over power
line, ultra wideband technologies, voice over IP, satellite delivered
internet. I mean, this is a steady diet at the commission, within our
regulatory purview in which we dramatically influence the course of
these emerging industries. This is not just, oh these people are really
cool and they live in Silicon Valley, go say hi to them, and it has
nothing to do with our policy. I would actually submit to you, more of
our resources today are dedicated to those things than other things that
might be more notable for various reasons, but if you looked at the
total time and resources of the commission and its rules, there are much
more of that then you might think. Some are licensees, some aren't but
are still subject, or will be influenced by the rules that we adopt. And
so, I guess I'm challenging myself as well as the creativity of weaving
diversity into the future of communications is to keep a broad
examination of all the kinds of things that we are playing in, and ask
yourself every single time, all right, are we going to do broadband over
power line, is there any diversity component here? We're going to do
wi-fi, is unlicensed a preferable vehicle for minority interest? By the
way, if it's an access to capital issue, it sure as hell lowers the
price of getting into the wireless business. I mean if you're a T-Mobile
and you have to come buy Spectrum for \$3,000,000,000.00, it's tough to
get a new minority company in there, but if it's free, I mean that's a
major advance in the access to capital for a particular form of
delivery. Not just, there are issues. But, I've been to five Indian
reservations this year in which every single one of them, with very
little resources, are providing broadband and building companies using
wireless internet technologies in a way that they could never have
possibly hoped to compete before. And part of that is a commitment in
our rules to the unlicensed model, as well as understanding for rural
areas and other areas, that it lowers costs and provides real
opportunities for people. So, it's just a challenge to be keeping sight
to all of the things we do. I'll let it go.

Ms. Johnson: Any final comments there? Seeing none. Commissioner Copps,
welcome.

Commissioner Copps: Thank you.

Ms. Johnson: And we will have a placeholder for you to provide comments
if you'd like now.

Commissioner Copps: No, I don't want to interrupt the seriatim of the
discussion, I might make some comments as we go along.

Ms. Johnson: Okay.

Commissioner Copps: I would endorse what my friend Jonathan just said
here though about the immediacy of the problem when we're talking about
some of these figures on employment, not just ownership of minority
media, but general station manager, radio general manager and all that.
That's truly alarming. And I tried to impart some sense of urgency. I
think the first time I came in and met with this group, and the
situation more urgent today, nothing's gotten better I don't think since
we met the first time. So your job is even more immediate, and I do
agree with what's been said here up to a point about the necessity to go
out and tackle those emerging industries, but that don't mean we can let
go of any of the industries that are here right now, because they might
own these emerging industries before we get too much further down the
line, and I think we've got to worry a little bit about that too.

Ms. Johnson: Okay, well this is actually a natural breaking point
between the reports and the resolutions. We can proceed with those, or
comments. Commissioner, comments? Okay. Thank you.

Commissioner Copps: I'm sorry, what?

Ms. Johnson: This is a natural breaking point between the sub-committee
reports and the resolutions. If you'd like to speak now, that's ----

Commissioner Copps: No, I didn't have any speech, I really did come down
to listen, I mean I know I've looked through the recommendations, I was
trying to listen up in the office to some of the discussion here. I
really applaud all of the hard work that's going on, but I'm just a big
believer in pushing, pushing, pushing. And I'm a believer in you pushing
us, and I'm a believer in us pushing you to really go as far as we can
on all this and really getting out there on the edge of the envelope and
seeing, in light of the Michigan decision, whether maybe there's more
that can be done in certain ways. Differentiating between what it is
that we're going to ask Congress to do and what we can do here. The
Chairman says we do a lot of things here, I agree with that, a lot of
different areas. And there's a potential, I think, to have an impact in
diversity across a broad range of issues, we just have to think
innovatively and think creatively, and that's what I thank you all for
doing and we look forward to doing that. But, just keep that sense of
urgency uppermost. I mean this country, as you all appreciate, to me is
founded on its diversity, its strength is its diversity and our media
and our communications industries have an obligation to reflect that
diversity and to nurture that diversity, and that's what this is all
about I think.

Ms. Johnson: Thank you. Thank you for your participation. Also wanted to
recognize Commissioner Tristani. I think she's still here. Welcome. We
appreciate your involvement. Thank you very much.

Mr. Temple: I just have one closing comment on that prior discussion.

Ms. Johnson: Yes.

Mr. Temple: Since we have a lot of the people in the room who are
subject matter experts, and a lot of good minds around the room, I think
one of the issues that we come up against all the time is, you know the
Chairman talks about the newer technologies, what is the FCC's
jurisdictional hook that can be leveraged? And that's not always clear.
And I think that's the critical issue. We need a jurisdictional hook,
and we need to exploit that.

Ms. Johnson: Excellent. Thank you.

Mr. Temple: Okay.

Ms. Johnson: And, with that we will transition into our presentations of
resolutions. The action items. Starting first with Frank and financial
issues. I think you have three resolutions to propose. And we'll take,
we'll vote individually. So I believe we'll start with your tax
incentive program.

Mr. Montero: You want to start with the tax incentive program?

Ms. Johnson: Yes sir, if that works for you.

Mr. Montero: That's fine.

Participant: For convenience, these are in the book that you have in
front of you just there should be a tab for each of the resolutions.

Mr. Montero: The first resolution submitted by the Financial Issues
sub-committee reads as follows, "Be it resolved that the Advisory
Committee on Diversity for Communications in the Digital Age, urges the
adoption of a federal program that would use the deferral of federal
capital gains tax liability as an incentive to make available to
socially and economically disadvantaged persons and businesses the
opportunity to acquire assets necessary to enter the broadcasting and
telecommunications marketplace."

Ms. Johnson: Okay. And there was an accompanying white paper?

Mr. Montero: Yeah. Did you want to actually go through the whole white
paper?

Ms. Johnson: Do we need to \-- you've provided a summary earlier.

Mr. Montero: Yeah, you've already gotten a summary of it earlier.
Although, are the white papers in -- yes they are.

Ms. Johnson: Yes, white papers are attached.

Mr. Montero: Okay, they're actually in the book here, which provides a
history of the tax incentive program. Particularly, the earlier minority
tax certificate program. Some of the considerations and allegations that
led to its demise, but as well as some of the considerations by industry
and government as to why it's, at least we have found it to be, a fairly
universally endorsed program and one that is very much needed. And as
you've heard here, several of the sub-committees here have all endorsed
the return of some kind of a tax incentive program.

Ms. Johnson: Jane, did you have ---

Ms. Mago: I just wanted to note for the record. The resolutions and the
white papers have been on the website contained under the submissions
for the June 14^th^ meeting. What you have in the book here is simply
the printout of what has been available on the website for your
consideration.

Unidentified: Move to adopt the resolutions.

Ms. Johnson: Motion and second. Any discussion? Benita.

Ms. Fitzgerald Mosley: Yes, regarding the Chairman's comment about
lobbying efforts and really the restriction upon the FCC to do that. Did
you all give any consideration to what ways in which, what things you
might employ -

Mr. Montero: We did. And, in fact, we actually, it came up in several
conversations because we had interviews with representatives of
legislators as to what they would like to see as far as increased
involvement by the commission staff, and we actually pointed out some of
the restrictions on the commissioners in that respect. We rooted the
language of the resolution very carefully and for precisely that reason.
Earlier drafts had said that we would urge to the FCC to adopt such a
program, it was pointed out that the FCC couldn't adopt such a program,
that it really required, really an amendment to the Internal Revenue
Code. And so some of that really had to come from the Hill. So the
resolution is fairly broad in its nature in that it doesn't urge the FCC
to act, it just generally urges the adoption of a federal program that
would introduce the capital gains deferral mechanism to achieve those
ends. I mean clearly, again, I think the FCC can play a role. In its
reports to the Hill, it has endorsed a tax incentive program. It's
actually done it two times in a row in the 257 reports. There are again
limitations on the ability to "lobby" whatever falls into that
definition. But again, to the extent that these reports and these
resolutions of this committee will be seen by those beyond the FCC, I
think what we were getting at is that we wanted to send a message not
just to the FCC, but also to Capitol Hill and also to any other
governmental instrumentalities or the industry that might be reviewing
these to see that this is the position we take is that a program like
this should be, we urge the re-adoption of a program such as this.

Ms. Mago: I think it's fair to call this sort of a sense of a committee
resolution. I mean you're making a statement as to your broad belief
that such a program is something useful, which is the kind of thing that
we've heard in each and every sub-committee meeting.

Commissioner Copps: But if I could just take a crack at that too, you
know there's, there are different levels of representational activity or
lobbying or whatever you want to call it. And I'm not aware of anything
that precludes an independent agency from developing a fairly specific
list of options for Congress to consider as it endeavors to achieve
overall objectives. And I think that's one area where we have been a
little bit remiss, whether it's talking about this in diversity, whether
it's talking about how we get broadband deployed across the country. You
know I think it's our responsibility to go out, get the facts, get
recommendations and share that with the Congress and say here's what we
think is the problem, here a number of ways to do it, they can be rather
specific. I don't think that comes under any prohibited lobbying
activities to do something like that.

Ms. Johnson: Thank you. Mr. Temple.

Mr. Temple: The fact that this specifically does not, I think raise on
the Hill. Members of Congress routinely ask the commission for its wish
list, and I would assume that if we pass on these recommendations that
it's expected that these items will make it onto such wish lists, if
it's adopted by the full commission.

Ms. Mago: Yes, and as Frank noted, this has been on the commission's
wish list. And so, that's why this one I believe is more a sense of this
body. The commission has had this on its wish list, and will continue to
do so. But, this is to get a sense from you all.

Mr. Montero: And I don't think that I overstate, and I welcome any of my
fellow sub-committee members to challenge me, but I do think that the
sense certainly of the sub-committee was to urge the FCC or any other
governmental bodies to do to take whatever steps are necessary and
appropriate to reintroduce this program. So, to the extent that you have
any permissible activity to definitely do it.

Ms. Johnson: Thank you. There's a motion and a second? Any further
discussion? Seeing none, then be vote, all those in favor. Opposed. Show
it approved unanimously. Thank you.

Ms. Mago: And we will note that on the phone we have Andy Barrett and
Jamie Howard are on the phone, and I assume that they both said aye to
this as well? Hearing no objection, I think they said aye. Mr. Montero.

Mr. Montero: The next one is the sub-committee's recommendation on the
distress sale policy, which is likewise one of the three items that I
referenced in my earlier report. And, our resolution reads as follows:
Be it resolved that the Advisory Committee, on diversity of
communication in the digital age, recommends that the Federal
Communications Commission reaffirm the viability and routine
applicability of the distress sale policy. To protect the public
interest, and ensure transparency in the operation of the distress sale
policy, it is recommended that the Commission assess each distress sale
purchaser's ability to promote diversity and require a showing of the
bona-fide's of the purchaser's company, its commitment to promoting
diversity and providing service for a substantial length of time, and
its plans to serve the needs of the public, and to correct any
deficiencies in station operations caused by the distress sale seller.

Again, the white paper is attached to it. And with regard to this
proposal, Madam Chairman, I might also note that, in fact with the next
two proposals that David Honig was very, very much involved in, as were
others, in the preparation of these resolutions. So, as questions come
in, I may also ask to further David on some of the discussion.

Ms. Johnson: Thank you. Is there a motion? Second? Motion and a second.
Any discussion? Seeing none. By voice vote, all those in favor? Opposed?
So this is approved unanimously. Congratulations. And, third issue.

Mr. Montero: Last recommendation of the sub-committee on Finance is on
incentive based regulations, and it reads: Be it resolved that the
Advisory Committee on Diversity for Communications in the Digital Age,
recommends that the Federal Communications Commission consider the four
proposals listed below, as a means to promote broader access to capital
for socially and economically disadvantaged businesses. They are:

1\. Waivers of the structural ownership rules;

2\. Waivers of the attribution rules;

3\. First place in line for future duopolies; and

4\. Waivers of the construction permit expiration rule.

Ms. Johnson: Is there a motion? Is there a second? Any questions
regarding the motion and/or the discussion papers? Seeing none? Then by
voice vote, all those in favor? Opposed? Show it then approved
unanimously. Congratulations. And does that conclude your action items?

Mr. Montero: It does Madam Chairman. Thank you.

Ms. Johnson: Thank you Sir. Next, Steve.

Mr. Hillard: I'd like to direct the committee members' attention to the
tab indicated as Adoption of the Transactional Opportunity Rule. I
wanted to make a few comments, and then allow any of our sub-committee
members, if they have comments and in particular, David Honig, who did
assist a lot on getting through a number of difficult questions that the
sub-committee members assessed in developing this proposal.

This was a matter of which we viewed as effectively consigned to the
Diversity Committee for its review and potential recommendation and
within our orbit of focus as sub-committee. I can tell you that as we
undertook the rule, which I'll I guess read in the simple form here in a
second, which was basically it would be, I guess with the resolve
language: Be it resolved that the Advisory Committee on Diversity for
Communications in the Digital Age urges the adoption by the commission
of the following rule:

No FCC licensee shall discriminate intentionally against a qualified
person or entity with respect to the offering for sale or the
entertaining of offers to purchase, any FCC licensed facility because of
race, color, national origin or gender.

As we examined this, we strove to find the balance between the merits of
a clear articulation by the commission of this policy, as well as the
workability and pragmatics and potential effect upon the marketplace,
which is explored at some length in the white paper. But this addressed
everything from the confidentiality concerns of the seller to concerns
of other groups, such as media brokers who we spent a substantial time
vetting this rule with to their satisfaction that it was workable. So,
with the permission of the Madam Chairman, and David, if you had some
additional comments \--

Mr. Honig: No, I think I agree with the presentation, and I'm happy to
take questions.

Ms. Johnson: Okay, and with that is there a motion? There's a motion to
move? Is there a second? Any discussion or questions for Mr. Honig?

Mr. Temple: I have a question.

Ms. Johnson: Mr. Temple.

Mr. Temple: The categories for non-discrimination. How did you arrive at
those, and did you think of including others? Such as sexual
orientation, for example.

Mr. Honig: The categories are really drawn from the parallel is Section
2080A, Part 73, the EEO Rule. It's this, actually this proposal was
first raised several years ago in connection with the EEO rule, and the
commission felt it ought to stand by itself and be treated as an
ownership related matter, but the definitions are the same as those in
the EEO rule, and we'll track them for consistency.

Ms. Johnson: Any other questions? With that, on a voice vote, all those
in favor? Opposed. Show it approved unanimously. Thank you very much.
New Technologies. Mr. Temple.

Mr. Temple: I'd like to have both Ari Fitzgerald and Marva Brown Johnson
to take seats at the end of the table. They are subject matter experts
for both of the recommendations that we will be considering today.
First, Marva Brown Johnson is a force of nature otherwise known as Marva
Brown Johnson. She has been essential to the work of the New
Technologies sub-committee, and has been one of the driving engines of
the sub-committee, and all of, in fashioning, all of the recommendations
of the committee, one of the many blessings of having Roscoe Young on
the Diversity Committee, has been that he brought Marva Brown Johnson to
us. Marva would you summarize your draft of the Supplier Diversity
Program recommendation.

Ms. Brown Johnson: Certainly, and thank you for the introduction. In
fact, that's why I was being a bit schizophrenic as to whether I was
really representing Roscoe and myself today? And I just wanted to thank
you all for the opportunity, first of all. The New Technologies
sub-committee put forth the recommendation that the FCC and this
committee establish the New Technologies Supplier Diversity Program, and
just as an overview, I'd like to start by giving an overview of the
program, and what we see as the flagship aspect of the program, and then
I'd like to open it up for questions, if people would like to ask
questions about the establishment of the program, or what some of the
objectives of the program will be. Just to highlight, we did want to
incorporate many of the suggestions that Chairman Powell made earlier
this afternoon. Also suggestions we've heard from Commissioner Copps
when we spoke initially in our initial interviews with some of the
chairmen. And, the focus was truly on opening opportunities for all
different types of technology advancement within the communications
sector. Because there is such a marked shift towards convergence, I
think we talked about earlier whether or not we focused on broadcast, or
whether or not we're going to focus on wire line, probably in ten years
from now, that conversation will be moot, it will be irrelevant. We will
have a market convergence where there is no distinction. Communications
is communications, whether it be over wireless access or satellite or
cable. The fact is is that you'll be focusing on the applications that
will be provided, and not the mode of transmission by which you receive
that service. So, the New Technologies sub-committee effort is an
important one because of that convergence and, therefore, we believe
that the establishment of our recommendation for the Supplier Diversity
Program will help in terms of advancing that convergence, objective.

We basically wanted to create, at the end of the day, an opportunity, a
real tangible opportunity, where at least ten companies could benefit
from the linkage between the access to capital, as well as the access to
the deal-making flow in brining their new technology recommendations to
real people, to real opportunities that could create, again, something
tangible within five years for at least ten companies. With that said,
the program basically has three elements. The first element of the
program is a mentoring program. We often get to participate in industry
forums where people can bring forth their technology and present, and
it's more of a trade show atmosphere. We believe that trade shows are
very important. And, in fact, as a part of this program, we would like
have a trade show, perhaps even in September, centered around one of our
off-site road show type activities. However, we believe that much more
important to this type of initiative is, a real linkage in a long-term
relationship. So that's why we proposed as the first cornerstone program
of the pushing of the program, the mentoring aspect of the program,
where we would have larger companies actually mentor, or really enter
into long term business associations with smaller new emerging companies
who are bringing forth technology recommendations.

The second aspect of the program is a Supply Diversity Resource Center.
We believe that there are already functions and disciplines within the
FCC that could really be of assistance, and have been of assistance to
smaller companies. We'd like to leverage them further in that role to
make sure that we can have a guide that gets you through some of the
regulatory trappings, so that some of the smaller emerging technology
companies can have access, perhaps to even engineers, to bounce ideas
off of. We saw that that was a critical aspect as well to helping some
of the smaller companies navigate their way through the regulatory
process.

Lastly, and most importantly, we have as the flagship item for this
recommendation, and that is the Minority Communications Supplier
Diversity Development Program. As noted earlier, none of these things
work unless you have access to real opportunities. And real
opportunities begin with access to capital to actually make some of
these ideas come to life. So, I think that we've had a great melding of
many aspects because we did have Anthony, who's on the Access to Capital
Committee, and we struggled for a long time because we needed to find
some way, we weren't recommending new technology, we were trying to
engender an environment whereby new technology could be easily deployed.
And without access to capital and that linkage to that access to capital
effort, none of these programs would really reach their full
effectiveness.

> As a next step, really what we'd like to do, is to begin to identify
> charter members. We would like to focus, just as Chairman Powell
> suggested, outside of your traditional telecommunications people. We'd
> like EDS, for example, Microsoft, one of the people you heard earlier,
> Riley thanked on behalf of our sub-committee was Deepak Masong, who
> actually is a software vendor, and he is doing an applications based
> software program that is communications based. So, we are looking to
> try to look for internet enabling opportunities to merge software
> opportunities and communications opportunities. So, we'd like to move
> forward, and as a critical next step, identify some of the players
> that could be charter members, as well as charter mentors, so large
> companies and small companies, so that we can really begin to move
> forward with some of the program recommendations that we would have
> and next steps in order to advance this recommendation. Are there are
> any questions?

Mr. Temple: Well, first let me thank you and move the adoption of the
recommendation to establish the Supplier Diversity. Essentially it will
work in the lap of the new --

Committee Member: Second.

Ms. Johnson: There's a Motion and a Second? Any discussions or questions
of Ms. Johnson? For the Chairman?

Commissioner Copps: Can I ask a question?

Ms. Johnson: Yes.

Commissioner Copps: This is an industry-wide program? These other ones
that are mentioned here, I guess, are very company specific but what
we're talking about here is a ----

Mr. Temple: What would happen is that the, our sub-committee would work
with the FCC in developing and targeting companies to participate and
working with them to develop the mentor program. We would target the
companies, and the FCC would make the invitation.

Commissioner Copps: And, can you explain to me a little bit more again
about this distinction the Chairman was talking about between the
emerging industries and the current industry leaders? I get the feeling
the emphasis here is very much on reaching out for the new emerging
industries more than trying to work with industries currently
controlling most of the charts.

Mr. Temple: It would not work to the exclusion of the already developed
industries.

Commissioner Copps: But it would work to their inclusion also,
proactively.

Mr. Temple: Absolutely. Specifically.

Ms. Brown Johnson: Actually, Commissioner Copps if I may. Actually, it's
a great opportunity to bring the two together, because one of the things
that we saw as an opportunity within this program recommendation is for
the smaller emerging technology companies to have a direct link into the
larger companies. So, for example, if Cox has a bottleneck issue that it
needs working on, they can speak with these smaller emerging technology
companies, and create an opportunity for thought, create an opportunity
to perhaps it will be something never thought of that will be leveraged
in an existing industry that takes us to the next step as an industry as
a whole.

Ms. Johnson: Okay, there's a motion and a second? Any other discussion?
Seeing none. By voice vote, all those in favor? Any opposed. Show it
approved. Congratulations.

Mr. Temple: Thank you. Our next set of recommendations were developed
with the assistance and brainpower of one Ari Fitzgerald, who is a
partner at the Law Firm of Hogan and Hartson. For your convenience, we
have divided these recommendations, sub-divided these recommendations
and the first is: Be it resolved that the Advisory Committee of
Diversity of Communications in the Digital Age recommends that the FCC
consider recommendations for increasing access to capital.

1\. Reinstate and explain the minority tax certificate, create a small
and minority communications loan guarantee program administered by the
SBA, create an entity that would purchase loans made to minority and
small business communications companies in the secondary market, allow
private lenders to take a security interest in FCC licenses and expand
the type and amount of funds available to small communications
businesses through the Telecommunications Development Fund. We all
recognize these recommendations would require congressional legislation
or FCC rule changes. Ari.

Mr. Fitzgerald: Thank you Riley. I think as Marva has already sort of
intimated, one of the themes running through our sub-committee's
deliberations was this idea that there was a whole lot going on out
there in sectors that are not traditionally regulated by the FCC. But at
the same time, as has already been mentioned today, the FCC, the
leverage points, the points of possible leverage were most available,
vis a vis those entities that were being regulated by the FCC. So, what
our committee tried to do, and you heard Marva sort of describe the
supplier diversity initiative, was to try to figure out a way to use the
leverage that the FCC has to really create opportunity for emerging
businesses. So, some of the recommendations that we focus on are
specific to access to capital that would apply to any technology and
other recommendations focus on those areas, those entities, those
industries that are still regulated by the FCC in some form or fashion
with the goal of trying to create incentives for those regulated
entities to work with new emerging technology companies that are owned
by minorities.

Some of the recommendations that we came up with relating to access to
capital have already been discussed by other sub-committees. Our
committee is also very interested in reinstating the tax certificate.
There are additional recommendations relating to access to capital
though. I'm not going to spend too much time talking about them today.
We do think that in addition to reinstating the tax certificate, there
are other ways to get funds to emerging technology businesses owned by
minorities, including creating a loan guarantee program that would
reduce the risk associated with making investments to emerging minority
owned companies, many of which would have sort of a non-traditional
credit profile and might not be able to secure the loans without some
type of guarantee. Fannie Mae has worked very well in encouraging
homeownership by people who would otherwise, if it weren't for Fannie
Mae, would not have access to a home. We think the same type of
institution could be created for small businesses. Again, the idea being
that there would be a source of capital available, an institution
available to actually buy loans that were made by financial
institutions. Thereby, keeping the flow of capital flowing to those
institutions, also minimizing the risk associated with making loans.

There has been a lot of discussion about the problem of taking a
security interest in FCC licenses. That issue has been around for a very
long time. Broadcasters and wireless companies have gotten around that,
to some degree, by allowing lenders to take an interest in the proceeds
from the sale of licenses. But it does often take some time to explain
the process to potential creditors. And so eliminating the need to
explain, you know, why you can't formally take a security interest in
the license could potentially be quite helpful.

And we made a very general recommendation about increasing the scope of
the TDF's responsibilities. Again, we see TDF has done a great job, but
if we expanded the scope of its responsibility, we believe that it could
be even more helpful in promoting opportunities in emerging
technologies.

Mr. Temple: All right, I just need you to clarify one thing, which is
with respect to interest in FCC licenses, the priority of the security
holder, the security interest holder, vis a vis the FCC.

Mr. Fitzgerald: Right, right. These would all, I believe all of these
recommendations would require legislation. Yes, but who \--

Participant: Not to allow \-- I'm sorry \-- not to allow security
interest in FCC license?

Mr. Temple: Yes, yes.

Participant: I think the prohibition is by FCC policy.

Mr. Temple: Yes, by FCC policy, so legislation or rule change. But the
question was, who would prevail, the security holder ----

Participant: It wouldn't require legislation or rule change, it's a
policy, so it could just be it would just be, require a change of
policy.

Mr. Temple: There is some debate on that issue, but the goal here would
be to allow the security holder to have priority.

Ms. Johnson: Let's, we have a couple questions or clarifications here.
Jane, did you want to speak ----

Ms. Mago: Yeah. I don't think it's just a policy Frank, I think this,
you know, it's part \-- there's a legal requirement regarding ownership
of the licenses.

Participants: Is there a rule? There is no rule ----

Ms. Mago: The security, I think it would require some modification of
the statute, but we would have to look into this. This is something.

Ms. Johnson: David.

Mr. Honig: Actually, the Access to Capital sub-committee has looked into
the same matter, and there is a way to do it that we're exploring and
hope to report on next meeting that would achieve this with just a rule
change, and in a nutshell it is just to have if you file a 314 to file
when would take the station in the other direction, just switch
positions of the assignor and assignee, and the only thing that you
would have to change is the rule how long you need before you close on
the transaction. You could make that two years on the transaction back,
if there's no, if the conditions are to the in the asset purchase
agreement are satisfied, you would just never file it, and dismiss it.
So there's a way to do it exactly the way that Ari has specified, that
wouldn't require legislation. But it would require a rule change.

Mr. Temple: It would require a rule change.

Ms. Johnson: Mr. Winston. I'm sorry, Mr. Chairman.

Mr. Temple: I want to move the adoption of the recommendation.

Ms. Johnson: Did we agree with that?

Mr. Temple: We forgot that.

Ms. Johnson: Okay, we'll go back to your discussion, but there is a
motion to put it on the floor for discussion. Is there a second? Motion
and a second. With that, we will continue the discussion. Mr. Winston.

Mr. Winston: Yeah, Ari, I was wondering how much discussion you had with
current licensees about this proposal to allow security interests.

Mr. Fitzgerald: We had some discussion. Again, focus across various
industry groups. But, we didn't get a whole lot of feedback on this
particular proposal. We've had a lot more specific discussion about some
of the other proposals that I'm going to be discussing.

Mr. Winston: I recall last time this was discussed extensively at the
commission, there was a great deal of resistance from broadcast station
licensees, many of whom feel that they already are shackled by
aggressive lending practices in their industry, and thought that
allowing a security interest in the license would give them even less
negotiating position than they have already. So I think there would be
some need for further discussion before we go very far with this
proposal.

Mr. Fitzgerald: Again, the fact that a lender can't take a security
interest in a license today has created, is viewed as sort of an
obstacle by some to being able to secure the capital necessary to build
out their businesses. If it were available, yeah I'm certain that
certain lenders would demand it from licensees. But it is perceived as a
barrier today, because you do have to go through and explain how you get
around the prohibition.

Mr. Temple: The purpose here, if we pass this recommendation is to not
say that this committee recommends that the FCC absolutely and
henceforth or ever more adopts a recommendation to take security
interest in an FCC licenses, but to place it firmly in the hands of the
commission to explore in the form of a rule making, and to have further
discussion on it.

Mr. Winston: And I would support your language much more than what was
written in front of me here. I think it's much more, the committee's
proposing to allow a security interest and that would trouble me.

Mr. Temple: Okay.

Ms. Johnson: I'm sorry, is that a friendly amendment?

Mr. Winston: I would take it as a friendly amendment.

Ms. Johnson: And \--

Mr. Winston: Which is to place this in the hands of the FCC for
consideration.

Ms. Mago: So if you were to say, for example, the Federal Communications
Commission might consider actions that it might take to allow or it
would be really to further most of the other goals and to potentially
allow that one if you're ready to do that.

Mr. Winston: Consider if such an interest would be advisable, is I think
the language I'd be looking for.

Mr. Montero: Personally, I agree with the idea of having the commission
look into this further, and in fact, Ari, your law firm had a
longstanding petition before the FCC, dating back to probably the early
'90's, trying to urge the FCC to do away the prohibition on securities
and FCC licenses. When we handled the Senior Lenders Panel, we did hear
from several senior lenders that this prohibition did act as a
disincentive, particularly by smaller less sophisticated lenders on
lending to telecommunications companies. I guess my only cautionary note
is that I think Jim's amendment is very very well taken, because there
are a lot of wrinkles associated with doing away with this prohibition
regarding do you allow foreign banks to take a security interest in that
license, if you do, are you going to allow strict foreclosure? That is
to say, are you going to allow the lender to seize the license without
the FCC being able to vet that bank? You know, people immediately start
thinking about BCCI, or whomever else. So, it's just that there are a
lot of wrinkles associated with this. But I will say that a lot of
lenders stated that this policy or this rule was a major disincentive
for smaller lenders.

Mr. Temple: Jim, I don't object to your friendly amendment, but I want
you for your consideration, I want you to look at the overriding
language of the recommendation to see if that will do it for you. But,
otherwise, I will accept your change.

Ms. Mago: I need to be clear about what the amendment is.

Mr. Winston: My colleague here just drafted something for which I find
very appealing. That phrase, "allow private lenders", would be preceded
by, "consider whether it would be advisable to allow private lenders,
etc., etc."

Ms. Mago: Just to be very, very clear. What you're talking about voting
on is the resolution, at the top, the be it resolved language that is
here "asking the commission to consider proposals listed below", and the
now next to last proposal would be to say that "it would consider
whether it would be advisable to allow private lenders to take a
security interest", is that the language?

Ms. Johnson: So that is a friendly amendment? Accepted?

Mr. Temple: Are there any other questions about any of the other access
to capital recommendations.

Ms. McCann: Yes I have one more. First of all, I would like to just
establish that I am in agreement with Jim on his amendment. We have
backed about a handful, a half dozen various ethnic individuals and
women in acquiring broadcast assets over about seventy-five stations,
and this issue would be a very big issue for us, and I am in complete
support of Jim's recommendation.

The other issue that I have with regard to these recommendations is the
last one. And as I talk to Riley, I understand the concept here was to
find a fund that was already established to put capital in, to have that
be the vehicle in the access to capital group he talked about trying to
establish a fund to fund, and I'm in agreement with the concept here,
but I think that it should be amended to say "TDF or other established
funds as a vehicle," rather than just TDF as a concept.

Ms. Johnson: Is that an acceptable friendly amendment. So we would add,
"Through the TDF or other established funds". So that then accepted
without objection? Any other final comments.

Mr. Montero: I have one question. When you say, it's not specific, but
when you say expand the type and amount of funds available, are you
referring to federal funds, as in interest on auctions? Or, are you
talking about any funds?

Mr. Temple: I think any funds.

Ms. Johnson: So, the clarification is that it's broader than more
narrow. Any other questions?

Mr. Temple: Okay, then I'd like to move on to the second set of ----

Ms. Johnson: No, we're going to vote them out, you're on a roll, we
better get these while we can. By voice vote, all those in favor with
the two appropriate amendments, signify by saying Aye. Opposed? Show it
approved unanimously.

Mr. Fitzgerald: Now I'm going to move on to the second set of
recommendations, and again, as I mentioned earlier, and as Marva has
already sort of suggested, our committee was interest in making sure
that there was a place, opportunity created by this sub-committee, by
the sub-committee's recommendations for Emerging Technology Companies,
but we were also very much aware that the FCC has leverage, more
leverage over certain companies than others. And what we tried to do
with the next set of recommendations was to create incentives for those
companies that the FCC has leverage over to serve, underserved minority
communities, and also partner with emerging technology companies.

The first couple of recommendations that I want to talk about are two
proposed new bidding credits. These credits would be transferable
credits or vouchers that would be made available. The first credit would
be made available to any liener in an FCC auction, regardless of size,
that certifies that it will use its spectrum license to provide service
to an underserved market. Now, this bidding credit seeks to achiever
goals of this sub-committee and goals that the FCC has. The FCC
obviously has a goal to make sure that services are available to as
widely a group of Americans, as widely a group of people within this
country as possible, and this committee is not only interested in
promoting ownership opportunities, but also making sure that
traditionally underserved communities are served. So this credit would
be made available to companies that make a commitment to use their
spectrum licenses to provide service in underserved areas. Now the FCC,
a couple of years ago, developed a credit which sought to promote
service on tribal lands. A credit that would be used, a credit toward
bids made in FCC auctions by carriers that commit to provide service, to
deploy facilities on tribal lands. This particular credit would work a
little bit differently. The idea would be that if you bid in an FCC
auction, your license area, whether it be a BTA license or an MSA
license, or whatever. If within that license area, there were areas
designated as underserved areas, either because they fall within a HUD
designated empowerment zone, or enterprise on them, we haven't really
figured out the geographic, how we would determine which geographic
locations would be, would qualify. But, if you have those areas within
your license area, and you're committed to providing service to
individuals residing in those areas, you would qualify for the credit.
Unlike the tribal lands, where service is not being provided because
facilities are not available on these lands, in this particular case,
there may be coverage, it just may be that people living in certain zip
codes, or within certain areas, within the license area, may not have
the resources, or may not have, or may not otherwise be, they may not be
receiving service at the same rate as others within the license area.
So, the goal of this credit was to create an incentive for licensees to
figure out ways to basically close the gap between the amount of service
they are providing to certain people within their license areas, and the
amount of service they are providing to others that may be living in
impoverished or underserved areas.

The second credit seeks to promote, it sort of dovetails with our
Supplier Diversity Initiative. It would create a transferable credit or
voucher, and would make it available to any FCC spectrum licensee,
auction winner, again, regardless of size, that makes a satisfactory
showing that it has entered into an agreement with a socially
disadvantaged business, as defined by the commission, for the provision
of services relating to that spectrum licensee's offering of services to
the public. Now here the idea would be to give some currency to
potential new business emerging technologies. The licensee would enter
into a deal either, we'd want to make sure that this credit is
structured flexibly so that a number of arrangements could be covered.
The licensee is interested in using, believes that it wants to market in
a particular ethnic community, and feels that in order to be effective,
either it needs to enter into a distribution arrangement with an entity
that has some expertise marketing to that community -- that type of
arrangement would be covered by the credit, market consulting,
engineering consulting, sales, leasing agreements, resale agreements,
network deployment agreements, content development. Let's say you're
interested in targeting content to certain historically disadvantaged
communities. You may not feel that you have the expertise in house to do
that as a carrier, but you know of some content provider that you think
may. That contract with the content provider would be covered under this
particular credit. So, the idea is to use the areas of leverage that the
FCC has with its regulated entities to see if we can create an
opportunity for businesses that, small minority businesses, giving,
create an opportunity for them to work with these regulatees.

Ms. Johnson: Does that conclude? I think you -- does that conclude the
presentation?

Mr. Fitzgerald: That concludes my description of those two credits.

Ms. Mago: We are going to put on the floor and then take questions. That
does conclude your -- no, there's more on here. Are you going to go down
the list or are you going to ----

Ms. Johnson: Go down the list, and \--

Mr. Temple: Did you want to talk about those others Ari, or do you want
to, should we go back.

Mr. Fitzgerald: I can definitely talk about the others, but I thought
that Vonya might have a question. Did \--

Mr. Temple: Well, why don't we talk about the others first.

Ms. Mago: Why don't we do a complete run-through of all of the items,
and then come to the discussion.

Mr. Fitzgerald: Okay. Again, the theme being to try to create leverage,
incentives for regulatees to promote, consider ways to promote ownership
opportunities. We also recommend that the FCC consider providing
expedited FCC review of license assignment transfer of control and de
facto leasing applications approvals where the applications contain a
certification that a notice of intent to sell or lease a spectrum was
disseminated in a manner that allowed notice to be provided to
minorities. Again, if you're interested in quick approval of your
application, the way that you get the FCC to quickly approve it, is to
make your goals of selling your license, or whatever transaction you
want to engage in, known to minorities.

We also have a recommendation about forbearing from pre-approval of FCC
applications that require pre-approval where the transaction would
result in minority ownership of 25% or greater. The FCC has forbearance
authority in certain cases, and again, we believe that there would be
people who would be interested in securing quick speedy approval of
their transactions, and such a rule would be attractive.

We also have recommendations relating to unlicensed Part 15. As the
Chairman mentioned, unlicensed just developed as a garden of innovation.
And, although the FCC does not have as much regulatory authority in the
unlicensed space, it does have some. One of our recommendations request
that the FCC consider increasing the amount of spectrum that's available
for unlicensed use.

Ms. Mago: Ari, you're into the next set. Wait a minute.

Mr. Fitzgerald: Yeah, we should go ahead and vote on \--

Ms. Mago: Ari, do you have the breakdown?

Ms. Fitzgerald: I have a different breakdown but, yeah, I apologize. The
last bullet has to do with the Diversity Impact Statement. And the idea
with the Diversity Impact Statement is again, to require that all
applications for transfer of control contain a Diversity Impact
Statement. A statement that explains how the particular transaction
would enhance diversity of ownership or viewpoint. Again, the idea being
seeking out, identifying those points of leverage and creating
incentives for the individual companies with business before the
commission to take steps to promote diversity of ownership opportunity.

Ms. Johnson: Thank you.

Mr. Temple: Madam Chair, I recommend that the committee adopt the
recommendation that the FCC consider the proposals as listed below.

Ms. Johnson: Is there a second?

Participant: I had a question.

Ms. Johnson: No, now we do the discussion.

Participant: On the second bullet, Ari, is there anything, you had a lot
more detail about that than is reflected in the document I have. Is
there anything in there that would require that the transaction be of
some significant value? I mean, I could see an opportunity for licensees
to engage in such de minimus transactions or minimal transactions to get
a credit and you know it would be meaningless.

Mr. Fitzgerald: One way to make sure that that doesn't happen is to do
what the FCC essentially did with tribal lands, which is to basically
give you a credit for the amount of the value of the transaction. Now,
if you did that, you have to weigh that against, if the value of the
contract isn't significant, and the carrier can't think of any way to
come up with a significant contract, that might not create the type of
incentive you want for the particular licensee to engage in the
transaction. But the answer is, yes, we have to be very careful not to
create a situation where this particular credit could be gained,
obviously seeing what the credit has to go to cover a bona fide
contractual arrangements. But there are various ways for the FCC to
police that activity to make sure that the arrangements that are covered
are bona fide arrangements.

Mr. Temple: But the recommendation, as currently drafted, does not have
a significant tag to it, but we would be open to that kind of
recommendation.

Ms. Mago: Let me also note to the committee that the report of the New
Technologies Committee that's in the front part of your binder, has the
expanded written explanation of this, so that you have that there.

Ms. Johnson: Do you have any final questions? Decker and then Dave.

Mr. Anstrom: Just a quick comment then question. First of all, I'd like
to commend this sub-committee has done very innovative work, I was
interested in the first impact statement which strikes me as a very
creative idea, and I was wondering, when you think about diversity
impact, specifically what are you looking at? I mean, are you looking at
broadly in terms of employment policies as well as ownership and is
there a breadth that you're thinking of, are you specifically looking at
ownership? And I guess my suggestion maybe for future work maybe by the
sub-committee, without changing this one, is to pick up a little bit of
the conversation is if we think this is a good idea, if you all go
forward with this, whether this idea of a diversity impact statement
might be something that's linked not solely to license assignments and
transfer of control applications but perhaps more broadly in terms of
other things that the commission might be doing. You know, arranging for
NPRMs to whatever.

Participant: \-- jurisdictional things.

Mr. Anstrom: Yes, exactly right.

Ms. Johnson: David or Jim?

Mr. Anstrom: On the second bullet, "provide a transferable credit or
voucher" and so forth, should end with "a socially and economically
disadvantaged business".

Ms. Johnson: Thank you. So, I think that's --was that accepted?

Participant: It's consistent.

Ms. Johnson: Yes. Jim?

Mr. Winston: Question. And I realize it goes to all the recommendations
that we've adopted today. I assume that as we continue our work, if
thoughts come up that suggest some of these recommendations need to be
redefined and changed, at the next stage of our proceedings, we can come
back and revise some of these recommendations.

Ms. Mago: Absolutely.

Ms. Johnson: Yes.

Mr. Winston: Okay, and the \-- with regard to Mr. Anstrom's comment
about the diversity impact statement. It's an idea that has been floated
for a few years, and I think it has a lot though it's intended to be
broad. So I think using it in other areas certainly would be something
the committee should look at.

Ms. Johnson: Thank you. By voice vote, all those seeing no other
discussion, by voice vote, all those in favor signify by saying Aye.
Opposed? So approved unanimously. Thank you.

Mr. Fitzgerald: The second set of recommendations focus on unlicensed,
again as ----

Mr. Temple: Ari, can you go to the next page, which would look at the
Regulatory, okay you are, okay. Regulatory Barriers for the Deployment
of Unlicensed Services Technology.

Mr. Fitzgerald: Yes. As the chairman mentioned, the unlicensed space is
a space of amazing, there's a lot of innovations going on in that
particular space today. The companies and businesses that are involved
in unlicensed, are not regulated to the same extent that FCC licensees
are. Nevertheless, there are points of leverage available, and we try to
take advantage of that, and try to create some opportunities to that we
believe may have, if not a direct impact on the ability of minority
companies to participate more in emerging technologies, at least an
indirect effect. So some of the recommendations that we're asking that
you consider is there is a pending proceeding going on right now with
respect to 3650 to 3700 megahertz. The FCC has proposed setting aside
some of that spectrum for unlicensed use. We've asked that the committee
consider recommending to the commission that it do that. Again, the
benefit, the good thing about unlicensed is that it eliminates that
barrier to entry that licensed, you have to pay, most of the wireless
licenses they're now assigned by the commission or assigned via auction.
There is a cost associated with it. Unlicensed doesn't require an
auction.

Mr. Temple: Ari, for the record could you just talk a little bit about
what services you're talking about in unlicensed.

Mr. Fitzgerald: This particular band falls between the 2.4 ghz band and
the 5.8 ghz band. Both of those bands have been allocated for unlicensed
use, higher powered unlicensed use, such as wifi hotspots for example,
short range communications. With the changes that are occurring in
wireless unlicensed technology now, equipment is being developed that
facilitates wider area coverage by this equipment. So there are now
wimaxes now which are being deployed which will allow facilities to
transmit much further than they have under, much further than they have
in the past.

So, a company that is interested in providing wide area service, but
doesn't want to necessarily have to spend the money to acquire an FCC
license, might now today look at unlicensed as a way to do that. And the
more unlicensed spectrum that is available, the better that company's
opportunities. The 3650 to 3700 MHz band falls between two spectrum
bands that have been optimized for unlicensed use.

The second bullet focuses on \-- recommends that the commission create a
fast track equipment certification process. Now, equipment certification
process at the FCC is not as cumbersome as the license process, but it
is a process, it's a regulatory process. And anything that the
commission can do to shorten that process could be helpful to small
businesses, including businesses owned by minorities and women.

The FCC has a program called the Experimental License Program. Today the
longest term for any experimental license is five years. We're
recommending that the committee consider recommending that that term be
extended to seven years. When companies that are developing new
technology go to the capital markets they're often asked, well what's
the process with the FCC? Sometimes if they don't, if they're in the
middle of an allocation process, it can take a very long time to secure
the regulatory approval they need to deploy their service, holding some
type of license is often helpful with the capital markets.

And the last bullet in this section focuses on expanding the terms for
Special Temporary Authority, which I believe most people are familiar
with.

Mr. Temple: I move the adoption of the recommendation for commission
consideration.

Ms. Johnson: Is there a second? Any discussion?

Mr. Winston: Could I ask a question, just because this is an area I'm
not that very familiar with. Are there currently many minority companies
that are affected, are there existing in minority companies that are
that might be able to step in and take advantage of these rule changes
now, or is this sort of hoping for the future?

Mr. Fitzgerald: I don't believe the FCC keeps any records on the race of
their \-- of entities that hold equipment authorizations, but there are
thousands and thousands of companies out there with equipment
authorizations, and there are a lot of people in garages around the
country that are trying to develop equipment that would need to be
certified by the FCC. Now these recommendations would benefit everyone.
They're race neutral. But because unlicenses become a lot more \--
there's a lot more activity in the unlicensed base than there was five,
even two, five years ago. It's definitely an area that many people are
focusing on as possibly the next big growth area. And, again, these
recommendations are race neutral, but they could have the effect of
helping people decide that they could make a business without
necessarily going through the process of acquiring a license.

Ms. Johnson: Thank you. Any final questions? Seeing none. By voice vote,
all those in favor, signify by saying Aye. Opposed? Show that section
approved unanimously.

Mr. Fitzgerald: Quickly, I will go through the last set of
recommendations, which relate to license spectrum -spectrum that is
licensed today by the FCC. The FCC currently offers bidding credits in
most of its spectrum auctions and they are generally made available to
small and very small businesses. The FCC decides, on a case by case
basis, the percentage credits made available in those particular
auctions. But recently, the credits have pretty much been 15% for small
business, 25% for a very small business, and depending on the auction,
the standards could be quite rigorous to meet those thresholds. This
recommendation would ask that the FCC increase the percentage bidding
credits for small and very small businesses to 25 and 50%, respectively.

Again, with the idea of that small and very small businesses are having
that the price of a spectrum license is a significant barrier to entry,
and anything that the commission could do to reduce that barrier, or
make it more manageable would be helpful.

The second bullet asks the committee to consider proposing to the
commission that it license spectrum over smaller geographic areas. Large
spectrum, large geographic areas generally cost more money. And, if the
commission, in particular auctions, for example, if it's interested in
promoting opportunity by small and minority businesses, it might want to
consider reducing the geographic license areas. Smaller areas are much
more affordable. And again, these recommendations are not race specific,
but could potentially help minority businesses interested in getting
into spectrum, into the business of providing spectrum based services by
lowering the cost of entry.

Participant: They find it a forbearance?

Mr. Fitzgerald: The FCC, last year, promulgated rules that allow
non-licensees to lease spectrum from spectrum licensees as part of its
secondary market proceeding. This was a great decision, because what it
does is it allows people, businesses that might not be interested in
becoming licensees themselves to nonetheless offer services to the
public using someone else's license spectrum. Now, the FCC does not
require pre-approval for transfers of leasing arrangements that do not
affect a de facto transfer of control of the license. But it does
require pre-approval for what they call de facto transfer leasing. The
FCC has sought comment on whether it needs to pre-approve these types of
arrangements. If it didn't have to pre-approve these types of
arrangements, the time it would take to enter into an arrangement, a
leasing arrangement, and the time it would take for the lessee to
actually be able to deploy services, would be reduced. The FCC has
sought comment on this issue. Again, this is a race neutral proposal,
but if adopted, this proposal could have the affect of reducing the time
to market for minority businesses that might be interested in getting
into the business of providing services without necessarily becoming a
licensee.

Participant: I move the adoption of the recommendation for commission
consideration.

Ms. Johnson: Is there a second? Showing a second. Any discussion? Frank.

Mr. Montero: Ari, on the bullet one, regarding FCC pre-approval of the
leasing arrangement. Given the fact that there is an NPRM on this issue,
I'm just wondering, what is the committee's obligations insofar as
putting out a recommendation, one way or another, and how the commission
should come out ----

Ms. Mago: In fact, I am specifically discouraged from taking positions
on pending specifically on pending matters, including NPRMS, and that is
something that I noticed about that, and I hadn't been aware of that
before. The committee getting involved I think in particular
proceedings, I think, is not part of the charge of what we are supposed
to be doing now.

Mr. Montero: Does the committee have, I think we discussed this one
before. Does the committee, not that they would do it here, have
authority to file comments in a commission, as a committee? Or make a
recommendation?

Ms. Mago: Directly file comments. The role of the Advisory Committee is
to provide advice to the commission in the form of a report, and so
forming, deciding to be a commenting body I think would be an extremely
unusual step.

Ms. Johnson: David.

Mr. Honig: I would think the charter prevents it, if I remember the
charter is silent, and some advisory committees actually do file
comments and rule-makings. But I don't think we need to reach that
question now. The resolution could just perhaps be corrected with a
friendly amendment saying without intending to take position on any
currently pending proposal. As a general matter, we recommend, and then
the rest of the text.

Ms. Mago: But you're recommending that the commission do something it's
already doing. You're recommending that the commission consider whether
it should forebear, which is something it's already appending, rule
making at the agency, so the agency is already doing what you're
recommending.

Mr. Fitzgerald: We could make the recommendation a bit more general and
to ----

Ms. Mago: It might also be possible just to delete that bullet.

Mr. Honig: One difficulty that we could anticipate, and maybe you could
explain what would happen, is if the commission undertakes a general
rule making on minority ownership for instance, as it has said it would
do in the mass media area, is it the commission's intention that while
that docket is open, this committee can't adopt a proposal or make
recommendations that would fall within the subject matter of that
proceeding.

Mr. Mago: Not at all, David. In fact, as we've discussed it's really the
anticipated work of this committee to help the commission to help
develop those proposals on a rolling basis, so it would be something it
would be entirely appropriate for them to continue to comment on.

Mr. Temple: So, it's not inappropriate to say this, but it does reflect
the committee's \-- if we had passed it \-- it reflects the committee's
"weighing in" on the matter, essentially.

Ms. Mago: Yes.

Ms. Johnson: Any further discussions? There's a \--

Participant: Are we going to vote with this one removed, with this
bullet removed or?

Mr. Temple: I don't see any reason to actually, unless, you don't want
to weigh in. I think it's a question of whether or not the committee
feels that it can weigh in on this particular proceeding and add
further, I think what the commission's going to do already. It seems to
me the commission might welcome it.

Unidentified: So, we're voting with the bullet in?

Ms. Johnson: I think the motion is with the bullet in.

Mr. Winston: Before we vote, I think whether we vote for this particular
item is one issue. But, what I hear, what I hope I'm hearing, is that
there's no impediment to this committee for voting on a pending rule
making matter. And I, you know, if people are hesitant to vote because
they don't want to be involved in this particular rule making, that's
one issue, but I want to make sure that they're not saying that this
committee is of the view that it should not weigh in to pending rule
making matters. That would be a matter of concern to me. Right.

Ms. Mago: Just to clarify. It is appropriate for the committee to take
positions that may be something that is the subject of a pending rule
making proceeding. But, weighing in on a particular, for a particular
side of that proceeding, you'd need to decide that as a committee that's
where you are. I'm not being very clear, I understand that. It's late in
the day, I'm getting tired. But, you are taking a position in the
proceeding if you go forward with this.

Ms. Johnson: Is there an understanding? There's a motion on the---I
think Mr. Temple has a change.

Mr. Temple: No change.

Ms. Johnson: Is there a second? Any further discussion? Seeing none.
Then, by voice vote, with all bulleted items included, all those in
favor signify by saying Aye. Opposed?

Ms. McCann: Aye.

Ms. Johnson: The motion carries with one dissent.

Mr. Temple: Finally, Ari.

Mr. Fitzgerald: In the interest of time, these are recommendations that
do not require either legislation or FCC rule changes. They're very \--
they're fairly general recommendations to the FCC to establish expanded
relationships that the FCC has with other government agencies to promote
minority ownership. The other agencies identified include the SBA, NTIA
and TDF.

Another recommendation would be for the FCC to sponsor an FCC/SBA
conference on minority small business and emerging technologies, and use
the conference to highlight the potential for partnerships between large
and small businesses, identifying certain potential relationships
between those businesses.

The third bullet would recommend to the FCC that it establish a database
that would list information about licenses, license sales, spectrum
leasing opportunities, and other communications related opportunities.
This database would not be, participation in the database would not be
mandatory, it would be voluntary, but it would serve as a resource for
people who are potentially interested in getting into the business and
need spectrum in order to provide services.

Mr. Temple: I move the recommendation.

Ms. Johnson: There's a motion, is there a second? Motion and a second,
any discussion?

Mr. Winston: Yes, it seems to me there may be other federal agencies
other than the SBA that might be worth including, and I would just like
some language that said, "or other appropriate agencies".

Ms. Johnson: The friendly amendment. Show it accepted without objection.
Any other clarifications or questions? Seeing none. All those in favor
signify by saying Aye. Opposed? Show it approved unanimously. Thank you
Mr. Temple and to our subject matter experts. Congratulations. And our
final presentation for resolution action item, Jenny.

Ms. Alonzo: We were just saying back here, ours is very simple compared
to all this. Be it resolved that the Federal Advisory Committee on
Diversity in the Digital Age accepts and commends to the commission's
attention the Career Advancement sub-committee's Best Practices Report,
Workplace Diversity, A Global Necessity and an Ongoing Commitment. Our
recommendation initially mentioned in the opening report basically,
eight \-- nine posts, the report on the website, and help promote it. At
this moment, that's all we're asking. Help promote the white paper to
the industry at industry conferences and so forth. So, that's it from
this end.

I'm not going to go ahead and read the executive summary. Sort of what
Francisco was saying, it's out there, it's available for anyone who
wants to curl up in a couch and read it at your leisure. But I do want
to say that this is a work in progress for this committee. We went
through a few back and forth very productive discussions, and certainly
there is an understanding that there is a lot of work to be done, and I
want to bring attention to our steps and phases II and III. At this
point at the submission of this report, we have completed phase I. In
phase II, we will be developing additional recommendations from the
sub-committee to present to the full committee regarding the
dissemination of Best Practices Guidelines. We will be developing
recommendation action items or other voluntary policy initiatives for
the communications industry, and we will explore opportunities to
conduct annual best practices benchmarking studies. That's all expected
to take place in phase II.

Phase III, we are going to propose legislative and regulatory
recommendations for Congress, the Federal Communications Commission and
other federal, state and local administrative agencies for
consideration. So, at this point, I pass it on, and I would like to add
one thing. I understand that for the record I need to say how we
conducted our meetings, and I didn't do that in my opening report. All
of our meetings were via e-mail, phone calls, and in-person meetings, so
I thank everyone for being available and for the cooperation. And, the
white paper we're putting forth is again, a labor of love of this
committee and of Fatima Fafanna and her team, and I would like to thank
the committee member's companies that helped pay for Fatima Fafanna's
services. So, thank you so much and at this point I turn it over to you,
Madam Chairwoman.

Ms. Johnson: And that was the motion. Is there a second? Any discussion?
Mr. Honig.

Mr. Honig: There's no way to understate the solemnity and importance of
what is being done by this sub-committee. If you would look at page
three of the progress report which accompanies it, which was discussed
earlier today, you'll see these very troubling statistics that RPNBA has
developed. And what's troubling about them, is that they show that in
just two years of non-enforcement of EEO rules, we've lost about a
generation worth of talent. These are positions of people at the top of
their career. When you have television general managers, minorities down
59%, that means that there are 59% of minorities who had been at that
point in their career; in two years they're not there anymore. They
didn't decide to go fishing. Something happened to them. And that's true
across the board in these job categories. There are other studies
including one that NMTC did, that related to the posting of vacancies
with just EOE notices, and the Blumrosens Ford Foundation study that
seemed to suggest that as many as 1/4 of broadcasters, even large ones,
discriminate in employment, 1/3 of cable companies, 1/3 of telecom
companies, so that the fact that the sub-committee is proposing,
initially, best practices initiatives, voluntary efforts, shouldn't be
misread as a signal that that's all that needs to be done; it's the
first thing that needs to be done. And, I'm going to vote yes for this
to be taken as a concurrence based on the fact that in the second and
third phases, the sub-committee is going to very seriously consider
whether, as always has been the case in the history of civil rights,
federal protection and federal intervention to protect people's careers
is necessary in the public interest.

Ms. Johnson: Any other statements? Thank you. Any other statements?
Then, consistent with the comments of the Chair, phase II and phase III
are yet to come, and there will be proper focus on all issues stated.

Ms. Alonzo: And I do want to add that the committee members support
that. We understand that there's work to be done, and there's a lot more
that we should be looking at. We just did not have sufficient time to
vet it amongst ourselves the way we wanted to to be able to come to you
and the rest of the team with comfort level that was appropriate.

Ms. Johnson: One step at a time, we're getting there. Understanding the
importance. All those in favor? No further discussion? Seeing none. All
those in favor, signify by a voice vote. Aye? Opposed? Resolution
adopted. Thank you very much. And with that, we're going to transition
into our public comment portion of the day and head towards our wrap-up.
Commissioner Tristani. Oh, I'm sorry, there is public comment. I'm
sorry, there's one question of a member, and then we'll go to the public
comment. I'm sorry.

Ms. Fitzgerald Mosley: It was just more general in nature, because so
many of the items that were recommended had something to do with
activities other than what in question as to what how much the FCC can
do on its own behalf. And I was wondering, since they really crossed all
sub-committees, at any point as a committee we would be addressing ways
in which to move all of these things forward in the most advantageous
and effective way, as opposed to each sub-committee kind of figuring out
piecemeal. Again, since so many of them seem to be crossing over. When
we finally look at all of them collectively, will we have an opportunity
to figure out, okay what's the best strategy for getting all this done.

Ms. Johnson: It would be my hope, and based upon the will of the group,
that we start the process with having each of the sub-groups kind of
bubble up the issues of most importance, and that we then can all sit
back and reflect on what implementation might be required for each, and
then put together a consolidated gain plan that would be consistent, get
rid of duplication, and focus on the core issues, and to the extent that
we can find some real trends, then we totally develop advocacy plans for
those, and move forward towards that final document.

And along the way, to the extent that we as a full body can put
ourselves behind these action steps then we do that as a full body, we
can do that through formal meetings such as this, or posting from the
website or through telecommunications conference calls, but we do intend
to look at this comprehensively and move forward.

Any other final questions of the group here? Seeing none, then we will
head to our public comments. Commissioner Tristani, welcome.

Ms. Tristani: Thank you. Can you hear me? Thank you. First of all let me
tell you my formal commissioner hat is here, but I am not here as a
formal commissioner, I am here as the Managing Director of the Office of
Communication of the United Church of Christ, an organization that has a
history that is well known to you in not just advocating, but being that
voice for civil rights in broadcasting and other communications, and we
hope now in emerging technologies also. First of all, I want to thank
the committees and all the sub-committees for your marvelous work. It's
very dedicated work. I know it takes time and effort. I know it takes
sometimes giving some, and holding back some so you can reach consensus
and make some good and valid recommendations.

I was also pleased to hear the question from Jim Winston that this
committee is not a committee that if it's ready to make recommendations
is going to stand back, because there happens to be a proceeding that's
open. After all, you are supposed to advise the commission on all
matters, not just on matters that may come up, otherwise, what's the
point. So, I commend you on that.

But I do have one comment and that is directed at the Best Practices
Report on the sub-committee on Career Advancement. And I do want to
commend you for starting with best practices. And I'm glad you mentioned
phase II and phase III, but I really find it hard to understand how you
can be making your first public report, and I think this is the first
public report, and not talk about the commission's regulatory, statutory
and moral obligation to equal employment opportunity.

In prevention, as David mentioned, I know with some it's not politically
correct to talk about, but it's a long tradition at this commission has
a long history, and if you look at those statistics, it's not just
cutting people at the top, it's cutting people at the bottom. And we can
talk about all the career advancement in the world, but if there's no
one left to advance, where are we going to go? So, I'm glad to hear that
there's phase II and phase III, but I would have liked hearing that
there's a commitment to equal employment, that you're going to hold the
commissioner accountable on that, that you should tell the commission
and you should at least consider advising the commission that it's got
to keep that up, monitoring, not just monitoring, enforcing equal
employment opportunities, doing all of that.

I don't want to take up much more time, you've got a lot more to do, but
I really want to plea, not plea, I mean it's your obligation to address
those issues, and not to say it's in phase II and phase III. For those
of us who aren't aware, for the public, that doesn't mean a thing. But,
thank you, thank you very much for the good work that you're doing. I
don't envy you that.

Ms. Alonzo: Certainly, Commissioner Tristani, we agree with you, and
we've talked about that at length. In certain cases we were in violent
agreement of the issues, and we -- I have to tell you that it came down
to the fact that there are committee members who are not as well versed
in the area of EEO policies, and therefore, want the opportunity to
really understand what the impact will be of our full recommendations.
So, it isn't that we're ignoring it. We really wanted to put it forth in
phase I, but feel that it would be irresponsible to do that without the
entire committee really understanding what is being moved along.

Ms. Johnson: Thank you. Thank you very much. Any other public comments?
Seeing none. Any closing remarks of the committee members? With that,
I'd like to thank our subject matter experts, our audience, our staff,
our designated federal officer, and most importantly, the committee
members for all of the hard work and focus and commitment. I think we've
made an excellent first step. Our next meeting is September 17^th^.
Right now it's scheduled for South Florida. But we're continuing to
evaluate the place for that meeting, but if you could mark your calendar
for September 17^th^. Any questions? Thank you again, and this meeting
----

Unidentified: Excuse me, can I --- would the South Florida, because?

Participant: Why not in December?

Unidentified: Why not South Beach in January?

Ms. Johnson: The 17^th^ is a Friday. The location was in response to the
committee saying we should go to the road. And, as a part of that
effort, we decided to head south in an area that was full of diversity
and interest in the working that we're doing. But certainly, I think it
was Commissioner Copps that said, "Take the show on the road", and that
would be our intention there.

Unidentified: Is the agenda open? Because we had talked and thought
about a little bit within our committee, tailoring an event like our
kick-off, our charter members for our diversity program around that
September meeting. So is it open?

Ms. Johnson: There's certainly opportunity for discussion. And we're
still developing. We were trying to first earmark a date to let everyone
know. Second, select a location, which still may be up for discussion.
And then we'll get into the actual agenda items. Is that right Jane?
Maureen, anything else? No? Seeing none. Thank you again for your time,
focus and commitment. This meeting is adjourned.

(End of recording.)