Remarks of

William E. Kennard, Chairman

Federal Communications Commission

Before the

Citizenship Education Fund

New York, NY

June 17, 1999

(as prepared for delivery)

[\"Back to the Future: Renewing the Tax Certificate for the Information
Age\"]{.underline}

Thank you, Percy, for that generous introduction.

Many of you have been to conferences like this one before -- meetings
where we talk about how to expand opportunities in the communications
industry. For many of us, we\'ve been in this struggle for many years.

We meet today at time when the opportunities are greater than ever
before. It is an extraordinary time to be in the communications field.

The communications industry is re-shaping our society and culture.
Through phone lines, cable wires, and the airwaves, Americans can now
access information wherever and whenever they want. Everything from
parenting to educating, from commuting to comparison shopping has been
touched by the communications revolution.

And it\'s fueling our prosperity. As much as one-fourth of our economic
growth -- growth which has produced the longest peacetime expansion of
the economy in history -- comes from the information technology sector.

A recent study estimated that last year the Internet economy generated
\$300 billion in revenue and was responsible for 1.2 million American
jobs. Impressive. But that number is constantly changing because the
technology and the industry is constantly changing -- churning with the
energy of entrepreneurs and the innovations of engineers.

I know that there is more opportunity than ever before, for I meet with
the CEO\'s of these companies everyday, and go to a different trade
convention almost monthly.

But what I notice in these meetings and at these shows is that the
communications industry \-- an industry that sends ideas and information
to the American people -- does not reflect the rich diversity of our
nation today. And it certainly doesn\'t reflect what our nation will
look like in the coming century.

I have a picture of my father in my office. And sometimes I look at that
photo and think about the opportunities that he had -- and didn\'t have
-- as a black man in America.

He was a professional, and he was able to create a successful
architecture practice. But he did so in spite of the opportunities that
he didn\'t have.

Then, I think about how society changed from his generation to mine.
Because of the hard work and struggle of men like Percy Sutton, Jesse
Jackson, and Herb Wilkins, there were opportunities there for me to
seize that were not there for my father.

Our nation has made tremendous progress, progress that we have all seen
just in our lifetimes. But the challenge for this generation is to open
this door of opportunity even wider. So that one day the people who walk
into the office of the chairman -- or chairwoman -- of the FCC will not
just represent their clients, but will represent the diversity of our
nation.

We should expect -- we should demand -- nothing less for our country.
And because of the explosion of the New Economy, we -- men and women in
the communications industry -- can\'t waste a day.

The famed University of Texas football coach, Darrell Royal, a man who
led that team to three national championships, once said that, \"Luck is
what happens when preparation meets opportunity.\"

If that\'s that the definition of luck, then I\'ve been lucky. I was
lucky since my preparation, my schooling, the values of hard work and
love of learning that I was taught by my parents were able to meet an
opportunity.

The challenge before us is: how do we create opportunity for minorities
and women? How do we create good luck for those who throughout our
history were resigned to limited horizons and unlucky lives?

How do we create this conditions for positive change in the
communications industry?

In the 1970\'s, members of Congress, the Carter Administration, and
activists wanted to open up opportunities for minorities in
broadcasting. Their plan was to set aside broadcast licenses for these
groups.

The NAB said don\'t do that. We\'d rather have a tax certificate plan.
And after working together, that\'s what we got in 1978.

Under this program, if an owner of a broadcast property -- like a radio
or TV station -- sold it to a minority, they would not have to pay
capital-gains tax.

Since 1978, the FCC issued 359 certificates to companies who sold to
minorities-- most of which concerned the sale of radio stations.
Although a small number, the impact of this program on opening up this
industry has been great.

Before 1978, minorities owned approximately .05 percent (or 40) of the
approximately 8,500 broadcast licenses.

As of September of 1994, that number increases eight-fold to 2.9 percent
of 11,128 licenses. Still a small number, but a giant leap forward to a
communications industry that looks like the nation it broadcasts to.

But this program wasn\'t perfect. It could have been improved. But
before we could do anything, the program ran into partisan politics, and
it was killed by Congress. The program was over.

But that doesn\'t mean that we can\'t create a little luck. It doesn\'t
mean that we must stop our efforts to open the doors to opportunity.

Already, the debate is underway on how to create this opportunity. And
we\'re not the only ones engaged in it. Al Gore and John McCain, Charlie
Rangel and Jesse Jackson, Michael Powell, Eddie Fritts, and Lowry Mays
and Mel Karmazin are all looking for solutions.

Some are focusing on partnerships between big broadcast companies and
small minority businesses. Some are establishing investment funds.
Whatever their approach, they are focusing on what works, and that means
focusing on money -- on how to develop capital.

We know that the tax certificate program worked. That\'s why we can and
should initiate a new tax certificate program.

A new tax certificate program should level the playing field by allowing
small businesses of all types to have the same tax advantages that large
corporations have.

Just as the communications industry is becoming increasingly dominated
by large corporations, tax certificates would rejuvenate the role of
small companies and entrepreneurs.

And it would do so not just in radio, TV, and cable, but in all
telecommunications businesses including wireline, wireless, and
satellite. It would open doors in the media industries of the future.

And within this incentive should be an added boost \-- an additional
incentive to give minorities and women an affirmative opportunity to
gain a foothold in the communications business.

Now, there are those who would yell and scream that this program is
unfair; that this is just a back-door quota program or a scheme of
government hand-outs. And there are others who would argue that
opponents of this program are supporting discrimination.

This is a false choice. We don\'t need wedge-issues or identity politics
that divide our nation. We need sensible solutions that recognize that
there are past inequities that we have not yet fully rectified and
commitments to diversity of viewpoints and democracy that we all
cherish.

We need solutions that recognize that that we tried some approaches in
the past that did not work and some that even subverted other principles
that we as a nation hold dear. But we need the courage not to just
reflexively defend the status quo, but to find ways that promote
equality of opportunity for all Americans.

A new tax incentive program should follow this course. First, it should
not be a quota or a government mandate. It should give new entrepreneurs
a ticket into the marketplace, but once there allows market forces to
choose the winners and losers.

To this end, it should impose limits on how many times you can benefit
from a certificate. This must be a hand up, not a hand-holding. The
responsibility lies with the new license holder to make the best of it.

Also, we need strict standards on firms eligible to purchase licenses so
that large corporations or unscrupulous deal-makers operating as fronts
are not the ones to benefit from this program.

And we need safeguards to make sure that we don\'t attract those to this
business interested in the indiscriminate flipping of properties. We
need new owners committed to building businesses and creating wealth
that helps and serves their communities.

This program is sensible. It honors our commitment to equality for
opportunity while respecting market forces and the hard work of
entrepreneurs everywhere. It would go a long way to correcting
injustices of the past, and preparing us for the future.

Think about the future for a second. Think about what America will look
like in the next century. Perhaps as early as 2005, and certainly within
the next ten years, Hispanics will become the nation\'s largest minority
group.

By 2050, Hispanics will constitute almost one-quarter of the U.S.
population, while Asians will total more than 8 percent. At the same
time, the percentage of Americans classified as non-Hispanic whites will
fall to under 53 percent. Already, here in New York City, more than
one-third of the population is foreign-born.

Anyway you cut it, the next century will be a diverse century.

Indeed, we are living through a period of immigration as transformative
as the waves of immigration from Eastern and Southern Europe at the
beginning of this century. We are undergoing demographic shifts as
exciting and paradigm-busting as the communications revolution.

Some choose to ignore our multi-cultural landscape. As some of our
friends in Washington insist, we live in a colorblind society.

I like what Al Gore says about this. People who say we are living in a
colorblind society use their colorblindness the way a hunter uses a duck
blind. They hide behind it and pretend that the ducks don\'t notice.

Well, we notice. Of course, we notice. The world notices. We remain the
world\'s greatest -- and successful \-- experiment in democracy. Now,
the experiment is becoming whether the world\'s strongest and most
powerful democracy can also be its most diverse.

Those of us in this room are crucial to this experiment. We stand at the
intersection of perhaps the two most important forces shaping our
society and our economy: the revolution in communications and the
changing demographics of America.

We need to use our talents to build a better America.

That\'s why at the FCC, I\'ve focused our attention on using technology
to bridge the divides of race, class, and opportunity in our society.

Last month, we funded the e-rate program to wire schools and libraries
to the Internet to its cap. With this move, we\'ll be able to wire
528,000 public school classrooms to the Internet. By funding to the cap,
we will be able to help schools that teach 40 million American children.
We will be able to wire one-third of the public schools in rural
America, and reach students in the poorest schools in every corner of
our nation.

The FCC has also focused its attention on making sure that the 54
million Americans with disabilities can use these new technologies to
live fuller and richer lives.

And we\'ve worked hard to bring basic phone service -- a vital necessity
for safe lives and productive neighborhoods -- to the poorest of
Americans, including those living on Indian reservations.

And that is why, the FCC looks forward to working with all of you on
making sure that minorities and women have access to employment and
ownership opportunities in the communications industry.

Because you know as well as I that luck doesn\'t come from a rabbit\'s
foot or a four-leaf clover. It comes from having an opportunity to rise
as far as one\'s God-given talents. It comes from a society committed to
creating these opportunities.

And it only comes when people like you -- businesspeople, Congress,
activists, and citizens -- engage in a struggle to make those
opportunities possible.

We\'ve done it before. Working together, we can do it again. Thank you.