UNITED STATES OF AMERICA

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FEDERAL COMMUNICATIONS COMMISSION

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ADVISORY COMMITTEE ON DIVERSITY FOR COMMUNICATIONS IN THE DIGITAL AGE

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MEETING BY TELECONFERENCE

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MONDAY

OCTOBER 4, 2004

3:00 P.M. - 4:00 P.M.

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The Advisory Committee on Diversity for Communications in the Digital
Age held its fourth meeting by teleconference.

This transcript produced from tape(s) provided by the Federal
Communications Commission.

I N D E X [AGENDA ITEM]{.underline} [PAGE]{.underline}

Welcome 3

Roll Call 7

Resolution 12

Vote 25

Resolution 32

Vote 38

Public Comment 44

Adjourn 51

P R O C E E D I N G S

3:00 p.m.

MICHELLE: I'd like to thank everyone for holding and welcome you to your
conference call today with Ms. Julia Johnson.

I'd like to remind you that your lines will be in a listen-only mode
until the question and answer portion of the call. At that time, I will
give you instructions on how to ask your questions.

I'd also like to remind you that today's conference call is being
recorded.

Ms. Johnson, at this time, I'll turn the call over to you and thank you
for using Sun Conferencing (phonetic).

MS. JOHNSON: Thank you, Michelle.

I'd like to first start off by calling the meeting to order, the fourth
meeting of the Federal Advisory Committee on Diversity in the Digital
Age. And welcome you and thank you for agreeing to participate via this
conference call.

Between our actual physical meetings, the Committees have been very
active, particularly New Technology. And we're dealing with several
time-sensitive matters that we thought it would be most appropriate to
go ahead and key up via this call today.

Let me give you a little bit of information on the process and the
protocol.

The first thing we'll do is take roll to ensure that we have quorum. And
I've been told by our operator that given her list, that we, at this
moment, do have a quorum and can participate in the very official way.

I'd ask that to the extent that voting members have comments or
questions or statements that they'd like to make, that you please
identify yourself first as this is being recorded. And it will be the
only way for us to keep a proper recording of who is saying what.

And when it gets to the point where we are actually prepared to vote, we
will again do the vote via a roll call yea or nay to ensure that we are
properly recording that for purposes of our rules and to ensure proper
recording.

One of the other things with respect to the discussion sessions is for
the two Resolutions that we will take up today, we'll have those keyed
up by the Subcommittee Chair Riley Temple and any of his Committee
members or subject matter experts that he'd like to engage in that
dialogue.

The subject matter experts are also on the participating line. So for
purposes of the dialogue and conversation, we do have the vehicle in
place to allow them to contribute as they have been working closely with
us in helping us crafting the Resolutions that will be presented today.

A little bit of shop-keeping information for our next physical meeting.
That meeting will be December 10th in Miami or the Miami area, either
the South Beach area or Miami proper. And if everyone could take note of
that, we'll get you information on the actual day and how it will
unfold, who our speakers will be.

I will be working closely with our Subcommittee Chairs to determine the
issues that they would like for us to key up and/or if there are any
other special presentations or matters that should come before the
Committee on December 10th, if you could, members, work through the
Subcommittee Chairs so that they can let us know and we can properly
prepare ourselves.

I've had a couple of questions as to whether people should come in the
night before or stay the night of. I would suggest that you come in the
night before and stay for about two or three weeks given that it is
Florida and we need all the economic development we can get around
December. And it will no longer be hurricane season.

So with that in mind, I think we probably will start early enough in the
day that it will probably be most comfortable for people to come the
night before and the 10th is a Friday. So I wanted you to have that
backdrop.

Related to that, to the extent that we have Resolutions and action items
that we'd like to vote out on December 10th, I'd ask that the groups
work very closely with their Subcommittee Chairs because we're giving
the Subcommittee Chairs a November 19th deadline to provide us any
written papers and/or Resolutions so that we can post those for the
benefit of the Committee members that are not on your formal Committee.

And with those background statements, I will go ahead and call the roll.
And understanding for those in the public that are participating, we
will have a public commenting period at the end of our call, the last 15
minutes, which will probably be around 3:45, at which time the operator
is in a position where she can actually key in a queue number and allow
any of the public participants to participate.

That is for those that are participating by call in, and I understand
there are at least five individuals in that situation, and/or Linda
Blair, and our FCC team, to the extent that there are any people there
with that group, please, Linda, feel free to let us know at the
appropriate time and allow those individuals to introduce themselves and
participate.

Linda, I also wanted to welcome you on board.

MS. BLAIR: Thank you very much.

MS. JOHNSON: We appreciate you stepping up to the plate and assisting us
in this effort.

And Maureen and the rest of the gang, they've done an outstanding job so
we look forward to more of the same with you.

MS. BLAIR: Well, I certainly hope I can live up to that expectation. I'm
going to give it my best shot.

MS. JOHNSON: Thank you.

With that, let me go ahead and start by going through the roll.

Jenny Alonzo?

MS. ALONZO: Present.

MS. JOHNSON: Decker Anstrom?

MR. ANSTROM: Present.

MS. JOHNSON: Maria Brennan?

(No response.)

MS. JOHNSON: Vonya McCann?

MS. McCANN: Present.

MS. JOHNSON: Benita Fitzgerald Mosley?

PARTICIPANT: Julia, just so you know, Benita is supposed to be on the
call. The operator \-- there was like a 15-minute wait for me to get
through. So people may be having a hard time.

MS. JOHNSON: Oh, okay. Thank you very, very much.

PARTICIPANT: Yes.

MS. JOHNSON: So we'll put a block by her name there.

Priscilla Hill-Ardoin?

MS. MOUTON: This is Yvette Mouton (phonetic) on behalf of Priscilla
Hill-Ardoin. She should be joining us a little later in the call.

MS. JOHNSON: Okay, thank you.

Henry?

MR. RIVERA: Here.

MS. JOHNSON: Henry is here.

Andrew?

MR. BARRETT: Here.

MS. JOHNSON: Hey.

Anthony?

MR. GEE: Here.

MS. JOHNSON: Ginger?

MS. LEW: Here.

MS. JOHNSON: Jim? Jim Winston?

(No response.)

MS. JOHNSON: Lauren Taylor?

MS. TYLER: Tyler, yes, ma'am.

MS. JOHNSON: Tyler, I'm sorry.

Frank?

MR. MONTERO: Yes, I'm here.

MS. JOHNSON: Roscoe? Roscoe Young?

(No response.)

MS. JOHNSON: Kelvin?

MR. WESTBROOK: Here.

MS. JOHNSON: Jamie? Jamie Howard?

(No response.)

MS. JOHNSON: Riley?

MR. TEMPLE: Here.

MS. JOHNSON: David?

MR. HONIG: Here.

MS. JOHNSON: Steve?

MR. HILLARD: Here.

MS. JOHNSON: Alex?

(No response.)

MS. JOHNSON: Fred Liggins?

(No response.)

MS. JOHNSON: Yvette?

MS. MOUTON: Did you say Mouton again?

MS. JOHNSON: Yes.

MS. MOUTON: Yes, I'm here. Thank you.

MS. JOHNSON: Okay. Is there anyone on the Committee that I did not call
your name?

JOHANNA: Julia, let me \-- this is Johanna (phonetic) with Mr.
Edelstein's (phonetic) office.

MS. JOHNSON: Oh, welcome.

JOHANNA: I want to welcome Linda Blair here, too.

MS. MOSLEY: And this is Benita Fitzgerald Mosley. I missed the roll call
but I did just join.

MS. JOHNSON: Okay, Benita.

Any other members \-- voting members of the Committee that have joined
the call?

PARTICIPANT: Sheryl (phonetic) has just been double checking against the
line on here and as noted \--

MR. USSERY: Terdema Ussery.

MS. JOHNSON: Oh, Terdema.

PARTICIPANT: Alex Wallau from ABC.

MS. JOHNSON: I'm sorry?

Ms. BLAIR: And Alex Wallau is not here, right? Okay.

MS. JOHNSON: Alex is not but we still have a quorum? Yes, we do.

MS. BLAIR: Yes, we do.

MS. JOHNSON: Okay. Well, with that, I wanted to go right into our
presentations and discussions on the two Resolutions.

I wanted to note as we discuss the first Resolution on Designated Entity
rules that we did receive comment from T-Mobile. Those came in this
morning.

It would be my thought that to the extent that members want to view
those comments, that they are posted on the Web. They came this morning.
And we're not in a position to kind of critique or discuss nor have we
made any provision for T-Mobile to actually provide oral comment.

As I stated, they just filed those this morning. But they have posted
them to the Web.

MS. BLAIR: Julia, also we received some just a short while ago from
CTIA, which have also been posted on the Web.

And while I'm interrupting anyway, we also received a set of comments on
the second issue, the FM issue from a Mr. Hodson. And they are posted on
the Web as well.

MS. JOHNSON: Thank you very much.

With that I wanted to turn it over to the Subcommittee Chair, Mr. Riley
Temple.

MR. TEMPLE: Thank you, Julia. And thanks everyone for joining us today.

The first recommendation concerns Auction 58, which is an auction of
some PTS licenses that were once in the hands of the entity Next Wave
and the concerns and ongoing Commission proceeding.

The Resolution urges the FCC to use the existing Designated Entity rule
in as many auctions as appropriate to increase opportunities for
entrepreneurial companies, including women and minorities, in, for
example, Auction 58.

And if Ari Fitzgerald (phonetic) is on the line as a subject matter
expert, I'd like to turn to him.

Ari, do you have a brief summary of the proposals? Ari?

MR. FITZGERALD: Yes, hello?

MR. TEMPLE: Yes.

MR. FITZGERALD: Yes, thank you very much, Riley.

The proposal really is to encourage the FCC to maintain consistent
application of its Designated Entity rules. And in particular, the
eligibility restrictions that currently apply in Auction 58.

And just by way of background, I can give you a little bit of
information on this particular auction and this particular spectrum.
This is a spectrum currently in the 1.9 gigahertz band. It's used by
co-carriers. It's part of the PCS service. And it's used to provide
mobile services.

The spectrum was originally auctioned in 1994. The FCC, anticipating
that it would be quite valuable, was concerned that set aside certain
spectrums for purchase by small businesses, small and minority
businesses, none of those businesses would be able to secure a spectrum
in an auction if they were competing against the deep-pocketed larger
carriers.

So back in 1994, the FCC, concerned about certain provisions of Section
309(j) which required that it create meaningful opportunities for small
and minority- and women-owned business that acquire spectrum auctions by
the FCC, the FCC decided to set aside a certain amount of that spectrum
for purchase only by small and minority- and women-owned business.

This is spectrums that \-- back in 2000, the FCC auctioned the spectrum
and a number of small businesses were successful at auction initially.
Some of those small businesses went on to build out networks.

In 2000, some of the spectrums \-- the FCC \-- some of the spectrums
that had originally been auctioned came back to the FCC and the FCC
tried to \-- opened up a proceeding to try to determine what to do with
that spectrum; whether to maintain (inaudible) rules that had previously
existed, rules that prevented the larger carriers from bidding on the
spectrum directly or opening up a portion of that spectrum to the larger
carriers.

The FCC ended up forging a compromise whereby it kept some of the
(inaudible) to small and minority-owned businesses but it opened up some
of the others. It closed some of the spectrum and opened up other \--
some of the spectrum. It essentially forged a compromise.

Earlier this year, the FCC announced that it was going to \-- earlier
this year, the FCC entered into a permanent agreement with Next Wave, a
company that acquired some of the licenses that were set aside for small
and minority-owned businesses.

Under that settlement, Next Wave agreed to give back \-- the FCC \--

MS. ALONZO: Ari?

MR. FITZGERALD: Yes?

MS. ALONZO: Hello? Can I interrupt for a second? Whenever anyone is
typing, we're losing what you are saying. So if folks are typing, it
would be helpful if they'd put their phones on mute because I'm not
hearing your complete, you know, message.

MS. JOHNSON: Thank you, Jenny.

MR. FITZGERALD: I was just getting to the part of my discussion where I
started to talk about why we're essentially here with the Resolution,
why we put this Resolution before you.

Earlier this year, the FCC announced that it was planning to auction
some spectrum that has previously been held by Next Wave, a company that
had originally acquired its spectrum in the C-block auction.

Under the rules pertaining to that spectrum, the licenses or the
spectrum or a good portion of that spectrum, about half of it, can only
be made available to companies that are viewed \-- are considered small
companies under the FCC's rules. You know, the rules lay out what
qualifies an entity as a small or what they call entrepreneurial
company. And I can go into detail for anyone who is interested in that.

But essentially the FCC, when it announced this auction, said unless the
current rules are changed, about half \-- there are going to be about
242 licenses offered at this auction, which is scheduled to take place
on January 12, 2005.

The FCC said about half of the spectrum would be made available to small
and minority companies, companies that the FCC called entrepreneurs and
half of the spectrum would be made available to anyone who would like to
bid.

The larger carriers, when they \-- in reaction to that announcement, the
larger carriers ended up petitioning the FCC to essentially remove all
eligibility restrictions on the spectrums that had been set aside for
the smaller, entrepreneurial companies.

And we're now in the process of \-- the FCC has opened up a proceeding,
sought comment on the issues. We're now in the middle of that
proceeding.

We expect the FCC to make a decision soon as to whether to maintain the
current eligibility rules, which as I already indicated, would keep
about 119 of those spectrum licenses available only to small and
minority- and women-owned businesses. And allow the others to be open.

The larger carriers and their industry association, CTIA, has asked the
FCC to essentially lift all of the eligibility restrictions so that all
of the licenses could be purchased by the larger carriers.

In order to understand why this is important, you have to go back to the
FCC's original decisions relating to this spectrum, the decisions that
the FCC made in 1994.

As I've already indicated to you, when Congress gave the FCC auction
authority, it was very concerned about what impact auctioning spectrum
would have on the ability of small and minority-owned businesses to
actually acquire licenses.

Congress is well aware that small and minority businesses have \--
encounter a lot more barriers when they're trying to access capital than
larger companies.

And because of this, Congress was concerned that if it made auctioning
the only way to, you know, auction without any type of \-- if auctions
were the only way that the FCC would end up assigning licenses, Congress
was very concerned that only the incumbents would be able to acquire the
most valuable licenses.

So when Congress gave the FCC auction authority, it also mandated that
the FCC take steps to make sure that small businesses and businesses
that don't have the same access to capital that the larger businesses
have have meaningful opportunities to acquire the spectrums.

The FCC \-- one of the first instances where the FCC had to implement
Section 309(j), this auction authority, in one of the first \-- the
broadband PCS spectrum auctions that occurred in the mid-1990s, one of
the first instances where the FCC actually had to auction spectrum
pursuant to Section 309(j), the FCC opened up a proceeding to consider,
you know, how to make sure that all provisions of Section 309(j) were
actually implemented, including the provisions that required that the
FCC create meaningful opportunities for small and minority-owned
business to acquire spectrum licenses.

And one of the conclusions that the FCC reached was because the
broadband PCS spectrum was expected to be an extremely valuable and
sought-after spectrum, it was concerned that if it didn't set aside some
of that spectrum for small and minority-owned businesses, no small
business would be able to actually acquire licenses to operate the
spectrums.

So it created the set asides which over the years have been modified
over time. But the set aside, at least aspects of the set aside continue
to exist. And the concern that we had was that there was an effort afoot
to essentially eliminate the set aside.

And the concern that we had was that if that set aside were eliminated,
it would eliminate the most viable opportunities for small and
minority-owned businesses to actually gain a foothold in the mobile
wireless marketplace.

MR. TEMPLE: And in fact, Ari, the FCC's notice on the Auction 58
specifically asks the question as to whether or not the Designated
Entity concept should be retained, which is why this Resolution is
critical and important at this juncture.

MR. FITZGERALD: Riley, I agree with that. And I just want \-- just on
the substance, one of the things you have to keep in mind is one of the
arguments that the larger carriers have made in this proceeding is that
small businesses do fine in auctions without the spectrum set aside.
They acquire spectrum licenses successfully. And they're able to secure
those licenses even where they are competing against the larger
carriers.

The records submitted in this proceeding demonstrates that that position
is just not true. If you look at the most valuable licenses acquired in
the

FCC's auctions, 82 percent of the dollar values, the total dollar value
of licenses acquired by so-called small businesses, have been acquired
in the closed auctions.

The bottom line is that the only way for small businesses to gain access
to the most valuable licenses is when they are set aside. They,
unfortunately, cannot compete against the larger players in auctions
where the larger players are actually allowed to bid even where small
businesses are given modest bidding credits.

So our concern was that what the larger carriers were trying to do here
was to basically open up the spectrum to everyone. Our concern about
that was that we knew based on the previous history, that if the
spectrum were made available to the larger carriers, it would not be
possible for small carriers to actually secure meaningful access to the
spectrums, which is something that Section 309(j) requires.

So our Resolution essentially asks the Committee to endorse the
Designated Entity concept, a concept that has been extremely important
in making sure that small and minority-owned businesses gain a foothold
in the marketplace. And in particular, we wanted to make sure that the
Committee endorsed the concept of a spectrum set aside.

Again, the spectrum auction is probably the last opportunity for small
and minority-owned businesses to actually gain access to very, very
valuable mobile spectrum that is currently being used across the country
to deliver services.

Licenses that are being offered cover a wide geographic area and there
are a number of extremely valuable licenses being offered, licenses
covering major metropolitan areas.

And, again, for a Committee that is interested in advising the
Commission on how to promote opportunities, it would be extremely
important for this Committee to make a statement with respect to this
particular auction and application of the Designated Entity rule.

MS. JOHNSON: Thank you. Thank you for that thorough explanation,
background. I think it allowed members to have even a great perspective
on what we are trying to achieve here.

With that, Riley or Ari, if there are any questions from members, I
think you all are prepared to respond to those?

MR. TEMPLE: Yes.

MS. JOHNSON: Any questions from the members?

MR. BARRETT: My only concern, Madame Chairman, I always \-- I will
express the same point of view I expressed when I voted on that. Ari,
you intermittently minority and small businesses. And my concern then in
1994 and my concern now is that small businesses do not necessarily
entail minority businesses.

And what we saw as a result of that vote in 1994 was we saw people going
out who had small businesses borrowing capital from their money. And I
do not accept the premise that has been a successful program at all.

MS. JOHNSON: Okay. So Andy, you're suggesting that this is maybe a good
start but more needs to be done?

MR. BARRETT: Not at all, dear. I know what it is and what the results
were. And yes, there were a lot of small businesses that obtained the
spectrum but there were not that many so-called minorities.

MS. JOHNSON: Got you. Okay. Any other comments or questions?

MR. FITZGERALD: This is Ari. Let me respond to what Andy said. I totally
agree with what he said. I think that it is true that there haven't been
as many minority businesses as we'd like. There have been more than
there would be had there not been this type of set aside. And I can name
a number of minority-owned companies that were actually successful. But
I agree with him that more needs to be done.

The reason why we're so concerned about this is, you know, obviously the
fact that a program \-- we would have preferred for this program to be
race based but for legal reasons it couldn't be. And as a result, there
were a number of non-minority businesses that were able to benefit from
it.

That doesn't sway from the fact, however, that there have been also a
number of minority-owned businesses that have benefitted from it. And we
have to assume that had there not been a set aside at all, there would
have been less minority businesses.

MR. BARRETT: No, Ari, and I'm not talking against your Resolution. I
just want to be factually, having voted on, that I want to be real clear
that at one point, and I think David was there, my proposal at that
point was to do a race based one.

Clearly given the legal parameters, that was a no-starter and it was a
waste of time to go forward on that. But I just don't want to give the
impression that minorities, as opposed to small business owners, have
been successful.

Yes, small business owners will go and borrow money and have been quite
successful.

MS. JOHNSON: Okay. Thank you.

Any other comments?

MR. HONIG: Yes, this is David Honig. Just to briefly comment, this is,
in fact, a race neutral and thus somewhat dilute but still very
productive approach.

And we should all bear in mind that the courts have repeatedly said that
before a race-conscious initiative can be considered, agencies are
expected to show that they've undertaken to examine and attempt all \--
not all but most potential race-neutral alternatives as well.

So that if we are ever to persuade the Commission that it is necessary
to do a more aggressive race-conscious approach, the fact that the
Commission will have given this initiative every opportunity to succeed
can only be helpful.

MS. JOHNSON: Thank you.

Chairman Temple, are we prepared to call the question?

MR. TEMPLE: Yes, Madame Chair, call the question.

MS. JOHNSON: Okay, Jenny?

MS. ALONZO: Yes, no question.

MS. JOHNSON: And your vote is yes?

MS. ALONZO: My vote is yes.

MS. JOHNSON: Okay.

Decker?

MR. ANSTROM: Yes.

MS. JOHNSON: Maria?

(No response.)

MS. JOHNSON: Let it show absence for this particular vote.

Joan?

(No response.)

MS. JOHNSON: Absent for this particular vote.

Vonya?

MS. McCANN: I'm abstaining.

MS. JOHNSON: Abstaining.

Matt Blank is not participating today.

Benita?

MS. MOSLEY: Yes.

MS. JOHNSON: Priscilla?

(No response.)

MS. JOHNSON: Is Priscilla on the call?

(No response.)

MS. JOHNSON: Okay. Show her absent for this particular vote.

Henry?

MR. RIVERA: Yes.

MS. JOHNSON: Andy?

MR. BARRETT: Yes.

MS. JOHNSON: Anthony?

MR. GEE: Yes.

MS. JOHNSON: Ginger?

MS. LEW: Yes.

MS. JOHNSON: Jim Winston if he joined the call?

(No response.)

MS. JOHNSON: Show him not participating on this vote.

Lauren?

MS. TYLER: Yes.

MS. JOHNSON: Frank?

MR. MONTERO: Yes.

MS. JOHNSON: Roscoe?

(No response.)

MS. JOHNSON: Show him not participating on this vote.

Kelvin?

MR. WESTBROOK: Yes.

MS. JOHNSON: And Jamie?

(No response.)

MS. JOHNSON: Not participating on this.

Mr. Temple?

MR. TEMPLE: My vote, unfortunately, needs to be recorded as an
abstention.

MS. JOHNSON: I'm sorry, that's right. Okay.

MR. BARRETT: What are you doing there Riley?

MS. JOHNSON: David?

MR. BARRETT: I've got to keep my eyes on you.

(Laughter.)

MR. TEMPLE: Oh, Andy.

MS. JOHNSON: David?

MR. HONIG: Yes.

MS. JOHNSON: Steve?

MR. HILLARD: Yes.

MS. JOHNSON: Alex is not participating on this vote.

Alfred, I believe, is not participating on this vote.

Terdema?

(No response.)

MS. JOHNSON: And Yvette?

MS. MOUTON: I'm going to abstain at this juncture. Thank you.

MS. JOHNSON: Okay. And show the Chairman Julia voting yes.

With that, we will move that item forward.

PARTICIPANT: Madame Chairman?

MS. JOHNSON: Yes.

PARTICIPANT: I want to thank \-- that was a really excellent
presentation \--

PARTICIPANT: Hello?

PARTICIPANT: \-- and I really appreciate that.

MS. JOHNSON: Yes, the Committee and all of the work and time and effort
that Ari, Mava (phonetic), Riley, and the entire gang put together on
that entire effort, I thank them all. And I know that they were the ones
to bring this to the forefront, particularly given the time-sensitive
nature of the item.

And with that, congratulations. And thank you very much.

And we will go on then \--

MR. USSERY: Hey, David?

MS. JOHNSON: Hello?

MR USSERY: Oh, hey, this is \-- I'm sorry, this is Terdema.

MS. JOHNSON: Hey, Terdema.

MR. USSERY: Hi.

MS. JOHNSON: We just went through the first \--

MR. USSERY: Yes, I could hear all of you guys but I couldn't \-- for
some reason, I couldn't talk.

MS. JOHNSON: Oh, I'm sorry.

MR. USSERY: So I just wanted to let you know that I was casting a yes
vote.

MS. JOHNSON: Thank you very much. We'll show that recorded.

MR. USSERY: I apologize.

MS. JOHNSON: Sure.

MS. BLAIR: Julia, it's Linda Blair. There seems to be a question.

PARTICIPANT: Yes, just to clarify, that abstention should be on behalf
of Priscilla since Priscilla is the voting member of the Committee.

MS. JOHNSON: Right.

PARTICIPANT: And actually that is correct. I had the same problem that
Terdema did. But for some reason, I'm on now. My vote is an abstention
as Yvette Mouton (phonetic) cast.

MS. JOHNSON: Okay. Thank you very much. Any other clarifications Linda?

MS. BLAIR: No, I think we're set.

MS. JOHNSON: Okay.

I think we're prepared to move on to the next Resolution. Again, New
Technology, Riley Temple.

MR. TEMPLE: Yes, we have had these \--

MS. JOHNSON: Oh, I'm sorry. You know what Riley, let me clarify one
thing. What we're doing because I was the one that added the confusion,
when, in an effort to help and, we thought, move the process along, I
suggested a resolve be used. And I know you all received that particular
language.

In the interim, I had an opportunity to talk with the Committee and had
the benefit of the actual Resolution that they were proposing. I know
that David Honig is going to speak to that.

So I would suggest, Mr. Chairman, that we actually tee up the Resolution
that you actually intended the Committee to vote upon.

MR. RILEY: Yes, the Resolution \-- okay.

MS. JOHNSON: And we did post it to the website. And it was posted as a
recommendation, recommendation on diversify ownership in the commercial
FM radio band.

And it kind of \-- it basically laid out the nine possible ways to
foster ownership diversity and delineated that the recommendation was,
in fact, for the nine scenarios that the group had worked with industry
and had a very deliberative process to come up with.

And I guess as a final point, the recommendations are for the FCC to
consider rulemaking and not an endorsement on the merits. And as such, I
apologize for going overly broad with the language that I keyed up.

And I appreciate David and Mr. Chairman your work in properly framing
the recommendation.

MR. TEMPLE: Well thank you, Julia, and you are right. The idea is to not
specifically endorse each recommendation but to move them on for
Commission comment and from the public.

And, David, I'd like to turn to you for a summary of what the
recommendations would be.

MR. HONIG: Sure. Thank you, Riley. And for those who don't have this
before you since there are a couple of versions and it is short, if I
could take the liberty to just read the text of this, the Subcommittee's
recommendation. It says:

"The Subcommittee on Emerging Technologies proposes that the full
Advisory Committee commend to the Commission, for the issuance of a
notice or notices of proposed rulemaking, nine possible ways to foster
ownership diversity in the commercial FM radio band (92.1 -- 107.9 mHz),
as outlined in the Subcommittee's June 11, 2004 Recommendations."

And the nine are found actually in this recommendation, which is posted
on the Commission's website June 11th. They are:

"1. Create Medium Power FM Stations.

"2. Replace the FM Table with Interference-Based Allotment Criteria.

"3. Allow Class A Stations to Use Low Towers and Higher-Than-Standard
Power while Retaining Appropriate ERP Levels.

"4. Conduct a Comprehensive Channel Search for New FM Allotments.

"5. Harmonize Regional Interference Protection Standards.

"6. Repeal the Third-Adjacent FM Contour Rules.

"7. Relax the Community of License and Transmitter Site Rules.

"8. Authorize Interference Agreements.

"9. Require Same-Day Updates of Entitlements to Bidding Credits."

To provide some background, these recommendations were intended by the
Subcommittee to be generally deregulatory in the sense that in the
spirit of Section 257, which calls upon the Commission to identify and
eliminate market entry barriers found in the Commission's rules.

They are designed to allow for more competition without needlessly
increasing interference to existing facilities. And to do this where
possible by relaxing engineering and operational regulations that may
disproportionately inhibit the development of new and small
entrepreneurs which would particularly include minority broadcasters and
entrepreneurs.

The white paper contains some fairly detailed statistics on the dilemma
facing minority broadcasters, most significantly that while 4.2 percent
of the broadcast stations, the radio stations, are owned by minorities,
they just constitute 1.3 percent of the asset value because minorities
tend to have gotten in later. And consequently tend not to own the most
powerful and most valuable facilities.

In fact, only 3.2 percent of FM stations are minority owned as of 2001
and of those, 40 percent are the lower-powered Class A facilities.

So these recommendations actually are the process of a winnowing down
and vetting that \-- with the help of many members of the Subcommittee
we did over the course of nine months.

We circulated them to industry stakeholders, trade organizations, some
companies. We had a meeting with media bureau engineers who reviewed
them not for the purpose of determining whether they were the right
policy. That's really a question for commenters and the rulemaking for
the Commission but just to be sure that they didn't offend the laws of
physics.

And we actually started with a list of 12. We wound up with these nine.
Three or four of the nine we modified in substantial ways so that it
would be made very clear that there was no intention on the part of the
Subcommittee to recommend that the Commission conduct the rulemaking,
the effect of which might be to substantially increase interference on
existing facilities.

But rather that the spirit was that since we've now had substantial
improvements in receiver technology and so forth, that it may be
possible to take advantage of that and increase opportunities for new
entrants to obtain facilities. And to upgrade the facilities that they
now have.

So it is in that spirit that this is offered and as the Chairwoman
pointed out and I think we'd all want to emphasize, these initiatives
are presented in that they would be commended to the Commission for
discussion in a rulemaking.

That is, the Subcommittee is not presenting them as endorsed on the
merits and does not seek the endorsement of the Committee on the merits
but rather has identified these as being worthy of full discussion in a
rulemaking proceeding for and against.

And, of course, there may be other initiatives as well that are also
worthy of discussion. And some have been proposed. But these seemed to
have the most legs of the ones that we reviewed.

And consequently, as a bundled together package, as the Commission seems
to prefer to look at a number of different alternatives at once, we
rolled them together, have this white paper, and commend it for the
Committee's consideration.

MR. TEMPLE: And dependent upon the Commission, the timing of any pending
proceeding, we might come back to the Committee again for \-- to weigh
in, depending upon the comments, and what the \-- and what future
Commission action that might be. Correct David?

MR. HONIG: That'S right.

MS. JOHNSON: Thank you.

David, any other information? Are you prepared to answer questions?

MR. HONIG: Yes, I'd be happy to answer questions about any of these.

MS. JOHNSON: Okay. I open it up to the Committee then for questions.
Please just remember to state your name prior to asking the questions.

MS. ALONZO: This is Jenny. So let me just understand. We're just
proposing to move this on for further consideration to the Commission?

MR. HONIG: Yes.

MS. ALONZO: Okay.

MS. BLAIR: Sort of along that same line, this is Linda Blair, David,
since there was a little bit of conflicting stuff on the web, and my
apologies for that, I just want to make sure that we've got the right
language at this point.

And basically it has, "Therefore be it RESOLVED that the Advisory
Committee commend to the Commission for the issuance of a notice or
notices of proposed rulemaking nine possible ways to foster owner
diversity." And then it lists the nine items. Is that \--

MR. HONIG: No, no.

MS. BLAIR: No?

MR. HONIG: No, actually the place where they are posted in the website,
I don't know why they're there, is on the site where it says:

"Please see comments," and then you click that and it gets you onto
another page. And then it lists various comments. And it clicks this as
a comment that I made although actually this is the draft that the
Subcommittee had developed.

MS. BLAIR: Okay. So could you just repeat that language so that \--

MR. HONIG: Sure.

MS. BLAIR: \-- we make sure we're \--

MR. HONIG: Sure. It's the language that starts out:

"The Subcommittee on Emerging Technologies proposes that the full
Advisory Committee commend to the Commission, for the issuance of a
notice or notices of proposed rulemaking, nine possible ways" \--

MS. BLAIR: Okay.

MR. HONIG: \-- "to foster" \-- and then lists them.

MS. BLAIR: Right. And so that's essentially what we're voting on \--
that is what we're voting on?

MR. HONIG: That's right.

MS. JOHNSON: Okay. Any other clarifications?

(No response.)

MS. JOHNSON: Mr. Chairman, are you prepared for the question to be
called?

MR. TEMPLE: Let'S call the question.

MS. JOHNSON: Okay. Jenny?

MS. ALONZO: Yes.

MS. JOHNSON: Decker?

MR. ANSTROM: Yes.

MS. JOHNSON: Maria?

(No response.)

MS. JOHNSON: Maria?

(No response.)

MS. JOHNSON: Show her not participating in this vote.

Joan?

(No response.)

MS. JOHNSON: Show her not participating in this vote.

Vonya?

MS. McCANN: Yes.

MS. JOHNSON: Matt?

(No response.)

MS. JOHNSON: Show him not participating in this vote.

Benita?

MS. MOSLEY: Yes.

MS. JOHNSON: Priscilla?

MS. HILL-ARDOIN: Yes.

MS. JOHNSON: Henry?

MR. RIVERA: Yes.

MS. JOHNSON: Andrew?

MR. BARRETT: Yes.

MS. JOHNSON: Anthony?

MR. GEE: Yes.

MS. JOHNSON: Ginger?

MS. LEW: Yes.

MS. JOHNSON: Ginger is a yes.

Jim?

(No response.)

MS. JOHNSON: Show him not participating in this vote.

Lauren?

MS. TYLER: Yes.

MS. JOHNSON: Frank?

MR. MONTERO: Yes.

MS. JOHNSON: Roscoe?

(No response.)

MS. JOHNSON: Show him not participating in this vote.

Kelvin?

MR. WESTBROOK: Yes.

MS. JOHNSON: Jamie?

(No response.)

MS. JOHNSON: Show him not participating in this vote.

Riley?

MR. TEMPLE: Yes.

MS. JOHNSON: David?

MR. HONIG: Yes.

MS. JOHNSON: Steve?

MR. HILLARD: Yes.

MS. JOHNSON: Alex?

(No response.)

MS. JOHNSON: Show him not participating in this vote.

MS. JOHNSON: Alfred?

(No response.)

MS. JOHNSON: Show him not participating in this vote.

Terdema?

MR. USSERY: Yes.

MS. JOHNSON: Yvette?

MS. MOUTON: Yes.

MS. JOHNSON: And Julia, yes.

The recommendation passes. And I'd like to thank, again, the Committee
for all of its work \--

PARTICIPANT: Thank you, Madame Chair.

MS. JOHNSON: \-- in that regard.

And that concludes the Resolution portion of our business. We are \--
any reports from the Subcommittee's Chairs prior to us going into the
public comment section?

MS. BLAIR: Julia?

MS. JOHNSON: Yes.

MS. BLAIR: It's Linda again. I'm sorry to interrupt. Before we move on,
I just want to make clear on the \-- I'm backing way up.

MS. JOHNSON: Please.

Ms. BLAIR: On the auction proposal, the language that we adopted was the
broader language that reads,

"The admitted Resolution urges the Commission to utilize existing DE
rules in as many auctions as appropriate including, for example, Auction
58." It's the broader language that we're going with, right?

MS. JOHNSON: That was my understanding but if there is any clarification
needed or if members thought otherwise.

MR. BARRETT: Linda?

MS. BLAIR: Yes.

MR. BARRETT: Andrew Barrett.

MS. BLAIR: Hi Andy.

MR. BARRETT: I also make sure that I don't have \-- I'm not barred from
voting on it. I didn't think about that. This is just recommendation,
right?

MR. TEMPLE: For having served on the Commission, Andy?

MR. BARRETT: Well, I don't know whether it was an adjudicated matter in
the real sense of the word. But Linda can check on that.

MS. BLAIR: Are you talking about the auction?

MR. BARRETT: Yes.

MS. BLAIR: Okay, even if you are barred, Andy, we'll check on it. But we
still have a quorum on that.

MR. BARRETT: Okay.

MR. TEMPLE: The Resolution was to specifically mention Auction 58, yes.

MS. BLAIR: Right.

MR. TEMPLE: And appropriate use of the DE rules.

MS. BLAIR: But not limited to just Auction 58.

MR. TEMPLE: Absolutely not limited.

MS. BLAIR: Okay. That's fine. I just wanted to make sure. Okay. Sorry
about that.

MS. JOHNSON: Linda, any other clarifications on either?

MS. BLAIR: No, I'm all set. I'm all set. Thank you.

MS. JOHNSON: Okay. And we're fine with our vote?

MS. BLAIR: Yes.

MS. JOHNSON: Thank you very much.

Now as it relates to the public \-- but prior to public comment, any
reports from any of our Subcommittee Chairs?

(No response.)

MS. JOHNSON: Hearing none, then we'll go right into our public comment
period.

Is operator \-- Michelle, are you on the line?

MICHELLE: Yes, ma'am. We will now take questions from the public. If
you'd like to ask a question, please press star 1 on your touch tone
phones. That will place into queue for the question and answer. When
your name is announced, your line will be open at that time.

If you'd like to ask a question, please press star 1 now.

PARTICIPANT: Diane Cornell (phonetic), you have the floor for the first
question.

MS. CORNELL: Yes, thank you very much. I'm Diane Cornell with CTIA. And
I just wanted to make a brief comment on the Auction 58 issue.

MS. JOHNSON: Yes, ma'am, this is Julia Johnson. I apologize for
interrupting. We have about 15 minutes \-- (inaudible) if we could limit
our comments to three minutes, that would be greatly appreciated.

MS. CORNELL: No problem. When I said brief, I meant brief.

But I think from our perspective, the issue is not whether to support
meaningful participation of DEs in auctions, the question is how best to
do that. And we've looked at a lot of the data from Auction 35 and from
prior auctions.

And from our perspective, if the goal of the policy is to get licenses
into the hands of DEs that will build out and operate these test
licenses, the track record of bidding credits really is one of proven
success and the track record of set asides is really one of proven
failure.

From the perspective of the experience in Auction 35 where \-- let me
just give one statistical factoid, in virtually all the markets where
there were both open and closed licenses available in the same markets,
DEs using bidding credits paid less or no more for open licenses than
winners of closed licenses. Now that is in virtually all the markets.

I also wanted to point out that small companies used bidding credits to
win nearly 50 percent of the available open licenses in Auction 35.

And now moving to the issue of minority-owned businesses and women-owned
businesses, of the winning bidders in Auction 35 that were self
identified as minority or women owned, approximately 85 percent won
their licenses through open bidding using bidding credits. And only
about 15 percent won their licenses through set asides or closed
bidding.

So I just wanted to emphasize that it's not a question of whether, it's
a question of how best. And we think that this is a great mechanism,
bidding credits, for maximizing participation of DEs.

So just a brief comment. Thanks for the time. I appreciate it very much.

MS. JOHNSON: Appreciate your comments. I look forward to you continuing
to work with the Subcommittee as they address other related issues.
Thank you.

MS. CORNELL: Thank you.

PARTICIPANT: Next question from Richard Hodson. Your line is open
Richard.

MR. HODSON: All right. Thank you.

This is Richard Hodson from Hodson Broadcasting. The reason I wanted to
participate publically was the fact that I am kind of the epitome of
what the Diversity Committee has actually looked into promote and
assistant. I'm basically a sole proprietorship, small business entity
that was formed in '97.

I have participated in the SEC rulemaking petitions. I had gotten an FM
allotment on the Table of Allotment back in '98, '99. And, of course,
have been, you know, waiting for this FM Auction No. 37 to commence,
which, I guess, it's supposed to be November 3rd and I am on schedule
for that.

But I just wanted to kind of present four brief points to the Diversity
Committee for consideration that when you're talking about new entrants
or Designated Entities as those that are actually trying to, you know,
break into the broadcast or, you know, other \-- second, you know, other
service markets what have you, they've only got really two choices to
market entry. You can either buy or build.

And, of course, in the case of broadcasting, small entrepreneurs, they
cannot buy within say the top 100 Arbitron (phonetic) markets because
the amalgamated corporations have come in since the national caps were
removed in the '96 Telecom Act and what they've done is they've hiked up
the secondary market purchase prices up to the point where it prohibits
smaller Designated Entities such as myself and other similarly situated
organizations from securing spectrum in this manner.

And something that has been kind of swept under the carpet that I've
noticed, you know, amongst the indecency and broadcast ownership high
profile issues, one thing that has been swept under the carpet is that
the FCC has not accepted a new commercial FM construction permit
application since 1997, which is over seven years.

So actually the FCC has been exacerbating the problem and they're kind
of a passive or maybe even active participant in the problem over the
years. As the old saying goes, the Commission cannot see the forest
through the trees.

And the reason why I say this, respectfully, of course, is the fact that
the FCC has routinely disregarded viable suggestions and practical
proposals from small business and other Designated Entities when they
propose them in rulemakings.

I mean I'm a witness to that. As a matter of fact, several times I've
tried to make comments in the initial regulatory flexibility analysis
and, you know, my proposals were, you know, disregarded as either well,
you need to create a rulemaking proceeding.

Or if you do it in the context of a rulemaking proceeding, then they say
well, it's outside the scope of this proceeding, you know, the issue is
outside the scope of the proceeding so we can't really, you know, weigh
on it. Then they quickly dismiss it.

Well, the delegated authorities and the report and order, memorandum,
opinion, and order, the authors at the Commission, they need to change
their perspective and policies in this manner pertaining to the
propositions offered by these disadvantaged businesses, including those
operated by female and minority principals.

And finally to conclude, I want to encourage the members of this
Diversity Committee to consider my comments in MB Docket 04-228, which
is a Section 257 proceeding.

And I also must take this opportunity to commend the Minority Media and
Telecommunications Council which I know David Honig is on the conference
call.

I do appreciate his organization, you know, getting the \-- successfully
motioning the Commission to extend the comment period so that people
that don't have effective resources and that are disadvantaged, such as
myself, have the increased opportunity and time duration to participate
in these proceedings.

Well, anyway, I guess it has also been submitted under the Diversity
Committee comments, which was referenced at the beginning of this
teleconference, of being placed on the website for review by Committee
members or any other interested parties.

And I think you for the opportunity to speak at this time.

MS. JOHNSON: Thank you. Appreciate your participation and I hope you
continue to follow the issues and help submit ideas for our
consideration.

Thank you very much.

MR. HODSON: Thank you.

MICHELLE: At this time, there are no further questions in queue.

MS. JOHNSON: Okay. Linda, are there any public participants?

MS. BLAIR: We have nobody on this end.

MS. JOHNSON: Seeing none, any questions or comments from Committee
members?

(No response.)

MS. JOHNSON: Hearing none, I want to thank you all. It looks as if we've
been able to accomplish what we needed to accomplish within the time
allotted.

You will be receiving additional information from us on our December
meeting.

And I would expect the Subcommittee Chairs will be hosting meetings to
determine what action items we will have for that December 10th meeting.

Again, the deadline for submitting white papers and Resolutions will be
November 19th.

With that, thank you very much for your participation.

MR. TEMPLE: Thank you, Julia.

(Whereupon, the above-entitled meeting was concluded at 4:00 p.m.)