Diversity cle[1]

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CLE presentation asks whether the FCC could revive its tax certificate program to encourage more diversity in media ownership

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Diversity cle[1]

  1. 1. Does Section 309(j) of the Communications Act still have TEETH? FCBA Diversity CommitteeCLE - The New Telecom Bills - The Return of the Tax Certificate and the Future of FCC Designated Entity (DE) Credits Washington, DC February 8, 2006 6 pm – 8:15 pmJeneba Jalloh GhattThe Ghatt Law Group, LLC2 Wisconsin Circle, Suite 700Chevy Chase, Maryland 20815(240) 235-5028 (tel)(301) 476-4531 (fax)Email: jeneba@ghatt.comWebsite: http://lawgroup.ghatt.com
  2. 2. The question should be in what state are 309(j)’s teeth?• Congress delivered Sec. 309(j) and created it to ensure increased participation by and ownership of communications spectrum --for minorities, women and disadvantaged businesses• In its Infancy, the application of 309(j) showed promise… • Tax Certificate • Bidding Credits and Designated Entity status • Distress Sale Policy • Comparative Hearings
  3. 3. Early 309(j) applicationGOOD START… Tax Credits Distress sales policies Comparative Hearings Designated Entity Program
  4. 4. With age… Signs of Decay crept in…• Bacteria: Fraud, Sham applications, Ineligible partnerships (LMAs), speculators, illegal “flippers”-• Cavities: Ineffective screening and oversight of auction participants’ eligibility by the FCC leads to the wrong parties benefiting from DE programs• Rot: – Lack of an effective mechanism post-auction to ensure licensee was indeed operating as a qualified DE - leads to further dilution of pool of SDB owners – Little enforcement of rules when evidence presented contributes to more decay – Administrative neglect and/or disregard over the dearth of ownership diversity – Decisions from Court Cases (Adarand, Croson) gutted 90% of programs created under 309(j) – The remaining program, the Distress Sale policy, doesn’t always yield good results because sometimes minority buyer must revive a financially bankrupt station
  5. 5. Can it be fixed? Hmmmmmmm?
  6. 6. A GOOD ROUTINE EXAM AND CLEANING• A comprehensive search for decay, cavities and rotting in the DE program is in order (similar to what is planned for pre AWS auction)• Apply the Findings and Recommendations from this Review to Clean out the Program applying the same type of attention and resources used to kick start indecency reform (post Janet Jackson) – Amend current program and craft measurable eligibility and bidding credit rules and policies – Redirect existing resources and or use the money from fines or other allocations to hire more staff to review applicants – Conduct useful post auction follow up BUT SOMETIMES EXTREME PROBLEMS CALL FOR EXTREME MEASURES…
  7. 7. DENTURES! Throw out the old rotted teeth Pending Communications Act rewriteOffers Congress and FCC an opportunity to Study and Review the past failures and adopt New Creative Solutions• Reinstate Tax Certificate Program• Adopt Waiver of Certain Ownership Rules if Entity Seeking Waiver Support Sale to Socially and Economically Disadvantaged Business (SDB) (from Diversity Advisory Cmte 6/1/2004 report)• Adopt Waiver of Certain Ownership Rules if Entity Seeking Waiver establishes an incubator or financing program that substantially promotes minority ownership (from Diversity Advisory Cmte 6/1/2004 report)• Adopt Waiver of Construction Permit Expiration Rules to allow Holders of Expiring Construction Permits to sell to a SDB which would add a new independent voice to a community (from Diversity Advisory Cmte 6/1/2004 report)
  8. 8. Winners and Losers in 309(j) Reform• THE GOVERNMENT• PUBLIC/PRIVATE PARTNERSHIP• THE COMMUNICATONS INDUSTRY• THE PUBLIC
  9. 9. WINNERS!• THE GOVERNMENT but only if it…. – Strictly apply eligibility and bidding credit rules – Critically review the quality of auction participants applying for DE credit to avoid sham applicants and ineligible participants – Reinstate the Tax Certificate program (Congress) – Amend Rules so that Venture Capital companies can increase their equity participation in minority-operated entities seeking to acquire telecommunications entities. – Real enforcement and “Recapture” of licenses from winners later found to be ineligible. (Borrow a page from the Old INS: e.g. 2 year conditional Green Card) – Effective Oversight/Advisory Committee with mandatory reporting of findings and recommendation to FCC with a copy to Congress, Media, and Public watchdog groups
  10. 10. WINNERS!PUBLIC/PRIVATE PARTNERSHIPSWatchdog groups like Leadership Cmt on Civil Rights, MMTC, CU, MAP,TRAC etcGroups like NAMIC that have existing mentoring programs
  11. 11. WINNERS!THE COMMUNICATIONS INDUSTRY but only if it… – Continues to support and partner with Incubator, Mentoring and Training programs like the ones within established trade associations (e.g. NABOB, NAB, AWRT) – Partners with institutions that specialize in minority and small business financing, and universities (like Howard, Emma Bowen), those that assist minorities and disadvantaged businesses develop business plans, acquire financing and learn how to access properties when they come available – Follow Best Practices Models like the one released by the FCC Diversity Advisory Cmte when it comes to hiring and promotion of minorities and women – Actively seeks out qualified new entrants when looking to spinoff properties
  12. 12. WINNERS!• New entrants SDBs, including those owned primarily by women and minorities, will have tools to participate and finally own communications properties• The Public: The public interest in diversity of ownership, viewpoints, cultures and voices will be promoted
  13. 13. LOSERS Sham applicants, Ineligible large businesses and others that seek to exploit for their selfish gain theinitiatives aimed at communications property diversification
  14. 14. CONCLUSIONS…Whether new policies will be adopted (or legislatively created) or there will be an attempt to fix or reinstate past initiatives, none of the goals can be achieved without proper oversight, periodic review and enforcement. A COMPREHENSIVE EXAMINATION AND HEALTHY BALANCED DIET OF GOOD POLICY AND EFFECTIVE ENFORCEMENT CAN SAVE THE INTENT AND TEETH OF 309(J)
  15. 15. THE END FCBA Diversity Committee CLE - The New Telecom Bills – The Return of the Tax Certificate andthe Future of FCC Designated Entity (DE) CreditsFebruary 8, 2006 6 pm – 8:15 pm Jeneba Jalloh Ghatt The Ghatt Law Group, LLC 2 Wisconsin Circle, Suite 700 Chevy Chase, Maryland 20815 (240) 235-5028 (tel) (301) 476-4531 (fax) Email: jeneba@ghatt.com Website: http://lawgroup.ghatt.com

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