Transcript FCC by jennyyingdi


									                        UNITED STATES OF AMERICA

                                   * * * * *


                                   * * * * *


                                   * * * * *

                              JANUARY 26, 2004

                                   * * * * *

     The Advisory Committee met at the Commission
   room at FCC headquarters, 445 12th Street, S.W.,
                     at 2:00 p.m.


                     JENNY ALONZO
                     DECKER ANSTROM
                     ANDREW BARRETT
                     ANTHONY GEE
                     BENITA FITZGERALD-MOSLEY
                     PRISCILLA HILL-ARDOIN
                     STEVE HILLARD
                     DAVID HONIG
                     JAMIE HOWARD
                     JULIA JOHNSON
                     GINGER LEW
                     VONYA MCCANN
                     FRANCISCO MONTERO
                     HENRY RIVERA
                     RILEY TEMPLE
                     LAUREN TYLER
                     TERDEMA USSERY
                     ALEX WALLAU
                     KELVIN WESTBROOK
                     JIM WINSTON
                     ROSCOE YOUNG II

                                NEAL R. GROSS
                            1323 RHODE ISLAND AVE., N.W.
(202) 234-4433    WASHINGTON, D.C. 20005-3701

                 MARK DEVER
                 MICHELLE FARQUHAR
                 GRIFFIN JOHNSON
                 MARVA JOHNSON


                 CHAIRMAN POWELL


                 JAMILA-BESS JOHNSON
                 ERIN BOONE
                 KYLE DIXON
                 SHERILLE ISMAIL
                 RICHARD LEE
                 JANE MAGO
                 MAUREEN MCLAUGHLIN


                 DAVID STEWARD

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



David Steward, Chairman and CEO of
   Worldwide Technologies

   Jenny Alonzo

                               NEAL R. GROSS
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(202) 234-4433   WASHINGTON, D.C. 20005-3701
        Riley Temple

        Ginger Lew

         Steve Hillard

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

 2                       CHAIR JOHNSON:          Good afternoon.            I’m

 3   Julia Johnson, Chair of the Diversity Federal

 4   Advisory Committee, and I wanted to officially call

 5   this meeting to order.

 6                       If we could, we wanted to quickly,

 7   before we start our business, go around the room

 8   and very quickly do introductions.                       I will then go

 9   through a few logistical issues and we will begin

10   immediately with our welcoming remarks.                            So with

11   that, Ginger?

12                       MS. LEW:       My name is Ginger Lew,

13   Telecommunications Development Fund.

14                       MS. MCCANN:         Vonya McCann, Sprint.
15                       MR. MONTERO:         Francisco Montero,

16   Fletcher, Heald and Hildreth.

17                       MR. RIVERA:         Henry Rivera of Vinson and

18   Elkins.

19                       MR. TEMPLE:         Riley Temple, Halprin,

                                    NEAL R. GROSS
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 1   Temple.

 2                       MR. WALLAU:         Alex Wallau, ABC

 3   Television.

 4                       MS. FITZGERALD-MOSLEY:               Benita

 5   Fitzgerald-Mosley, Women in Cable and

 6   Telecommunications.

 7                       MR. STEWARD:         David Steward, Worldwide

 8   Technologies.

 9                       MR. HONIG:        David Honig, MMPC.

10                       MR. HILLARD:         Steve Hillard, Council

11   Tree Communications.

12                       MS. HILL-ARDOIN:            Priscilla Hill-

13   Ardoin, SBC.

14                       MR. DEVER:        I’m Mark Dever representing

15   FACA.

16                       MS. ALONZO:         Jenny Alonzo, National

17   Association, Multiethnicity in Communications.

18                       COMMISSIONER ADELSTEIN:               Jonathan

19   Adelstein -- I know these guys.                     Jonathan

20   Adelstein, FCC.

21                       COMMISSIONER ABERNATHY:               Kathleen

22   Abernathy, FCC.

23                       CHAIRMAN POWELL:            Mike Powell, FCC.

24                       CHAIR JOHNSON:          Thank you, again.        A

25   few logistical issues.                Oh, Jane, yes.           We can’t

26   forget Jane and Maureen.

                                    NEAL R. GROSS
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 1                        MS. MAGO:        I’m Jane Mago.          I’m the

 2   Designated Federal Officer.

 3                        MS. MCLAUGHLIN:           Maureen McLaughlin.

 4   She’s the Alternate Designated Federal Officer.

 5   Thank you, everybody, for coming through the snow.

 6                        CHAIR JOHNSON:          That’s a good

 7   transition into -- if you’ve noticed, several of

 8   our members are missing today.                      They will be

 9   participating via conference call.                        I think we have

10   someone who’s going to open up the line.

11                        They can participate in an interactive

12   way.       Most of them have stated, though, that they

13   don’t listen and they have individuals here who sit

14   on different subcommittees, who will speak on their

15   behalf.          But if necessary, and if we hear someone

16   with questions, we’ll try to entertain those

17   questions also.                          We have a full agenda of

18   basically committee reports.                     I wanted to thank

19   everyone for their active participation and the

20   work that you’ve done over the holidays.                            We’ve

21   only been together for three or four months, but in

22   that time, everyone’s taken their responsibilities

23   quite seriously.

24                        We are thankful to have the privilege

25   and the opportunity to add a group, deal with

26   issues of diversity in the digital age.

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 1                       Our next meeting will be May 10th.             At

 2   that meeting, I’m trying to deal with questions

 3   that we’ve received, as to whether or not we would

 4   have action items going forward today, the

 5   committees are busy working on action plans,

 6   resolutions, and other activities that will be

 7   presented both through the committee process and

 8   also through our process of conference calls.

 9                       At today’s meeting, I think most of the

10   presentations will be just that, teeing up issues

11   to see if there’s any redundancy, any issues where

12   committees can share research, share knowledge, and

13   we will kind of direct ourselves in the most

14   meaningful way for the entire group.

15                       Also, there was a question as to

16   comments that Commissioners had made at the last

17   meeting with respect to did we intend to hold all

18   of our meetings here in D.C., or did we intend to

19   do any outreach?             The group -- as a group, we have

20   decided that we will hold several meetings here,

21   but we will do our field visits.

22                       The efforts in that regard will be to

23   better understand what works, what does not, talk

24   about best practices, talk to real practitioners,

25   other practitioners outside of this group and the

26   subject matter experts as to what the barriers

                                    NEAL R. GROSS
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 1   might be, and ways in which the FCC, as well as

 2   this committee, could be helpful.

 3                       We will take those comments and that

 4   information as we forge and present our

 5   recommendations to the full FCC.

 6                       With that, I don’t want to take up too

 7   much time.          I did want to make sure we try to stay

 8   on track.         Mr. Steward will be speaking.                    We

 9   understand that he, as well as many others, even

10   sitting around the table, you’re trying to catch

11   planes to get out of here in a timely -- to make

12   sure you can get home tonight.

13                       So we’re very, very mindful of that.                 I

14   want to thank all of the subcommittee chairs and

15   the committee members for all of the work that

16   you’ve put in thus far, and I look forward to

17   recommendations and dialogue today.

18                       With that, the person who’s been most

19   excited about the work that we’ve done to date, and

20   the task that we have before us, Chairman Powell

21   will speak, with introductory remarks.                         We also

22   will hear from our other Commissioners.

23                       We’ve had the opportunity as

24   subcommittee chairs to meet with the Commissioners,

25   to better understand each -- from each and every

26   one of them their expectations, their thoughts, and

                                    NEAL R. GROSS
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 1   also receive information and data from them as to

 2   how we can move forward in the most effective and

 3   efficient way.

 4                         They’ve all been so incredibly

 5   responsive.            Commissioner Abernathy and

 6   Commissioner Adelstein are here to share more of

 7   their thoughts with us, and we look forward to

 8   hearing from them, too.

 9                         But the Chairman has had this committee

10   at a special place in his heart and, as also, at

11   the front of his pin.                  Whenever we call, whenever

12   we have questions, whenever we have needs, he’s

13   been willing to work with us to try to address

14   those.

15                         I want to thank him for his support,

16   and because of that, I feel sure and certain and

17   I’m comfortable in saying that our work will not be

18   vain, but that our work will be a model of success

19   that will lead to more opportunities for women,

20   minorities and others as we move forward.                            With

21   that, Mr. Chairman.

22                         CHAIRMAN POWELL:            Well, thank you

23   Julia.           I’m going to hire you to permanently

24   introduce me at every event I go to.                          It’s very

25   generous of you.               I want to thank all of you for

26   your participation and your perseverance and

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 1   commitment to get here, in what in Washington is a

 2   tragic snowstorm.

 3                       I just returned from Davos,

 4   Switzerland, where it snowed a foot and a half and

 5   nobody even noticed.               But I think the perseverance

 6   and determination you show in getting to the

 7   meeting or getting to the phone to be with us today

 8   is the kind that we’ll need, in order for our

 9   aspirations about diversity to turn into product

10   and action, and I want to highlight that.

11                       This is the second full meeting of the

12   Federal Advisory Committee on Diversity in the

13   Digital Age.           I wanted to say a thing about the

14   name of the FACA, because it seemed to me that we

15   thought a lot about why it’s diversity in the

16   digital age.

17                       Because as we’ve talked extensively

18   about policy and the direction this nation and the

19   globe is moving, in terms of information technology

20   in the information age, that all questions seem to

21   me are being returned to first principles, to think

22   about how to make the next era more fruitful and

23   production for us as a nation than the last era

24   was.       All policies need rethinking and

25   recalibration in light of that.

26                       I had the benefit not long ago to take

                                    NEAL R. GROSS
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 1   a tour for a week up and down the coast in

 2   California, through Silicon Valley, the places

 3   we’ve all wrung our hands about, the loss and the

 4   boom collapse, and the energy and the optimism of

 5   that.

 6                       Because there’s a recognition that the

 7   transformation in the digital age means one thing

 8   fundamentally.            It means opportunity.              What

 9   diversity should mean in the digital age is

10   opportunity.

11                       You know, when I’m really preaching and

12   I give my speech, I say you know, my ancestors were

13   picking cotton during the agricultural age, and

14   they were in segregated facilities in the

15   industrial age.            This is the first economic

16   revolution in which genuine, real and fruitful and

17   deep-meaning opportunity are presented to us.

18                       So if we’re guided by that fact, that

19   as you sit at the dawn of an information age, what

20   will diverse opportunity be, I think it will give

21   us the challenge to really reach for the stars, and

22   not just in increments but in bold and visionary

23   steps.

24                       So I’m very, very excited about that,

25   at every level.            In every industry, I think

26   sometimes we have a tendency to get really unduly

                                    NEAL R. GROSS
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 1   focused on one sector or another sector.

 2                       Our children are really going to have a

 3   whole range of things.                Virtually everything in our

 4   economy is going to have something to do with

 5   technology and communications.

 6                       So our commitment to their future, as

 7   individual citizens, and their opportunities as

 8   employees and owners and contributors to our

 9   economy really hangs in the balance as to whether

10   we as policymakers can get this right.

11                       This committee to me is a recognition

12   that we can’t get it right without help.                           Diversity

13   often means admitting you don’t own all the

14   answers.         Diversity also means a willingness to

15   reach out beyond your own comfort level and your

16   own platform, your own understanding, to people who

17   have insights and experiences that can be

18   aggregated and brought to bear forcefully for

19   solutions, and that’s really what this committee is

20   about.

21                       I look around this room, I’ve been here

22   six years and I see people who have demonstrated

23   commitment, not only rhetoric but in practice, to

24   the goals and aspirations that we’re trying to

25   achieve.         So I’m incredibly encouraged that we have

26   the people that we need and the leadership that we

                                    NEAL R. GROSS
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 1   need to be successful.

 2                       So while some of these questions will

 3   be the day-to-day questions about regulatory

 4   policies of the Commission, I think we should be

 5   saddened if that’s where the question rests,

 6   because the real opportunities for diversity are

 7   going to be far beyond our visionary horizon.

 8   They’re going to be much further into the future,

 9   with the recognition of what technology and digital

10   change mean for all of us.

11                       So I’m sorry I didn’t read the talking

12   points, Jane.           I’m going to do that.               But I just

13   really wanted to do that, because as my

14   professional experiences expose me more and more to

15   the opportunity presented by the changes we read

16   about in the paper, I’m more convinced than ever

17   that we have one of the richest opportunities to

18   think about diversity right from the beginning, as

19   opposed to how it is so often treated near the end.

20   This group, I hope, will be a leader, an

21   inspirational leader in that effort.

22                       So I pledge the support of the

23   Commission, our resources, our time and our effort,

24   and thank you for doing so equally.                       I wish you

25   luck, and I look forward to hearing the

26   subcommittee presentations today, from those who’ve

                                    NEAL R. GROSS
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 1   really taken on the additional burden of leading

 2   the practical work to a solution.                        So thank you,

 3   Madam Chairwoman, and thank you, Jane.

 4                         CHAIR JOHNSON:          Thank you.

 5   Commissioner Abernathy?

 6                         MR. WINSTON:         Hello?

 7                         CHAIRMAN POWELL:            Hello?

 8                         MR. WINSTON:         Hey, this is Jim Winston.

 9                         CHAIRMAN POWELL:            Hey Jim.

10                         CHAIR JOHNSON:          Hi Jim.       You’re on the

11   line and you’re in the meeting.

12                         MR. WINSTON:         Okay, great.

13                         CHAIR JOHNSON:          Thank you very much.

14                         MR. WINSTON:         All right, thank you.

15                         CHAIR JOHNSON:          Commissioner Abernathy?

16                         COMMISSIONER ABERNATHY:               Thank you.

17   Thanks again, everyone, for coming today and to

18   those of you who I didn’t have an opportunity to

19   personally say hello to, we do appreciate your time

20   and your efforts, and your dedication.

21                         I’m pleased that I’m able to be here

22   today.           Luckily for me, the snow resulted in a

23   cancellation of something I was supposed to be

24   doing, so I get to be here and listen and learn

25   from everything you’re doing.

26                         I just wanted to tell you, I’ve been

                                      NEAL R. GROSS
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 1   talking with some of the subcommittees and with

 2   Julia that I’m so pleased that you’re going beyond

 3   sort of what we already have done in the past,

 4   which hasn’t been enough, to say “Okay, how do we

 5   take ourselves to the future?”

 6                       What we’ve done in the past worked for

 7   the past, but what we’re trying to do is deal with

 8   the next generation; not ourselves, but the kids,

 9   and those opportunities.                 So you’re looking at

10   things like training and mentoring and financing,

11   and issues that go beyond what we have

12   traditionally focused on.

13                       That, I think, is really where the

14   future is, because when I look at my family, which

15   wasn’t discriminated against but came here very

16   poor.       I don’t think anyone who was really rich

17   came to the U.S., because they had it pretty good.

18                       So I think most of the people who came

19   here came here because you wouldn’t do this, you

20   wouldn’t leave everything you know, if you had a

21   really good life there.

22                       So worked on the railroad, drank a lot,

23   good, hard-working people.                  But what they knew is

24   that if they worked hard and gave their kids an

25   opportunity for an education, then their children’s

26   lives would be so different.                    Every generation has

                                    NEAL R. GROSS
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 1   done that, unless and until our society doesn’t

 2   give them that opportunity.

 3                       I think that’s really what this is all

 4   about, is that all of us have to know that because

 5   we’re where we are, we now have an opportunity to

 6   make sure that others.                Now I venture to say most

 7   of us haven’t come from, you know real necessarily

 8   privileged backgrounds.                 We’ve had opportunities

 9   that weren’t denied us.

10                       I think that’s really what we’re

11   talking about here.               How do we take everything that

12   we’ve known, where we’ve seen success, where

13   mentoring has worked, where financial opportunities

14   have worked, where training has worked, and how do

15   we take all of that and focus it more effectively.

16                       That’s what I’m very, very excited

17   about, because frankly for me, I wouldn’t be here

18   if there hadn’t been key people along the way who

19   helped me and who were interested, and who gave me

20   opportunities.            So thanks again for all your work.

21   We are here to listen and learn, and facilitate

22   wherever possible.              So thanks again.

23                       CHAIR JOHNSON:          Thank you.

24   Commissioner Adelstein?

25                       COMMISSIONER ADELSTEIN:               Well, thank

26   you.       I really appreciate all you making it out

                                    NEAL R. GROSS
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 1   here, especially with the snow.                     I, being from

 2   South Dakota, can relate to the Davos people more

 3   than the Washington people.                   I’m not afraid of a

 4   couple of inches here, but neither are you, because

 5   these challenges are so big.

 6                       I noticed since I was here in

 7   September, some of us have been very productive.

 8   Some of us more productive than others, especially

 9   our chairman and myself, who have had children

10   since we last met.              Congratulations to you.            Oh

11   yes, and you too.

12                       (Laughter)

13                       CHAIRMAN POWELL:            Something I didn’t

14   know about.

15                       COMMISSIONER ADELSTEIN:               We’re creating

16   our own little mini-diversity there.                        We’ve got to

17   make sure they have opportunities when they get to

18   be, you know, when they grow up, because you sure

19   face a big challenge.                We talked about it last

20   time, and I’ve been following very closely your

21   activities.

22                       I’ve had Anne Perkins follow all of

23   your subcommittee meetings and Johanna Mikes has

24   made it to some -- or Johanna Shelton, I should

25   say, speaking of being productive, monitoring the

26   subcommittees and seeing what’s going on, and I

                                    NEAL R. GROSS
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 1   hear a lot about your enthusiasm and how much

 2   effort you’re putting into this process.

 3                       I know all of us on the Commission

 4   really appreciate it, because we’re looking forward

 5   to hearing from you.               We want to make sure that you

 6   have all the resources you need.

 7                       I was pleased to hear Julia’s comments

 8   about how satisfied you are.                    If there’s anything

 9   we can do, anything I can do, you just let us know,

10   because we want to make sure you have everything

11   you need to get the important work that you have

12   before you done.

13                       I said last summer I was here that I

14   hope to be optimistic, even in the face of big

15   challenges.          I remain that way, seeing how much of

16   an effort you’ve made and how much progress you’ve

17   made over these last few months.                      My advice, I

18   guess, is just to keep thinking with a broad, open

19   mind.       We need to think outside the boundaries,

20   because what’s been done up to this point clearly

21   isn’t working.

22                       We still see minority ownership at the

23   lowest point since we’ve been keeping the

24   statistics.          We need some fresh ideas; we need new

25   approaches; we need to jump-start what’s happening

26   now.

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 1                         So we really want you to think with an

 2   open mind.            We’re already hearing some good, new

 3   ideas, I think, what we’ve heard so far.

 4                         I encouraged you all, last September,

 5   to engage in a lot of outreach, and I see you’re

 6   doing that.            You have people like Roscoe Young and

 7   Marva Johnson and other members of the New

 8   Technologies Subcommittee are reaching out to

 9   people that are off of the FCC’s normal radar

10   screen, people like Tom Wilkins, I’m talking about,

11   and other minorities that are trying to make it out

12   there in industry.

13                         They give us some real insight into

14   what it is the FCC can do.                    I’m especially looking

15   forward to hearing that subcommittee’s meetings in

16   March.           I want to hear about them.                You’re going

17   out on the road, and you’re doing the subcommittee

18   outreach that we’re all so hopeful about.

19                         I know that a lot of the other

20   subcommittees are reaching out as well.

21   Commissioners Andy Barrett and Rivera last Tuesday

22   studied finance issues all day long.                          My

23   compliments to you for keeping at it all day.                         I

24   heard it was a very productive session, and we

25   heard new ideas about how to get over the hurdle of

26   finding capital.

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 1                       That’s been the issue, you identified I

 2   think, in the mid-80's, as the biggest issue facing

 3   minorities trying to get into this business.                       It

 4   remains possibly the biggest primary hurdle today.

 5   So getting those deals done is -- what it takes to

 6   get those deals done is what you’re trying to work

 7   on.

 8                       So it reminds me of health care costs.

 9   I remember when I came to Congress, these old books

10   about health care costs from the early 70's, saying

11   that there’s a crisis in the cost of health care in

12   1972 hearings in the Senate.

13                       I got there in the late 80's and the

14   issue was still health care costs, and guess what?

15   Still is right now.               We heard about it just

16   recently.

17                       Some issues just don’t go away, but

18   we’ve got to think of new, creative ways to get

19   over them.          At another forum, I guess at that same

20   forum, you heard from Professor Leonard Baines

21   (phonetic), who talked about the history of this,

22   that broadcast licenses were often given out

23   without a minority enhancement.                     People had to get

24   them the old-fashioned way.

25                       Whoever had the most money at the table

26   won out, despite what the preferences might have

                                    NEAL R. GROSS
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 1   been.       We’ve got to make sure that current FCC

 2   processes don’t build on that history of

 3   discriminatory, or insensitive, or ineffective

 4   practices.

 5                       I hear that other subcommittees are

 6   making progress as well.                 For example, the

 7   Transactional Subcommittee has been working hard to

 8   address the need for tax credits, and looking at

 9   other possible legislative or regulatory solutions,

10   to get the assistance that people need.                            Career

11   Advancement is properly focused on measures to

12   further minority employment opportunities.

13                       I think overall the committee’s

14   functioning well.             It’s moving in the right

15   direction.          I’d just like to fill out some themes

16   for you to think about as you move forward.

17                       First, it seems that you don’t have the

18   kind of relevant data that we need.                       We hear this

19   again and again from your subcommittees, that you

20   don’t have what you need to understand and fully

21   address these issues.

22                       A number of subcommittees, my staff

23   tell me, do not -- have a lack of data or a lack of

24   resources that they need to obtain the necessary

25   data about what the situation is out there and how

26   to address it.

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 1                       One good example, Professor Alan

 2   Hammond (phonetic) on Tuesday commented that

 3   accessing programming playlists would help in

 4   knowing what impact minority ownership really has

 5   on what gets broadcast.

 6                       So we need to prioritize the data, and

 7   figure out what we need most, and figure out then

 8   how to get it, and let us know how we can help you

 9   do that.

10                       A second issue is the legal support

11   that you need, as you get deeper and deeper

12   analyzing these proposals.                  I understand that some

13   pro bono solutions have been found, but I want to

14   continue to work with you on this and monitor this,

15   and make sure you have what you need and that’s

16   working out.

17                       A third consideration is what role the

18   Commission plays with regard to minority ownership,

19   and whether or not the FCC should serve as some

20   type of advisor for small businesses, and identify

21   problems and opportunities.                   How much of a role do

22   we have?

23                       Just navigating the waters of the FCC

24   can be difficult for anybody.                    You know, you need

25   these high-priced lawyers to figure out what we’re

26   up to, some kind of priesthood, that you need to

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 1   have all this expertise.

 2                       But it shouldn’t be that way, and we

 3   should be helping out.                I mean, some people that

 4   particularly speak Spanish may not even be able to

 5   access that easily.               So what role can ARPO

 6   (phonetic) take to proactively assist people?                        What

 7   more can we do than we’re doing now?                        We want to

 8   hear from you about that.

 9                       A fourth issue is more understanding of

10   the timing and the end game for the Commission.

11   This is especially important as we strive to think

12   outside of the box.               For example, as the Chairman

13   noted, as we’re moving to the digital age and

14   multi-channel digital television role, what new

15   ideas do we need to bring to bear there?

16                       So I know you have a big mission and

17   sometimes frustrating, because like I say, you keep

18   confronting these same issues over and over again.

19   But I just want you to know how much we’re

20   concerned about what it is you’re doing.

21                       You heard from all of us here today,

22   and I know our colleagues who couldn’t make it here

23   today for snow or whatever reason, feel the same

24   way, that we want to support you any way we can,

25   and we want to see you succeed.                     I think that

26   you’re on the right track towards getting there.

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 1   So thank you again for being with us.

 2                       CHAIR JOHNSON:          Thank you all for your

 3   comments and your active participation.                            I know

 4   that on the conference calls that we’ve been

 5   holding, every subcommittee they’ve addressed and

 6   discussed that each FCC Commissioner has taken an

 7   active role and involvement in what we’re doing.

 8   So thank you again for your comments.

 9                       Again Commissioner, we took notes, as

10   we did the last time, and we will be responsive to

11   all of the issues raised, and thank you for your

12   support.         Member Honig?

13                       MR. HONIG:        Commissioners and Chairman

14   Powell, I know all of us, and I’m just speaking as

15   a member, appreciate the encouragement and

16   optimistic expressions that you’ve presented us

17   with today.

18                       I just wanted to take the liberty to

19   ask one question, which I’ll -- which you should

20   take, I hope, as a friendly question.                        We will be

21   empanelled for two years or possibly more, and we

22   are volunteers.            During the time that any advisory

23   committee is convened, inevitably and unavoidably,

24   issues that may affect or fall within its scope of

25   influence or jurisdiction will arise in the normal

26   course, in the triennials, the biennials, and other

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 1   forms.

 2                       Is it -- what is your policy or what is

 3   your preference, as far as when those things arise

 4   in the normal course, whether either the Commission

 5   or individual bureaus ought to be soliciting the

 6   committee’s advice and input during that process,

 7   or even perhaps before these issues arise in a

 8   public way?

 9                       CHAIRMAN POWELL:            Well, the committee

10   is just that.           It’s an advisory committee to the

11   Commission on questions of diversity.                        It serves

12   both as a resource for the Commission and its

13   constituent elements.

14                       In addition, it has an opportunity, as

15   a separately-chartered and independent

16   organization, to make its views expressed to the

17   Commission in the context of proceedings, both as a

18   group or on an individual basis. So I don’t see any

19   problem with that at all.

20                       Now the suggestion, however, which may

21   be implicit in your question, that somehow it is

22   unsatisfactory if every single regulatory question

23   that might involve diversity isn’t first run

24   through the Council, I don’t know if that’s what’s

25   you’re suggesting.              That may be.

26                       MR. HONIG:        Not quite.         Maybe I didn’t

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 1   make myself clear enough.                  Inevitably, there will

 2   be some questions that go right to the heart of

 3   diversity.          Not implicitly but explicitly, and

 4   since we’re here, I’m just suggesting perhaps as

 5   the best way to make efficient use of our time and

 6   expertise and so on, and sometimes we may be

 7   exploring that issue anyway, but not be aware that

 8   it’s being ramped up within a bureau.

 9                       It might be a good idea to just make it

10   the Commission’s practice, if not policy, to reach

11   out to us and ask our input.                    And understanding

12   that sometimes these things are time-sensitive and

13   it will be necessary for us to jump.                        But that

14   might be an additional way in which we could be

15   helpful to the Commission.

16                       SPEAKER:       I would agree with that.

17                       CHAIR JOHNSON:          Mr. Honig and other

18   members, we’re going to -- we have a time slotted

19   for a Q&A towards the end.                  Mr. Honig, I’ve allowed

20   you that privilege, but we do need to try to stay

21   on schedule.           If it’s the will of the group, I

22   wanted to go ahead and move forward, and have Mr.

23   Steward make his presentation.

24                       Before doing that, I just want to spend

25   a few minutes bragging, about the man that’s seated

26   before us today.             Worldwide Technologies was

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 1   founded by Mr. Steward in 1990.                     Oh, by the way, I

 2   also wanted to recognize his wife.                       She’s here.

 3                       And it was founded in 1990, with four

 4   employees, in a 4,000 square-foot office space, to

 5   distribute computer software and hardware.                         Today,

 6   there are over 400 employees.                    The company has

 7   close to a billion dollars in sales.                        They are one

 8   of the leading electronic procurement and logistics

 9   companies in the United States.

10                       His honors, as well as the company’s

11   honors, have been many.                 In 2001, WWT was ranked

12   14th in St. Louis Business Journal for privately-

13   held companies.            In 2000, it was named Black

14   Enterprise Magazine’s number one African-American

15   owned business in the United States, making it the

16   first technology company to receive such honors.

17                       In 2000, he earned national honors for

18   Federal Computer Week and Washington Technology as

19   a top minority technology vendor.                      He was recently

20   recognized by Ebony magazine as one of the top 100

21   most influential black Americans.                      The honors go on

22   and on and on.            But most importantly, the effort,

23   the commitment, and what he has created, not only

24   for himself but for the others that come after him,

25   and the ones that are within his company.

26                       In addition to leading this company and

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 1   its effort, he and his wife, he’s also found time

 2   to write a book, titled Doing Business by the Good

 3   Book.       Another model of success and lessons learned

 4   on success, straight from the Bible.                        This man and

 5   all of his interest, all of his commitment and all

 6   of his efforts has created something just

 7   tremendous.

 8                       We thought that we would bring him

 9   forward, because one of the things that the

10   Chairman had asked of us is to focus on best

11   practices; what works, how does it work, and how

12   can we replicate.             To the extent that there are

13   barriers, talk to those who’ve succeeded and better

14   understand how they overcame those barriers, and if

15   there are still barriers to be addressed today.

16                       We are here to listen and to learn from

17   you.       I wanted to thank Priscilla Hill-Ardoin for

18   helping us find him and bring him, at a time when

19   there are storms and the economy is somewhat upside

20   down, and to give us the honor of having him

21   present to us today.               With that, Mr. Steward.

22                       MR. STEWARD:         Madam Chairman, thank you

23   so much for the opportunity to be able to speak

24   before this Advisory Commission.                      Chairman Powell,

25   thank you for receiving me earlier today in your

26   office as well.            We had a very interesting dialogue

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 1   and conversation there as well.                     And Priscilla,

 2   thank you for the honor of being here and asking me

 3   to come, and talk a little bit about one of my

 4   favorite subjects, and that’s this business called

 5   Worldwide Technology.

 6                       Also, I’d like to acknowledge, again,

 7   my wife of 27 years, who decided to weather the

 8   storm with me, to come here to Washington, D.C.                      We

 9   weren’t quite sure whether we were going to make it

10   or not, with our plane being a little delayed and

11   their having to do some deicing and so forth.                      But

12   we weathered it, and were able to get here and get

13   here on time.           So thank you for coming with me.

14                       I thought it would be important that

15   you kind of get a sense and a feel for my

16   background, because I thought that would be helpful

17   in giving you a sense and a feel for, I guess, the

18   personality, the kind of environment that I kind of

19   grew up in.

20                       It gives you a kind of a background, a

21   kind of a sketch, and then kind of evolve that to

22   some of the business, other businesses I’ve owned

23   over the years, and then talk a little bit about

24   Worldwide Technology in more detail because, you

25   know, it’s not where you end up.                      I mean, today is

26   what you see Worldwide as being, but the business

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 1   actually started years ago.

 2                       Actually, it started when I was growing

 3   up in a small town of Clinton, Missouri, and with

 4   my parents being -- my dad especially being

 5   somewhat of an entrepreneur as well.                        Not the kind

 6   of entrepreneur that we’re talking about today, but

 7   the one that we would call someone who hustled for

 8   a living.

 9                       He had a number of jobs, from

10   janitorial jobs to barkeeper to a night watchman to

11   hauling trash, was just the kind of a way we lived,

12   how he made a living.                In addition, that we lived

13   on a semi-farm.            We grew up in a small town called

14   Clinton, Missouri, which is only 6,000 people, and

15   we lived on the edge of town, on the other side of

16   the tracks.

17                       During those days, it was a time where

18   segregation was prevalent.                  However, I was one of

19   the first persons of color to go to the integrated

20   school in 1957, going directly from home tot eh

21   first grade, as opposed to having the opportunity

22   to go through kindergarten.

23                       We were challenged in the town.                We

24   were going through a very, very transitional

25   period, where both sides were beginning the process

26   of learning about one another, being incorporated

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 1   with one another.

 2                       At the same time, there were still some

 3   challenges in the community as well, relative to

 4   the movie theater, where you had the persons of

 5   color sitting in a balcony, to the public swimming

 6   pool, where you had segregation or actually we

 7   weren’t allowed to go to the swimming pool there or

 8   any other restaurant in the community as well.                          So

 9   there were still those elements that were there,

10   and challenges that we all faced in our community.

11                       I had the privilege of going to Central

12   Missouri State University, acquiring a Bachelor’s

13   degree and B.S. in Business Administration, with an

14   emphasis in Industrial Organization.                        I had the

15   opportunity also to play college basketball there

16   as well.

17                       Moved onto to St. Louis; initially

18   worked for a company called Missouri Pacific

19   Railroad Company, that’s now merged with the Union

20   Pacific Railroad Company, in Sales and Marketing.

21   Went through a very extensive training program with

22   them, and lived in New Orleans, Milwaukee, Houston

23   and L.A.         So I had great exposure there.

24                       Then had an opportunity to work for a

25   company called Federal Express, which most of you

26   have heard of, an extremely successful company and

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 1   at the same time I had the opportunity to be able

 2   to get experience in Sales and Marketing in that

 3   company.

 4                       Decided that I had this entrepreneurial

 5   spirit, something that had been burning inside of

 6   me.      My wife said that she would support me totally

 7   on my endeavors.             However, she didn’t know what was

 8   really getting into.               Between the time that I

 9   initially engaged and got the first business

10   started and growing and happening, I had been

11   through seven businesses since that time.

12                       So it hasn’t been easy.               There have

13   been challenges along the way.                     I can say that the

14   initial businesses I got in evolved me, and was a

15   learning experience for me with relationships; a

16   learning experience of how business is done; a

17   relationship to how access was very, very important

18   to me and to the other diversity companies, how

19   vitally important that is, to able to be effective

20   in getting the kind of traction you need in

21   business.

22                       Let me tell you a little bit about the

23   first kind of business, so you can get a

24   perspective of how this business, how Worldwide

25   Technology evolved.               I was in the audit business,

26   where we actually were auditing and analyzing,

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 1   reviewing freight invoices for overcharges assessed

 2   against the various carriers.

 3                       So we would actually audit a company’s

 4   freight bills, for example, a General Motors or a

 5   Ford or Chrysler or SBC and others, and we would

 6   get them money back from the various carriers,

 7   whether it was a railroad or truck line or air

 8   freight carrier.             We would take a percentage of the

 9   amount of money we were able to find.

10                       We were pretty good at it, and we

11   developed that into a much broader opportunity by

12   actually becoming an ICC-licensed property broker,

13   where we actually were brokering truckload movement

14   across the country as well.

15                       We were able to visibly see what was

16   happening across the country, relative to

17   transportation, and how companies, private and

18   commercial fleets were moving their product in and

19   out of the various points of (inaudible) across the

20   country, and we were seeing that there are empty

21   miles that were pretty prevalent in the bump

22   traffic end of the business.

23                       As a result of that, we were able to

24   match up our clients with those carriers.                          We were

25   able to obviously take an override on those, which

26   was the first time that had ever been done in the

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 1   tank truck end of the business.

 2                       As a result of that, we recognized that

 3   we were seeing that there were just as many

 4   challenges with undercharges with the railroads, as

 5   there were overcharges with our clients.                           So as a

 6   result, we set up a separate company that did

 7   nothing but analyze and audit freight invoices for

 8   the railroads, for undercharges.

 9                       It had never been done before.                    I

10   challenged the Union Pacific initially.                            It was the

11   initial engagement that we had, for us to an audit.

12   We would do the audit for nothing.

13                       As a result of that, we were able to

14   get the commitment from the large -- one of the

15   largest railroads west of the Mississippi, the

16   Union Pacific.            The statute of limitations happens

17   to be three years, where we could do the audit.                             So

18   we have $15 billion worth of information coming to

19   us in 1987.          How do you do an audit of all that

20   kind of information?

21                       So we would not receive the information

22   in truckloads.            So we decided in 1987 to build one

23   of the largest LAN systems in the Midwest.                           We’ve

24   only hung the -- it was only 45 (inaudible).                              The

25   file server that we had, that we built around, was

26   a file server that was 660 megabytes.                        The machines

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 1   were 8088 machines.

 2                       We had a gateway that was tied to the

 3   railroads themselves.                We had a converter box that

 4   would take the ASCII file from the railroads, and

 5   actually convert it and to download it into our LAN

 6   system that we had built.

 7                       Then we began to build a software

 8   application in triple C++ to build an application

 9   that allow us to be able to do the audit, 35 to 40

10   times faster than the railroads could do it

11   themselves, and then be able to send the data back

12   to them.

13                       So we were using Intranet, Internet,

14   Extranet applications when we didn’t know what it

15   was, to manage the information.                     So as a result of

16   that, this light bulb comes on.                     I wasn’t in the

17   transportation business, audit business.                           I was in

18   the business of using technology to change how and

19   the way that we did business.

20                       So in 1990 evolved this company called

21   Worldwide Technology, and that’s what we’re going

22   to talk about today.               I thought that was important

23   that you understood the evolution of all that,

24   because my background is not in technology.                          It’s

25   not in telecommunications; it is in transportation,

26   but we recognized that technology made a huge

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 1   difference in the how and the way that we did

 2   business.         Worldwide Technology, we decided that’s

 3   what we were going to launch.

 4                       Our very first client actually ended up

 5   being SBC.          They gave us an opportunity and

 6   presented an opportunity where, you know, we

 7   weren’t in a business that we had grew up in, and

 8   they gave us an opportunity to prove our

 9   capabilities of being able to deliver some

10   technology to the marketplace, to them, for their

11   infrastructure.

12                       As you can see, at Worldwide Technology

13   you see today we’re a company that last year did

14   almost $1.2 billion in business.                      We did that with

15   a 400 and almost 500 people.                    Actually, we have 556

16   people in our organization.                   You wonder, how do you

17   do that?         I say “very carefully.”

18                       You have the infrastructure, which we

19   will talk a little bit about.                    We have an order

20   process system, a back office system that is second

21   to no one.          We believe that our definition on how

22   we have utilized our business process engineers and

23   reengineered how and the way that we do business,

24   our back office.

25                       Our enterprise resource planning system

26   that we’ve implemented as well, is second to no

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 1   one.       It allows us to be able to scale, to be able

 2   to bring some efficiencies in the supply chain that

 3   didn’t exist prior to us being there.

 4                       As you can see, we’re a premier

 5   evaluated reseller.               We do some engineering and

 6   integration services, as well.                     We do provide some

 7   procurement and logistics services, and we have an

 8   IT consulting arm that does nothing but

 9   implementation of back office ERP and do business

10   process reengineering.                Supply chain services, we

11   were able to provide as well, and we do some light

12   manufacturing in the organization as well.

13                       The company has been extremely

14   profitable over the years.                  We just put in place a

15   $130 million line of credit, and I was looking at

16   it the other day.             We put in -- actually it’s $145

17   million, because I had to sign a personal guarantee

18   for it, and I never would have believed this young

19   boy from Clinton, Missouri would be signing for a

20   $145 million line of credit.                     But that’s as a

21   result of partnership through relationships and the

22   success and growth that we have experienced over

23   the years.

24                       We’re ISO-9000 certified, and we also

25   were part of the Quest (phonetic) Forum as well.

26   We’re TL 9000- certified as well, which is a much

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 1   more stringent process to go through.                        We’ve been

 2   certified with that.               We are the first person of

 3   color, diversity company, to have acquired that

 4   status.

 5                       We have logistical centers that are

 6   across the country.               In fact, we have over a

 7   million square feet of office and warehouse space

 8   across the country, to accommodate the business

 9   that we do.          And to give you a sense and a feel for

10   the facilities, and they’re mirrored from as far

11   north as Detroit, to as far south as San Antonio,

12   Texas, to far west as Livermore, California, and as

13   far east as here in Washington, D.C. area.                         We have

14   a pretty substantial presence and facility as a

15   result of the business that we do on the Federal

16   side of our business.

17                       And to take a look at Worldwide

18   Technology overall, there’s a Worldwide Holding

19   Company, and then there’s Worldwide Technology, and

20   then there’s a company called, which

21   is vertically focused on the telecommunication

22   industry.

23                       At Worldwide Technology and that

24   vertical focus, we have primarily we’re focused on

25   the financial industry, in delivering IT products

26   and services in that industry, as well as we -- the

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 1   Federal government.               We do quite a bit of business

 2   in the Federal government as well, in delivering

 3   products and services to our Federal government,

 4   and primarily in DOD.

 5                       We were able to -- we were one of the

 6   most successful SBA small businesses and the 8(a)

 7   program that we grew up on as well.                       We today do

 8   about $300 million in that sector.                       We also are

 9   heavily involved in the telecommunications space,

10   where we also have an EF&I team, as well as we have

11   strategic alliances with some of the biggest OEMs

12   in the country.            You’ll see that in the next slide.

13                       People talk a little bit about the

14   supply chain, and how complex it really is.                        If you

15   take a look at that slide, you get a sense and a

16   feel of how people are trying to communicate with

17   one another, the inefficiencies in the way they are

18   communicating with one another, and the problems

19   and challenges and so forth they face as well.

20                       We believe that defining and redefining

21   the supply chain is vitally important for the

22   future of any of the vertical markets that we’re

23   involved in, whether it’s telecommunications, or

24   whether it’s involved in the financial marketplace

25   that we’re dealing with, or the automotive space

26   that we’re in as well.

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 1                       As you can see, with that complex kind

 2   of -- you find all kinds of inefficiencies, and all

 3   kinds of problems and issues, in trying to work

 4   through this very complex supply chain.                            What our

 5   company was very successful at doing a number of

 6   years ago, that was putting in a back office system

 7   that we believe is second to no one.

 8                       We had an opportunity to be able to

 9   redefine the supply chain and the various

10   programmatic opportunities that we’ve had, and be

11   able to bring some real inefficiencies and drive

12   down costs, and increase the visibility, and at the

13   same time, bring some clarity to the supply chain,

14   in a way that had never been brought to it before.

15                       It allows us to be able to really

16   define what the supply chain is.                      That’s where the

17   opportunity is.            One of my favorite scriptures is

18   my “People perish for the lack of vision.”                            If you

19   can see this opportunity, I think this is an

20   unprecedented opportunity for minority and

21   diversity companies to take advantage of, and to

22   realize, because I believe that small business and

23   diversity companies have the -- not only have the

24   creativity, but also have the entrepreneurial

25   spirit to allows them to be able to turn quicker,

26   faster, more efficiently, better than the larger

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 1   companies.

 2                       We actually have the ability to be able

 3   to turn on a dime, in order to prepare to put these

 4   kind of very complicated systems together.                         But it

 5   takes, in my mind, it takes the right people and

 6   right slots in the organization.                      I’ve learned over

 7   the years that the most important thing to -- that

 8   in business, people aren’t your greatest asset, but

 9   the right people are.                 Putting the right people in

10   the right slots in the organization are vitally

11   important.

12                       My mother said that, I think equally as

13   well, but she said it in a little different way.

14   Don’t have any preconceived ideals of how your

15   blessing’s going to come.                  It comes in all

16   different sizes and shapes and colors, and that

17   blessing may just pass you right by if you don’t

18   recognize the true value and get past some of the

19   misconceptions that we might have about how that’s

20   going to come.

21                       So if you take a look at the

22   streamlined complex, the supply chain that we were

23   talking about earlier, and we’re talking about

24   being able to aggregate the OEMs, the minor

25   suppliers, and be able to integrate ourselves deep

26   and broad within those, and be supplier-neutral in

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 1   how we are deploying that as well.

 2                       Then we take a very complicated

 3   procurement process, an order process, and we have

 4   it streamlined in such a way they’ll be able to

 5   drive down the costs of any kind of inefficiencies

 6   that we’re talking about, and bring some real

 7   visibility and value in the supply chain to the

 8   customer.

 9                       That’s what the customer is looking

10   for, us to be able to bring value to that.                         We

11   believe that if we’re able to define what that

12   supply chain is, we have an unprecedented

13   opportunity to not only define it but we have an

14   opportunity to dominate in the areas that we

15   provide this kind of service, because we believe

16   that no one else will be able to do it the way we

17   can, with that kind of entrepreneurial, creative

18   approach that we take.

19                       To kind of give you an idea of the

20   breadth of relationships and contacts that we’ve

21   built over the years, as well as, I think, is

22   important, these relationships weren’t built

23   overnight.          It took, time, effort, energy to build

24   the kind of partnerships.

25                       At the end of the day, what happens is

26   that people do business with people they like and

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 1   they trust, and those relationships aren’t built

 2   overnight.          It took a lot of dinners and lunches

 3   and events that we went to and extended ourselves

 4   at.

 5                       In addition, some of these people

 6                       (Tape change)

 7                       MR. STEWARD:         (tape picks up) inside

 8   their comfort zone, to do business with us as well.

 9   We have a number of customers who have done that, a

10   number of partners who have done that as well.

11   That outside the comfort zone, decide that “Well,

12   we’re going to take a risk on a company that has

13   been not initially proven, that they can provide

14   all the services that they say they can, but with a

15   little risk, maybe they can.”

16                       One of the things, obligations we know

17   that we have is that each and every day we earn our

18   stripes.         We’re only as good as the last deal that

19   we did, and one of the reasons that I talk a lot

20   about the way and how we do business, it is vitally

21   we do business with integrity, we’re a vendor that

22   can be trusted with the technology, and that we do

23   what we say we’re going to do and we do it each and

24   every time above and beyond what the customer and

25   the partnership is expecting.

26                       As a result of that, what happens is

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 1   that people tend to do a lot more business with us

 2   as a result of that.               They want to build even more

 3   partnerships and broader relationships with us, and

 4   want to get us even more engaged in broader

 5   opportunities.            They realize that we’re going to

 6   also invest in that relationship as well.

 7                       We’re going to bring new technology;

 8   we’re going to bring new ways of doing business;

 9   we’re going to bring our entrepreneurial spirit;

10   we’re going to bring also the ability to be able to

11   bring creativity to that relationship that gets

12   them to think a little differently about their

13   supply chain, and how we can bring and drive down

14   costs, and bring efficiency, and be better as a

15   partnership to that customer, than they would be

16   without us.

17                       As a result of that, the customer gets

18   very excited about the relationship as well, and as

19   a result of that, obviously the vendor looks to us,

20   relative to being their partner, moving forward

21   with their business with a particular customer,

22   because we’re bringing real value.

23                       As you can see, the evolution of the

24   supply chain and some of the things that we have

25   done over the years as well, how we’ve improved and

26   developed our business is a part, a part of our

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 1   company’s history.

 2                       As you can see, the back office systems

 3   are a big part of that as well.                     How we’ve invested

 4   heavily back into the technology that we talk

 5   about, whether it’s XML technology, EDI, and how

 6   we’ve integrated ourselves deep and broad in our

 7   supplier base, with our suppliers and also with our

 8   customers, is a big part of that as well.

 9                       I know very few companies -- they’re

10   very small -- that can compete with the kinds of

11   infrastructure that we’ve put in place, that we

12   spent a lot of money, effort and energy to put

13   these systems in place.                 Without question, our

14   suppliers are benefiting from it and so are our --

15   have our customers.

16                       As you see, the robust back office

17   infrastructure as well that we’ve put in place, we

18   do walk the talk.             We use the technology that we

19   talk about, and we’ve been doing that for a number

20   of years as well, and we have a development team

21   and back office team that is second to no one.

22                       A number of awards that we’ve received

23   over the years have been numerous, and you’ve

24   talked a little bit about that.                     As a result of the

25   work that we’ve done at Dell Computer, as you can

26   see, and some at the SBC, as well as Cisco, and

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 1   being honored by the National Minority Supplier

 2   Development Council as well, was a big part of last

 3   year’s successes.

 4                       Then taking a look at some of the

 5   things that we’ve done with the GSA, with our

 6   Federal government in the Federal space, a Partner

 7   in Excellence award that we received from them,

 8   just kind of gives you a sense and the breadth of

 9   how people are feeling about the way and how we do

10   business.

11                       One of the things that we’ve emphasized

12   with the culture of our organization, which I think

13   has been vitally important to the success of the

14   organization as well, is that integrity, and trust,

15   and loyalty and commitment are a vital part of how

16   we do business.

17                       One of the things that I have been

18   focused a lot of time, effort and energy on is that

19   I invest an awful lot of time in serving, and

20   showing integrity and loyalty, commitment within

21   the organization.             As a result, what culminates in

22   the culture of the organization is a sense of

23   integrity.

24                       As you see, even pocketed throughout

25   our organization, we have -- trust and integrity

26   and loyalty and commitment are all pocketed through

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 1   the organization, to remind people how vitally

 2   important it is to the long-term growth in our

 3   business.

 4                       The ability to be able to change, our

 5   ability to be able to make a difference.                           If you

 6   don’t have a passion for the business, you need to

 7   do something else, is a part of that as well.

 8                       So I try to -- I do everything I

 9   possibly can to lead by example.                      As a result, it

10   culminates in the culture of the organization.                           I

11   believe as a result of that, people begin to serve

12   one another better.

13                       As a result of that in serving one

14   another better, we tend to put our customers and

15   our suppliers first, and we also, that little word

16   of “integrity” in that relationship and building

17   that trusting relationship with them, tends to come

18   out foremost in building the kinds of relationships

19   that we want with our supplier base and our

20   customers.

21                       So it gives you a sense and a feel for

22   the awards that we have received.                      Can you go a

23   little further?            Okay.      Supplier diversity.             One of

24   the things that we’re very passionate about, and

25   even in our own organization, simply because we’re

26   a diverse company as well, is that we’ve put a lot

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 1   of time, effort and energy.

 2                       There was a blue ribbon panel that was

 3   commissioned by SBC, and I happen to be one of

 4   those members as well.                We came up with a number of

 5   recommendations and so forth for -- to enhance the

 6   supply chain.

 7                       One of the things that is vitally

 8   important to us at Worldwide is that we walk the

 9   talk as well.           We’re encouraged also by suppliers

10   and people that we work with, that we also put

11   together a -- we think we can do diversity and

12   inclusiveness of other kinds of companies of color,

13   in the supply chain, probably a little better,

14   because we understand the challenges they face.

15                       Whether it’s advice relative to

16   building relationships; whether it’s advice

17   relative to capital and the resources necessary;

18   whether it’s regarding the vision relative to the

19   technology that can be utilized, in order to make

20   their company and provide a better value

21   proposition for the customer, is a part of that as

22   well.

23                       We also have allowed a number of the

24   partners that we have as well the opportunity to be

25   able to utilize even our infrastructure, to be able

26   to get better engaged as well.

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 1                       If we have to be the front end, and we

 2   integrate our systems into place, and they’re able

 3   to take advantage of our back office systems in

 4   order to make their business proposition work, and

 5   in conjunction to do business, we’ve had an

 6   opportunity to do that.

 7                       As a result of that, we’re very proud

 8   to say that we won the Phoenix award from the

 9   National Minority Supplier Development Council a

10   couple of years ago.               We do more business with

11   other minority businesses than any other minority

12   business.

13                       So we’re very proud of that, and our

14   passion and commitment to diversity in our business

15   as well.         We think that we’re a living example of

16   what can happen, and how that can continue to grow

17   for all of us.

18                       But if you take a look at the inherent

19   value to the telecom supply chain, we think that

20   lower-cost structure, we think that the lower

21   return on investment hurdles and local presence,

22   and the flexibility and creativity, as I talked

23   about earlier, is vitally important.

24                       And our ability to be able to

25   customize, I think, is something that diversity

26   companies are able to provide, that companies of

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 1   size have a difficult time doing.

 2                       A new challenge is required.                   I think

 3   focus on improving our value proposition beyond the

 4   below-margin and basic distribution services

 5   offering, which most companies are involved in, and

 6   improved governances, and strategies for long-term

 7   profitability obviously is a big part of what we

 8   look at as we’re advising these companies as well.

 9                       Growth and diversification, I think,

10   are a big part of it as well.                    We’re not just in

11   the telecom sector, as I was talking about earlier.

12   We had the pleasure of being able to diversify our

13   portfolio in such a way that as the telecom sector

14   did have a downturn, that we had other business

15   that we were doing, and doing well in, that

16   mitigate the kind of challenges that most companies

17   were having as the downturn took place.

18                       In our task force recommendations, it

19   gives you a sense and a feel for what we recognize

20   as being some real issues or real ways to, I think,

21   improve the diversity companies.                      As you can see,

22   implement effective sourcing for supplier diversity

23   was a part of that.

24                       Enhanced risk mitigation; activities in

25   the supply chain; management practices; our deploy

26   process; quality and control were a part of that as

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 1   well.       We were part of the Quest Forum, as well, to

 2   begin the process of really getting companies to

 3   understand that quality process and how that

 4   process works, and how you incorporate it into your

 5   business.

 6                       Improved access in capital and finance

 7   management was a part of that as well.                         Capital has

 8   always been a challenge, because of relationships

 9   and because of access.                It was a challenge for us

10   for many, many years as well.

11                       Again, at the end of the day, people

12   want to do business with people they like and they

13   trust, and the kind of business that we’re talking

14   about in the telecom sector.                    Not a lot of people

15   understand this business, and not a lot of people

16   are willing to take the risk as well with their

17   capital, in this kind of business as well.

18   However, there are, you know, other kinds of

19   options out there for those companies as well.

20                       And then, of course, to accelerate

21   supplier diversity participation to the industry

22   overall, collaborating with one another, and

23   understanding the importance of diversity and the

24   supply chain as well, and the value that those

25   companies bring.

26                       One of the things I thought was

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 1   important is that we’re concerned about the next

 2   generation, and trying to provide at least an

 3   example.         One of the things that we were -- did not

 4   have the privilege of is having a Worldwide

 5   Technology or some of the other larger companies

 6   out there as an example, or at least something,

 7   someone to look to as a model.

 8                       So I hope that you look to us regarding

 9   advice, regarding counsel, regarding help,

10   regarding support, relative to the task force

11   mission, and we’re here to support it in any way we

12   possibly can.           We’re hopeful that this is helpful

13   and at least gives you some insight into what is

14   possible, relative to diversity companies.

15                       This is a culmination of 20 years of

16   being in business.              I’ve stepped in just about

17   every pothole you could possibly step in.                          I have

18   also, as I reflect back on my career as well, and

19   as I began to evolve into this business called

20   Worldwide Technology even for that matter, my wife

21   tended to say “Oh, another business?”

22                       Because I had a number of failures out

23   there as well, from getting my car repossessed, to

24   them turning off my water, to my losing my home,

25   and a whole host of issues that have happened.                          Not

26   everybody will want to go through that challenge.

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 1   However, but we have to convey the opportunity,

 2   because the opportunity for the next generation to

 3   realize a dream is real.

 4                       I think there’s a window of opportunity

 5   right now, low cost of entry, to utilize technology

 6   in a way that’s never been used before, and

 7   redefining the supply chain, that allows companies

 8   to realize a real value in seeing these companies

 9   come into the supply chain and make a huge

10   difference in the way and how they do business, and

11   really redefine the company’s future as a result of

12   that.

13                       So I thank you for the opportunity to

14   be able to share this brief story with you.                        I’ve

15   tried to collapse 20 years in this little-bitty

16   presentation that I’ve given.                    But I appreciate you

17   listening, and giving me the opportunity to be able

18   to testify before you.

19                       (Applause)

20                       CHAIRMAN POWELL:            David, I want to

21   thank you and commend you.                  You know, in addition

22   to learning about your terrific business, part of

23   what we are trying to do is study such

24   opportunities and models of success.

25                       I just wanted to go over quickly my

26   notes from what I heard that you said, which I

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 1   think presents an opportunity for this committee to

 2   understand the kinds of things we want to be

 3   addressing.

 4                       At first, I thought it was interesting

 5   you talked about the, sort of the formative

 6   experiences that led you where you were.                           You

 7   learned hustle from your parents; you learned the

 8   importance of knowing about one another.                           We heard

 9   a lot about training.                I suppose you learned some

10   teamwork playing basketball.

11                       I think it’s always important, when we

12   focus on our youth, to focus on those values.                            But

13   more importantly when you started talking about

14   business, I thought you said a few, really critical

15   things for us to think about.

16                       Seeing the opportunity to do something

17   different, I thought, was what I heard right away,

18   which is you might start off thinking you’re doing

19   something else, but staying eagle-eyed about the

20   opportunity to do something different or better is

21   where the real wealth and opportunity come from in

22   an entrepreneurial society.

23                       I also thought you made a point about

24   secondary opportunity; that is, you may be in a

25   successful business, but you stayed alert to the

26   possibility to move from the railroad business to

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 1   the technology business.

 2                       I think sometimes we need to figure out

 3   ways to model, how to see secondary opportunities.

 4   And more importantly, relevant to our task, how

 5   technology or communications systems can present

 6   secondary opportunities that might not at first be

 7   apparent, I think were important.

 8                       You talked about the importance of any

 9   business better be ready to turn on a dime.                           I

10   think there’s an importance about flexibility there

11   as well, that you know, if we’re going to have

12   successful companies of any type, and when we teach

13   companies, you know, our diverse population, about

14   how to succeed, the importance of being able to

15   adjust quickly seemed important in your history.

16                       You said it better when you said “Don’t

17   ever have a preconceived notion of success.”                           You

18   can’t make the world bend to your will.                            You have

19   to go out and serve the world in a way that it’s

20   ready to embrace, and I think that’s interesting.

21                       You talked about the importance of

22   relationships and contacts.                   Networking is

23   something I’ve heard talked about a lot about this.

24   I’ve never heard it put so well.

25                       People want to do business with people

26   they trust and they like, and trying to make sure

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 1   that those we’re trying to help have that

 2   opportunity to network and build those

 3   relationships, so that they run into an SBC, or a

 4   government contract or something that gives them

 5   that first opportunity and that first access to

 6   capital seems a common story.

 7                       And that every day you have to earn

 8   your stripes.           You’re only as good as the last deal

 9   you struck.          Then near the end, you so repeatedly

10   emphasized ethics and integrity.                      I’m always

11   disheartened by -- the newspapers are filled every

12   day with companies and people who fell apart on

13   this prong.          So if you’re committed to long-term

14   success, it seems to me you do need to be committed

15   to those values.

16                       Practice what you preach; lead by

17   example; and just raw perseverance.                       Your wife’s

18   weathered more than today’s storm, and clearly

19   that’s commendable.               But I just wanted to go

20   through that real quickly to say, you know, when I

21   listen to a presentation like that, you can hear

22   the elements that I think provide a lesson to those

23   who are trying to succeed, but more importantly

24   giving us ideas about things we might focus on,

25   such as, you know, seeing opportunities to do

26   something different.

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 1                       What are the lists of those

 2   opportunities where there are underserved business

 3   segments that perhaps there’s real entrepreneurial

 4   activity in?           Thank you, Madam Chairman.

 5                       CHAIR JOHNSON:          I think we have a

 6   question from committee members.

 7                       MR. WALLAU:         I just want to answer the

 8   Chairman, that I heard certain things and I’m

 9   probably not as positive a person as the Chairman.

10   One thing that struck me, Mr. Steward, was the

11   greatest impediment for me and the business that I

12   run, is actually one that you raised as a positive,

13   which is people want to deal with people they know

14   and they trust.

15                       What happens every time I push

16   diversity through the ABC Television Network,

17   people go to the people they know and trust, and

18   that’s -- they have to take that risk that you

19   talked about, to go to places where they don’t have

20   a known commodity, where they don’t have the people

21   that they normally trust.

22                       So knowledge and trust is, I agree with

23   you, critical, and it actually is a major factor,

24   an impediment to getting diversity drilled deep,

25   all the way from suppliers to -- of everything from

26   office suppliers to television shows.                        People just

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 1   tend to go to -- and that’s the biggest obstacle

 2   that there is in diversity.

 3                       You’ve got to, I mean, a small part of

 4   the telecommunications industry I’m involved in,

 5   you know, they have millions of dollars invested in

 6   a television pilot.               Are they going to hand it

 7   direct to some kid who’s a person of color, who’s

 8   unproven, or you going to go with that same old

 9   person who’s going to do the kind of nice B minus

10   job?       See, there aren’t too many superstars, so you

11   tend to just sort of play it safe.

12                       And the idea of risk-taking, the idea

13   of we’re not going to get what we want to get in

14   any kind of diversity issues unless we’re willing

15   to take some risk, with significant parts of our

16   businesses, and with people who we don’t know real

17   well, and we haven’t had enough experience to build

18   up trust with.

19                       That really is key to getting this

20   done.

21                       MR. STEWARD:         Let me suggest something

22   to you, because I think this is vitally important

23   to know, is that to mitigate some of that risk,

24   what customers have done and I’ve seen it done

25   consistently -- SBC is very good at this -- and

26   that is encouraging a partnership with larger

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 1   companies.

 2                       Because there are certain things that

 3   larger companies don’t do as well, and that smaller

 4   companies are capable of doing.                     Like, for example,

 5   in redefining and being entrepreneurial and

 6   redefining the supply chain, an application to do

 7   that, and doing some business process reengineering

 8   of the supply chain.

 9                       Larger companies have a stumble with

10   that, and stumble with turning quickly to

11   accommodate a need of a customer.                      As a result of

12   that, larger companies are recognizing that smaller

13   companies can do that better, and probably be much

14   more creative about how we approach it and do it

15   differently than probably has ever been done.

16   They’re really wanting to take the risk.

17                       So as a result of that, comes kind of a

18   huge opportunity, not only for a diversity company,

19   but a huge opportunity for the supplier partner to

20   also differentiate himself into the customer, which

21   allows him, you know, more opportunity, more

22   incremental opportunity, in things that he would

23   not do well anyway.               The customer, he gets more

24   value than ever before.                 So there are ways of doing

25   it, in a way that allows everybody to win, and win

26   in a huge way.

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 1                        CHAIR JOHNSON:          Thank you.         Any other

 2   questions?           I think I -- Steve?

 3                        MR. HILLARD:         Madam Chairman?

 4                        CHAIR JOHNSON:          Uh-huh.

 5                        MR. HILLARD:         Mr. Steward, a couple of

 6   things.          One is I thought that there was a lesson

 7   in some of your early observations as you began,

 8   that were kind of a lesson for the committee, which

 9   is really something I think we’ve been talking

10   about, which is to establish, really challenge

11   ourselves, and then really create the necessity

12   that comes from stepping up to that challenge, to

13   create some real solutions.

14                        I thought that was great, and I had a

15   question, too, which is in your experience, maybe

16   you’ve got an observation.                   It’s a topic that the

17   committee and our subcommittee is looking at, is

18   how do you -- in your experience, how do you look

19   out and find particular transaction opportunities?

20                        Is there in the course -- clearly, in

21   the course of the development of your companies,

22   you moved from one area to another, or seen

23   opportunities within a given business zone.                         Any

24   observations that you could share with us?

25                        MR. STEWARD:         You know, it’s

26   interesting that you make that, because it does

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 1   couple onto what I just said a few moments ago, is

 2   that people do business with people they like and

 3   they trust.          Over the years, we’ve been able to

 4   build a level of trust and confidence, and not only

 5   that, but a reputation of providing real value to

 6   our business partners.

 7                       So, instead of Worldwide being that

 8   company that only has 500 people, you don’t do the

 9   kind of business that we do and the size of deals

10   that we’re involved and engaged in with the small

11   sales force that we have.                  Our business partners

12   will bring us into deals, because they know without

13   question that we’re going to bring value to that

14   partnership, and we’re going to invest in the

15   partnership relationship.

16                       We do business with integrity, and we

17   do business with the trust that, you know, instead

18   of us having, you know, the 40 sales people we have

19   spread across the country, we have thousands of

20   sales people out there selling our partnership, our

21   business proposition together, which allows us to

22   be able to be engaged in a lot of deals we would

23   have never seen.

24                       That’s in the automotive sector; that’s

25   in the telecommunications sector; that’s also in

26   the Federal sector that we’re involved in as well.

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 1   I mean, from the IT partners that we have to the

 2   telecommunications that we have, Alphatel

 3   (phonetic), Fujitsu and Tellamps (phonetic) and the

 4   like, and Cisco and the like, are interested in

 5   this relationship, because of the additional value

 6   we can bring that they simply are not a business

 7   they’re involved in, and that we can hugely make a

 8   difference in the way and how they do business.

 9                       CHAIR JOHNSON:          Thank you very much.

10   We’re going to -- you’ve done an outstanding job,

11   and I see several members have questions.                          We are

12   running a bit off schedule.                   If we could hold

13   questions, that would be great, and if you can’t

14   stay with us, Priscilla’s got your number.

15                       Because the dialogue and us better

16   understanding what the barriers might be, how we

17   can address those and replicate your success with

18   others, is something that we’re certainly

19   interested in.            We appreciate the wisdom that

20   you’ve brought to us today, and we will follow up

21   with you.         With that, thank you again.

22                       MR. STEWARD:         Thank you.

23                       (Applause)

24                       CHAIR JOHNSON:          If it’s the pleasure of

25   the group, we’re going to continue and go right

26   into our subcommittee reports, with the first

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 1   subcommittee report being Career Advancement.

 2   Jenny Alonzo.

 3                       MS. ALONZO:         Thank you, Julia.           Is this

 4   on?      Okay, the committee has a packet, which is

 5   titled “Career Advancement Subcommittee.”                          So if

 6   you can please refer to that, and I am going to

 7   walk everyone through our summary, and our general

 8   overview.         You need more?           Here’s -- you have it?

 9   Okay, alrightee.             We have some extras, so -- okay.

10                       All right.        In December 2003, the

11   Federal Communications Commission Advisory

12   Committee on Diversity for Communications in the

13   Digital Age’s Subcommittee on Career Advancement,

14   requested information from a broad range of

15   industry, trade associations and foundations across

16   the country.

17                       The intention of the request was to

18   compile input eliminating the experiences of such

19   organizations and/or their members companies, in

20   order to identify workforce identity best

21   practices, that would be worthy of widespread

22   acceptance throughout the broadcast,

23   telecommunications, cable, satellite, Internet and

24   broadband industries.

25                       Specifically, the Career Advancement

26   Subcommittee sought information regarding diversity

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 1   efforts, programs and policies in the following

 2   categories:          employment diversity, diverse

 3   contracting initiatives, evaluation procedures and

 4   incentives, the role of the FEO in promoting

 5   diversity, and the Role of Diversity Committee in

 6   promoting diversity.

 7                       An overview of the responses to the

 8   Subcommittee’s letter request received to date is

 9   attached.

10                       Our general overview.              Requests for

11   information on best practices were sent to a total

12   of 30 trade associations and four foundations.                        The

13   full list of organizations is listed in Exhibit A,

14   and an example of the letter submitted to trade

15   associations and foundations are shown in Exhibits

16   B and C, respectively.

17                       Six responses were received from the

18   following organizations, most of which are cable-

19   oriented:         The American Cable Association, the M.L.

20   Bowen Foundation for Minority Interest in Media,

21   National Association or Multiethnicity in

22   Communications, National Cable and

23   Telecommunications Association, United States

24   Telecom Association, Women in Cable and

25   Telecommunications, and the WIC (phonetic)

26   Foundation.

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 1                       Additionally, AWRT responded to our

 2   request.         However, the subcommittee has not had the

 3   opportunity to review, but will do so for

 4   subsequent meetings.               The American Cable

 5   Association responded in support of the

 6   Subcommittee’s initiative, but was unable to supply

 7   the required information in the timeframe requests.

 8                       The USTA supplied only very limited

 9   information, noting that the FCC Diversity

10   Committee’s inquiry would be better directed to our

11   larger telecommunication companies, some of which

12   are their members.

13                       The remaining four organizations who

14   responded, the M.L. Bowen Foundation, NAMIC, NCTA

15   and WIC, all supplied relevant information that

16   will be summarized in the following pages.                         The

17   responses from the M.L. Bowen Foundation and NAMIC

18   provided an insight into diversity practices on a

19   non-profit level, from foundations that provide

20   recruitment and training for support of their

21   respective industries.

22                       The information provided by the WIC

23   Foundation highlights the best companies for women

24   in cable, as measured by the number of women and

25   women of color, managers and executives,

26   commendation and pay equity, advancement

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 1   opportunities and resource for work life support.

 2                       The information supplied by the NCTA

 3   offers a general summary of the cable industry

 4   practices.          The NCTA response was the most

 5   comprehensive, addressing employment diversity,

 6   diverse contracting opportunities, evaluation

 7   procedures and incentives, role of the CEO in

 8   promoting diversity, and the role of the Diversity

 9   Committee in promoting diversity.

10                       However, more data is urgently needed.

11   It would be highly valuable if the separate

12   telecommunication companies themselves would

13   provide input on specific practices in their own

14   organizations, for use in ultimately compiling a

15   comprehensive best practices document.                         Companies

16   in the various FCC-regulated industries should be

17   encouraged to share their particular experiences to

18   enhance the credibility, effectiveness and

19   influence of this project survey by the FCC’s

20   Advisory Committee.

21                       The Subcommittee intends to proceed

22   with a follow-up to its best practices request

23   within the corporate sector.                    Attached is a summary

24   of the responses provided by the organizations and

25   above.

26                       Next steps for the Subcommittee:                 We

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 1   will be reaching out to corporate sector directly,

 2   and via trade organizations again, to gather

 3   additional information on best practices programs

 4   within their respective companies.                       Companies’

 5   findings and subcommittee’s recommendations on the

 6   best of the best practices will be presented to the

 7   full committee, and subsequently to the Commission.

 8                       Timeline.        We’re talking about a second

 9   round of letters going out the week of February 9th.

10   Responses will be requested for return by March 9th.

11   Draft summary will be distributed to the full

12   committee by April 12th, and the Subcommittee will

13   present a draft set of best practices during full

14   committee meeting in May 2004, back here at the FCC

15   headquarters.

16                       This draft set is intended to be a

17   living document, as we gather field learnings

18   during the planned FACA road show in the summer of

19   2004.

20                       At this point, I would like to open it

21   up to the other Subcommittee members.                        If there is

22   anything that you would like to add or enhance on

23   this overview.

24                       MR. WALLAU:         Well, I think that’s

25   exactly (inaudible).               Indeed, I am a little adamant

26   (inaudible) to respond, and I think all the

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 1   broadcasting companies would respond.                        I personally

 2   would get your request.                 But we’re used to

 3   complying with these type of requests, when they

 4   come from outside entities, primarily associations

 5   involved with how to diversify broadcasting,

 6   obviously specifically.

 7                       You should know that in the

 8   broadcasting sector that’s listed here, the NAB, as

 9   you probably know, all the networks have withdrawn

10   from the NAB for reasons of the conflict between

11   the non-owned affiliates and the networks.                            So I

12   think if you went to the networks and to the major

13   broadcasting, at least in my part of the business,

14   this businesses -- these numbers of businesses that

15   we’re talking about, the companies would comply

16   with some pretty national information that would be

17   helpful just to understand the present.                            You should

18   also hear from them about the initiatives they have

19   in place, which are substantial.                      Some are working,

20   some are not, and we can be helpful in figuring

21   that out together.

22                       CHAIR JOHNSON:          That would be great.

23                       MR. WALLAU:         But I think going through

24   the rest of these companies is essential, and I

25   think you’d be -- I hope you’d be heartened by the

26   response you’d get.

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 1                       MS. ALONZO:         Any other comments from

 2   the committee members, Subcommittee members or the

 3   committee as a whole?

 4                       SPEAKER:       I would just add one

 5   challenge of creativity, also, is in what way can

 6   either the committee or the Commission sort of

 7   lend, in some validating way, sort of its

 8   imprimatur to the successful practices, and in some

 9   ways challenge companies with less successful

10   practices, to either adopt, or some sort of

11   initiative.

12                       You know, I don’t know if any of this

13   works or is even legal.                 But, you know, I’ve

14   thought of everything from something as simple as

15   the good housekeeping seal of approval or an FCC

16   feature of Best Practices, or something that

17   associates the government’s approval or sort of

18   validation of those things.

19                       You know, I’ve seen in diversity

20   programs this works pretty well in other areas.

21   You know, whether you’re one of Fortune’s Top 50

22   companies for diversity, people really work very

23   hard to be on that list, or those who care about

24   it.      It’s a pretty significant motivator, as I

25   understand it inside companies.

26                       So be thinking creatively.                 What could

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 1   the FCC potentially do with that information, that

 2   might give it that kind of ongoing validation, that

 3   companies would actually desire, sort of vie for

 4   being perceived as, you know, healthy employment

 5   environments for diversity.

 6                       MS. ALONZO:         Mr. Honig?

 7                       MR. HONIG:        Did the Subcommittee chair

 8   want to address the question of baseline data?

 9                       MS. ALONZO:         We actually figured that

10   we would table this and address it off-line.                           There

11   was a concern that there’s an NPRM for data from

12   companies, smaller companies in the telecom arena,

13   to get rid of the mandatory request for data.                          We

14   figured we would take that off-line.

15                       CHAIR JOHNSON:          Thank you.         Any other

16   questions?

17                       SPEAKER:       Well, just so it isn’t a

18   total blow-off, I do think this sort of raises an

19   important thing to stay cognizant of.                        There’s a

20   very different set of equities with legal

21   compulsion to report data to the United States

22   Government, than there is from what you also do

23   voluntarily.

24                       Both are probably necessary.                   But I

25   don’t think -- I think they should be complimentary

26   to each other, because I think there are things you

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 1   can get from some sources and not from others as

 2   well.       We will always have certain kinds of

 3   limitations, everything from the Paperwork

 4   Reduction Act, approval by OMB, the legal rights to

 5   compel.

 6                       You know, we’re a state actor.                   That’s

 7   one of my frustrations in the diversity arena, is

 8   we’re always subject to sort of the constitutional

 9   scrutiny associated with these things, that often

10   puts limits that we might not otherwise impose.

11                       So I would only say that, you know, I

12   think I know what we’re talking about.                         It’s fair,

13   but I don’t think that that should mean that this

14   committee doesn’t have an opportunity to get good

15   data through its own processes as well.                            That’s

16   actually one of the reasons we hoped, we put this

17   group together.

18                       CHAIR JOHNSON:          Thank you.         Any other

19   comments or questions of the Chair?                       Ms. Alonzo?

20   Seeing none, excellent report.                     We look forward to

21   the additional work.               And again, to kind of

22   reiterate, we drafted and submitted this

23   information to companies right before Christmas, so

24   we understood it would be --

25                       MS. ALONZO:         Right.      Christmas is a bad

26   time.

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 1                       CHAIR JOHNSON:          Yes.      It would be a

 2   work in process.             Now to kind of hone it in and go

 3   directly to the companies themselves will provide

 4   us probably with even more rich information to

 5   build from.

 6                       MS. ALONZO:         Right, and really everyone

 7   we reached out to, no one was reluctant.                           Everyone

 8   was like “We’d love to help you out,” but timing

 9   for some was kind of difficult.                     But overall,

10   everybody was very interested in serving.

11                       SPEAKER:       I did want to make one

12   comment, as far as (inaudible) information as far

13   as the best companies list that you were referring

14   to.      We did do a survey such as that this past year

15   for the first time in the cable industry, and we

16   called it the “Parr Initiative,” Women in Cable and

17   Telecommunications, say for pay equity, advancement

18   opportunities and resource for work life.

19                       What we found is that, upon doing the

20   survey last year, compiling the results and

21   partnering with Working Mother Media, who does the

22   annual 100 best companies list for working mothers,

23   that we got the credibility and the expertise from

24   Working Mother that had done those kinds of surveys

25   in lists before.

26                       Then we were able to do our own list in

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 1   the cable industry for the best companies for women

 2   in cable from that.               We had the results on November

 3   3rd at our gala that week, honored the very best

 4   operator and the very best programmer in the cable

 5   industry.

 6                       What we found from that a lot of

 7   companies were clamoring after that, to say “How

 8   can we be honored at this event?                      How can we get on

 9   this list?”          It really does cause a lot of warm

10   competition, but also people to look inside of

11   their own companies, to look at their results from

12   the survey as we gave them scorecards back to show

13   them how they did.

14                       It was all confidential, so it’s not

15   like we’re outing people.                  We just honored the best

16   companies.          It really was a very positive thing for

17   the industry, a very positive thing for the

18   companies that participated, because those that

19   didn’t do well, nobody knew it.                     But the ones that

20   did do well, everybody knew about it.

21                       It seems to me now an incentive for

22   companies, after having seen how well it worked,

23   wanting to get on that list this year.                         So I would

24   hope that would be something we could try to do,

25   either a CO or a list or something, and again,

26   understand the legal ramifications that I did see

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 1   firsthand in the last 12 months, how well that can

 2   work.

 3                         CHAIR JOHNSON:          Thank you.         Thank you,

 4   Jenny.           With that, we’ll go to New Technologies.

 5   Mr. Riley Temple will be presenting.                          The

 6   Subcommittee chair, Roscoe Young, is participating

 7   via the telephone, as his plane was not able to get

 8   him in today.             So Roscoe, we know you’re there in

 9   spirit, and you’re in good hands with Riley.

10                         MR. YOUNG:        I’m alive and well.           Thank

11   you very much, Julie.

12                         MR. TEMPLE:         Thank you, Roscoe.          Thank

13   you, Julia.

14                         MR. YOUNG:        Riley.

15                         MR. TEMPLE:         I am pinch-hitting here

16   for Roscoe.

17                         CHAIR JOHNSON:          Riley, I think you need

18   to come to the microphone.

19                         MR. TEMPLE:         I’m pinch-hitting here for

20   Roscoe, and also the engine that drives our

21   Subcommittee, who is Marva Johnson, who was not

22   able to be here as well.                   The Technology

23   Subcommittee has been meeting over the course of

24   time, and I wanted to outline for you some of the

25   objectives and our progress report to date.

26                         We also have some preliminary

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 1   recommendations which we will not present today,

 2   but which are summarized briefly in this report in

 3   front of you, and we will be developing white

 4   papers on it for your consideration at some later

 5   time.

 6                       Our objective is to assess what

 7   ownership and career advancement opportunities are

 8   available in new and emerging technologies, and the

 9   convergence of these technologies, and to develop

10   recommendations for facilitating opportunities for

11   minorities and women in new industries as they

12   form.

13                       There are several critical success

14   factors.         One is to draw the linkage between

15   technology opportunities and financing

16   opportunities, and identify the opportunities that

17   drive technology and advancement in investment

18   interest, and managing the quick success

19   expectations; that is, focusing on opportunities

20   for sustainable success, and not get-rich-quick

21   type schemes.

22                       We’re doing this in a phased

23   approached.          Phase 1, we’re looking at

24   opportunities that exist right now, i.e., low-

25   hanging fruit, and you’ll see examples of that at

26   the end of this packet, and which we can talk about

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 1   if we have the time at the end of this

 2   presentation.

 3                       Phase 2 will focus on technology-drive

 4   development opportunities and focus on incentive-

 5   based and regulatory policy, i.e., not regulation-

 6   based opportunities, with target recommendations to

 7   be made some time mid- to late 2004.

 8                       In Phase 3, what does the long-term

 9   future hold?           We’re looking at the commercial

10   sector, Petri dish research and development

11   opportunities for minorities and women, and working

12   with incumbents like Microsoft, Hewlett-Packard,

13   GTE, to identify opportunities to outsource

14   development in delivery of technological solution

15   for their business needs.

16                       Interestingly enough, we will probably

17   spend some time with Worldwide Technology after

18   listening to that.

19                       In education, driving the advancement

20   of scholarships and research opportunities at the

21   graduate level.            For example, Emory University has

22   a New Ventures program at its business school in

23   regulation, focusing on establishing long-term

24   regulatory programs and policies to drive and

25   foster nascent technology, with target

26   recommendations to be made in ‘05.

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 1                       We wanted to also today to present a

 2   general progress report.                 We did or conducted post

 3   mortem focus groups.               We looked at minority

 4   companies who have made an effort to get into the

 5   business and have either stumbled and failed, and

 6   we wanted to look at and get some feedback on their

 7   hurdles, best practices and opportunities.

 8                       They included Essential Integration

 9   (phonetic), Globenet and the Wilkins Group.                        We

10   also looked at retail service providers, and we

11   have some recommendations as a result of having

12   looked at those retail service providers, which

13   include Northpoint, Broadwave, UrbanCom (phonetic)

14   and Savoy.

15                       Our identified initial recommendations

16   in general, and in the broadcast sector, follow.

17   We have some initial assessments and in the

18   interest of time, perhaps I shouldn’t go through

19   these, but I would recommend them for everybody’s

20   review and comment.               I would appreciate your

21   comments in getting back to us.

22                       They focus on media, communications and

23   telecommunications, and specifically, in one case,

24   I want to follow up on the need for further data

25   gathering, which makes it -- which is difficult in

26   the telecom arena particularly.

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 1                       Also, I would have you look at,

 2   beginning on page 8, our findings from the post

 3   mortems.         What worked and what didn’t; the -- for

 4   example, if you look what didn’t work in terms of

 5   the auction policies with respect to Northwave and

 6   Urban, bidding credits and what those entities

 7   referred to as “overregulation.”                      On the broadcast

 8   side, the hurdles with respect to financing,

 9   discrimination and regulatory policy, and also lack

10   of industry experience.

11                       Now in terms of our low-hanging fruit

12   recommendations on page 12, in which no rule

13   changes or legislation are required, which is why

14   they’re determined to be low-hanging fruit.                        We

15   would like to recommend the expansion of the

16   working relationship between the FCC and the SBA,

17   as well as the FCC and other government entities,

18   such as NTIA in the Department of Commerce, to

19   increase awareness of emerging technology

20   opportunities for minority and small businesses.

21                       We also recommend the sponsorship of an

22   SBA-FCC conference on minority small businesses and

23   emerging technologies, such as wireless, voiceover

24   IP and broadband and others, for a potential

25   conference in the fall of this year.

26                       Spectrum allocation.              We recommend that

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 1   the FCC establish a database, and work with outside

 2   groups to establish an information clearinghouse of

 3   updated license sales, spectrum leasing and other

 4   communications-related opportunities for minorities

 5   and small businesses.

 6                       In the engineering area, the creation

 7   of a medium-powered AM and FM radio stations; relax

 8   the community of license and transmitter site rules

 9   to allow suburban facilities to move closer to

10   their audiences, and to allow interference

11   agreements between licenses of or for a licensee

12   with itself.

13                       In our next steps, we will finalize

14   these recommendations and submit white papers on

15   them for your consideration.                    We are going to work

16   with the Access Subcommittee to establish a

17   minority supplier program, or to recommend the

18   establishment of a minority supplier program,

19   identifying opportunities to leverage resources or

20   the ASABA Group (phonetic), for example, and enlist

21   the support of top tier players.

22                       We will refine regulatory and

23   legislative-based recommendations, and leverage the

24   resources of the organizations listed, to reach, to

25   look at the research minority publishers, and to

26   focus in on private sector initiatives.                            Finally,

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 1   to explore opportunities to resuscitate the

 2   Telecommunications Ownership Diversity Act.

 3                       Roscoe or Marva, do you have any other


 5                       MS. JOHNSON:         Roscoe, did you want to

 6   make any comments?

 7                       MR. YOUNG:        No.     I think, Riley, you’ve

 8   covered the point to the talking note that we have

 9   for the day.           Marva, feel free to chime in.

10                       MS. JOHNSON:         I didn’t have any other

11   comments.         I did want to thank everybody on the

12   committee, because the committee has put forth a

13   lot of hard work in coming up with some initial

14   investment.

15                       CHAIR JOHNSON:          (inaudible)

16                       SPEAKER:       If I could just --

17   (inaudible) because I just thumbed through this

18   thing quickly, but the thing that strikes me as

19   either potentially wrong or limiting is somehow the

20   question of broadcast versus telecommunication.                    It

21   would be purposely provocative.                     It would suggest -

22   - I would even go so far as to suggest those aren’t

23   the two areas I would list as the new emerging

24   technologies.

25                       What worries me is that, you know, I

26   see some of the assessments of telecom, for

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 1   example.         It’s almost premised on the big telcos or

 2   something, as if the opportunity in

 3   telecommunications is an opportunity to compete

 4   with incumbent telephone services which has, of

 5   course, all of the hurdles that I see listed.

 6                       I would love to see sort of an edgier

 7   expansion, if you would of -- I love the framework

 8   personally, but I would love to see sort of an

 9   expansion into, you know, perhaps software,

10   hardware industries; new and emerging technologies;

11   wireless services, WiFi and related services,

12   powerline and related services.

13                       I think the real exciting part of

14                       (Tape change)

15                       SPEAKER:       (tape picks up) quite a bit

16   further removed from traditional broadcasting and

17   telecom.

18                       MR. TEMPLE:         Yes, I think what you have

19   in front of you is our initial assessment of where

20   we are today.           This doesn’t include, you know, the

21   future and forward look.                 If you look at our

22   phased-in -- our Phases 2 and 3, in which we will

23   begin to focus on those other areas.

24                       We first looked at low-hanging fruit in

25   order to get the engine moving, to see what we

26   could, what kind of analysis we could do, to come

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 1   up with initial recommendations, and this is the

 2   analysis of where they are right now, and those

 3   recommendations are a reflection of this kind of

 4   analysis essentially.                So it’s just the first step.

 5                       SPEAKER:       Okay.

 6                       MR. TEMPLE:         Okay.

 7                       CHAIR JOHNSON:          Any other comments?

 8                       SPEAKER:       When David Steward was

 9   speaking earlier, he mentioned the fact that when

10   Worldwide Technologies -- well, probably in

11   launching all of his businesses, but particularly

12   that one, that he didn’t really have examples of

13   other companies like his or like what he was trying

14   to put together, at least not people of color that

15   were heading up those companies that he could

16   emulate.

17                       I’m, you know, coming from a more

18   professional development background.                        But I’m

19   thinking from a business development perspective,

20   that having an opportunity to have businesses be

21   able to connect CEOs, or people who are trying to

22   put businesses together, finding mentors in that

23   realm, as opposed to we’re always, in our

24   professional development, thinking about mentors to

25   help us with our career path.

26                       But in these emerging technologies,

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 1   that these are things that haven’t been done

 2   before, and if they are being done before, by a

 3   very, you know, small number of companies or people

 4   that are doing that, and really to find an

 5   opportunity to get those people together, to be

 6   able to talk.

 7                       What an opportunity that would be, to

 8   help move those technologies along, as well as

 9   helping those companies develop.                      So I didn’t know

10   where that kind of landed among these four

11   subcommittees, but this one seemed the most likely,

12   and I’m on it.            So that’s why I brought it up.

13                       MR. TEMPLE:         Actually, I think it does

14   land squarely within our subcommittee jurisdiction,

15   and particularly when we look at what’s in the

16   supply chain.           That’s clearly where a lot of the

17   opportunity is available, and Mr. Chairman, as you

18   mentioned, in the other technologies as well, the

19   supply chain opportunities are clearly there, which

20   is where we will be looking.

21                       CHAIRMAN POWELL:            You know, just to

22   expand on your point, you know on the plane ride

23   back, I was looking through some magazines and was

24   almost embarrassed when I was reading about a

25   number of individuals who were being featured on

26   the covers of magazines at this conference, who

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 1   were minorities, and I had no idea.

 2                       Like the CEO of Semantec (phonetic),

 3   that owns Norton Antivirus software, is an African-

 4   American.         I had no idea.           That Rod Atkins, who is

 5   the senior vice president at IBM running the entire

 6   Pervasive Computing Department.                     Who knew these

 7   folks?

 8                       You know, and I think that one of the

 9   challenges, if we’re looking for mentors who’ve

10   done it and done it right, they are more than I

11   think we have been able to see.                     I think one of our

12   challenges is really to get educated about who’s

13   out there and what they’re doing, and try to tap

14   into their line of mentorship and at least

15   experiences.

16                       Because I think, you know, reading the

17   article about each of them, it was a primer in how

18   to succeed in high tech businesses that I thought

19   was real interesting.

20                       SPEAKER:       (inaudible)

21                       CHAIRMAN POWELL:            Yes ma’am, I did.

22                       MR. WALLAU:         Mr. Chairman, I think

23   that’s equally important for the majority of people

24   in business, to see if there are success stories

25   out there, if not more important.

26                       CHAIRMAN POWELL:            Yes.

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 1                       MR. WALLAU:         Because when Riley was

 2   reading on page 9 about discrimination,

 3   discrimination (inaudible) and I’m not racist.                     But

 4   then you can also be discriminate -- you can

 5   discriminate based upon experience, that the

 6   (inaudible) to being a minority is whatever failure

 7   happens to a minority happens to all members of

 8   that minority.

 9                       So if it’s -- you know, a white person

10   fails well, you know, that happened to that

11   specific person.             But if there’s a failure of a

12   black, any minority company, it is ascribed by the

13   majority viewing it to be the failure of that

14   entire group.

15                       So I have one bad experience; I

16   therefore am much more reluctant to have other

17   experiences with any kind of people I do business

18   with, if I’m that closed-minded.                      So that the more

19   that we can publicize the people who are holding

20   the reins of power, that there are successful

21   people, and I didn’t know that about the leader of

22   the Semantec.

23                       That’s a big fact.             I mean, that’s an

24   amazing thing to me.               I meet with these (inaudible)

25   to the story, and the more we get those stories

26   out, I think the more we’ll open people’s minds up

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 1   to the possibility of doing business in those

 2   areas.           So I think it’s an education -- well, it’s

 3   mentoring.            Of course, people of color it’s also

 4   educating white people.

 5                         (Laughter)

 6                         SPEAKER:       So we can get the

 7   (inaudible).

 8                         SPEAKER:       You know what might be

 9   useful, as a product or a takeaway, is whether we

10   couldn’t -- a symbol or a clip, sort of a reading

11   set of materials that we’re regularly updating, and

12   we could circulate under the auspices of the

13   committee as experiences, you know, diversity

14   success stories.

15                         Because these things often have long

16   featured articles.                Each one of the ones I had

17   read, you know, beginning to end, everything that

18   had happened, because they’re interesting and

19   compelling stories.                 So maybe that’s something we

20   could figure out a way to do.

21                         CHAIR JOHNSON:          Maybe a link from the

22   website.

23                         MR. WALLAU:         Yes, I was thinking like

24   that.       Yes.

25                         CHAIR JOHNSON:          Any other questions?

26   Ginger?

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 1                       MS. LEW:       I think another area where

 2   the issue of visibility has an impact is in the new

 3   emerging technologies and those entrepreneurs that

 4   are coming out of our business schools and our

 5   engineering schools, who are looking at WiFi, who

 6   are looking at powerline management, who are

 7   looking at more efficient semiconductor chips for,

 8   you know, your cellphones, etcetera.

 9                       One of the big challenges a lot of

10   these young, and they usually tend to be younger

11   entrepreneurs, is that they don’t have -- they,

12   too, don’t have mentors.                 So they don’t have people

13   who’ve made it, other people of color who have made

14   it in those fields, who can sort of pave the way.

15                       I think another area where it creates a

16   hurdle for them is that they don’t know or have

17   access to majority CEOs of large companies, because

18   at the end of the day, they end up selling to a

19   Nokia or a Qualcomm, or whoever it might be.

20                       So it creates this interesting hurdle

21   for some of the new, younger entrepreneurs that are

22   coming out of school, and we should think about how

23   we can, number one, identify some of those leaders,

24   and number two, how we can help them overcome of

25   those hurdles.

26                       CHAIR JOHNSON:          Good point.            Any final

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 1   comments?         Thank you, Mr. Temple.               Excellent

 2   report, and I do recall on one of your meetings,

 3   via conference call, Mr. Wilkins, I believe, one of

 4   the entrepreneurs, he spoke to the same issue, too.

 5   He said “You know, the trade show in and of itself

 6   isn’t enough.           But if you can -- you know, I need

 7   to know the CEO and he needs to know me, and I have

 8   a wonderful story to tell.”

 9                       So he kind of challenged us to come up

10   with something systemic, something real that would

11   allow that to occur.               He didn’t know what it was,

12   but some forum, some mechanism to make sure that

13   they would.          So you all are on the right track in

14   teeing up that issue, and bringing forward a real

15   entrepreneur, who could speak from experience, to

16   help us focus and address.                  Thank you.

17                       SPEAKER:       Or find a forum to get them

18   all together.

19                       CHAIR JOHNSON:          Exactly, uh-huh.

20                       SPEAKER:       Can I just mention, before we

21   move on to the next subcommittee, that for those of

22   you on the phone, who didn’t have access to the

23   PowerPoint presentation on this, we will make sure

24   that this is available on the website, so you can

25   go back and look at the pages that Riley was

26   summarizing or us.

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 1                       CHAIR JOHNSON:          Thank you.         With that,

 2   we’ll move on to Access to Capital.                       I believe,

 3   Jenny, were you going to -- what?

 4                       SPEAKER:       Ginger.

 5                       CHAIR JOHNSON:          Oh, Ginger is -- is

 6   Commissioner Barrett on the phone lines?

 7   Commissioner Barrett?

 8                       SPEAKER:       I think that we would have

 9   heard him by now.

10                       (Laughter)

11                       CHAIR JOHNSON:          I guess he’s not on, so

12   with that, Ginger?

13                       MS. LEW:       I would like to acknowledge

14   the other members on the Subcommittee.                         Lauren

15   Tyler, who was the chair of the Subcommittee, from

16   Quetzal/JP Morgan, and Anthony Gee from Carthage.

17   Lauren, are you on the call?                    I know she was trying

18   to make it.

19                       MS. TYLER:        I am on the call, Ginger.

20                       MS. LEW:       Thank you.         Well, I’d like to

21   acknowledge the great work you did in pulling

22   together the Subcommittee, and inviting our

23   panelists to appear on January 20th.                       Thank you.

24                       MS. TYLER:        It was a pleasure.

25                       MS. LEW:       We had the pleasure of

26   inviting three members from the private equity

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 1   funds.           Ed Shirley, from Fairview Capital; Duane

 2   McKnight from Sincom (phonetic), and Anita Stephens

 3   (phonetic) from Opportunity Capital Partners.

 4                         The panelists were asked to look at

 5   three broad issues.                 Number one, to provide an

 6   overview of the history of private equity; two, to

 7   discuss areas where ethnic entrepreneurs have had

 8   successful entries and exits and challenges; and

 9   three, identify the general challenges in the

10   marketplace.

11                         Mr. Shirley of Fairview Capital

12   provided an overview of the historic performance of

13   private equity funds that invest in ethnically

14   diverse companies.                He is a former board member of

15   the National Association of Investment Companies,

16   which is a trade association of investment firms

17   led by people of color.                   I also serve on that board

18   as well.

19                         Mr. Shirley reported on a recent study

20   that was funded by NAIC and the Kaufman Foundation

21   (phonetic).            The study looked at the historic

22   financial performance of its member funds.                           There

23   has been, in the past, a perception, an erroneous

24   perception, by general private equity funds, that

25   private equity funds led by people of color

26   underperform and do not provide the types of

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 1   returns that majority funds do.

 2                       The Kaufman-backed study reported that

 3   DC-backed minority funds outperformed the S&P 500,

 4   providing a 20 percent rate of return for the

 5   period that was under study.                    The study also found

 6   that such funds invested primarily in broadcast,

 7   and not broadband opportunities.                      A summary of this

 8   report is attached to this submission.

 9                       The panelists then went on to talk

10   about four broad areas.                 Number one, access to

11   talented entrepreneurs.                 Mr. Shirley and Mr.

12   McKnight reported that there was in fact a broad

13   pool of talented entrepreneurs.                     While in the past,

14   the pool of well-known and established

15   communications entrepreneurs was relatively small,

16   there is also an emerging, new generation of

17   talented entrepreneurs who are seeking capital.

18                       Access to talented investment

19   professionals.            Mr. Shirley again reported that

20   there are more ethnically diverse investment

21   professionals than ever before, working in both

22   minority and general investment funds.                         I will go

23   back to each of these points in just a moment.

24                       With respect to access to capital, all

25   the panelists cited the lack of access to capital

26   as a major impediment to ethnically diverse

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 1   entrepreneurs being able to launch new companies,

 2   and/or grow existing companies.                       Interestingly

 3   enough, consolidation of broadcast properties has

 4   created successful exit opportunities for some of

 5   these well-known entrepreneurs, yet consolidation

 6   of broadcast companies has also resulted in a

 7   significant appreciation of certain broadcast

 8   property values, sometimes making the acquisition

 9   of new broadcast properties beyond the scope of

10   minority entrepreneurs.

11                         General investment funds were not

12   viewed by ethnically diverse entrepreneurs as being

13   accessible or available, and several reasons were

14   cited.           First, Ms. Stephens stated that general

15   equity or senior lending companies did not view

16   investments in smaller broadcast deals as being

17   attractive.

18                         Many of the properties available for

19   purchase are in second and third tier markets.

20   Thus, general equity firms have concerns about

21   future appreciation and current cash flows from

22   smaller properties.

23                         Second, there is a general lack of

24   familiarity of investing in ethnically diverse

25   broadcast investments.                  Third, Ms. Stephens

26   reported that ethnically diverse entrepreneurs lack

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 1   access to the network of general investment funds.

 2                       Fourth, the investment opportunities

 3   may be too small to reach the investment thresholds

 4   of larger funds.             Fifth, a number of lenders making

 5   loans to communications companies have left the

 6   marketplace, thus shrinking the pool of debt

 7   lenders that are available.

 8                       One of the other challenges that was

 9   discussed was that with ethnically diverse funds

10   having limited funds, in fact, NAIC recently

11   announced that its member funds currently have

12   about $5 billion under management, entrepreneurs

13   seeking to purchase higher value properties in the

14   top 100 markets do not have access to sufficient

15   capital to pay for these newly-appreciated

16   properties.

17                       Access to opportunity.               All panelists

18   identified this as the major, if not the most

19   significant barrier to entry.                    That, in turn,

20   creates a significant competitive disadvantage.

21   Ethnically diverse entrepreneurs are not in the

22   loop to hear about attractive properties.                          Without

23   knowing what properties there are, their ability to

24   participate in such deals is severely limited.                          As

25   Mr. McKnight said, “If they are not at the table,

26   then they can’t play.”

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 1                       When asked why entrepreneurs don’t hear

 2   about such opportunities, Mr. Shirley stated that

 3   there was a perception that ethnically diverse

 4   entrepreneurs don’t have access to capital, and

 5   therefore don’t have the money to participate.                      So

 6   therefore, they are not told about these

 7   opportunities.            It is an interesting cycle which

 8   perpetuates itself.

 9                       Of all the issues that were discussed

10   during the sub panel meeting, the lack of access to

11   opportunity was seen as the greatest hurdle.                       It

12   was interesting to note that in Mr. Shirley’s

13   comments, he made a statement that “My people

14   perish for lack of vision.                  They also can perish

15   for lack of opportunity.”

16                       Other issues that were identified and

17   discussed, overregulation.                  Ms. Stephens and Mr.

18   McKnight urged the FCC to be cautious about

19   adopting policies which may overregulate minority

20   or small business communities.

21                       One example that was cited by both

22   venture capitalists was requiring 51 percent

23   minority ownership of broadcast properties, in

24   order to be considered a minority ownership

25   property.         Panelists indicated that the 51 percent

26   threshold created significant problems, from an

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 1   investor’s perspective, as it relates to valuations

 2   and subsequent exits.

 3                       Another panelist mentioned a problem

 4   that entrepreneurs have with respect to debt

 5   financing, as the secondary markets have a

 6   reluctance to accept loans that are securitized

 7   against sales and cash flows.

 8                       Some of the recommendations made by our

 9   panelists include reinstatement of the small

10   business tax certificate; institution of the

11   comparative bid component to the spectrum auction;

12   establishing set-asides for small businesses in the

13   spectrum auction; educating banking regulators.

14                       In terms of next steps, the

15   Subcommittee plans to follow up with the panelists,

16   to flush out their recommendations, in order to

17   submit them in a fuller way to the full committee.

18   We’d also like to pursue having discussions with

19   the National Association of Investment Companies,

20   to comment and work on this, any further

21   suggestions they may have.

22                       We should also reach out to the Tweego

23   (phonetic) Foundation, which is a foundation

24   designed to encourage more people of color to go

25   into the investment community, to find out about

26   some of the hurdles that they’ve identified.

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 1                       Finally, in terms of the first two

 2   topics that were talked about, the access to

 3   talented investment professionals.                       I think I

 4   mentioned the Tweego Foundation.                      But we need to

 5   dig a little bit deeper into this issue about

 6   access to talented entrepreneurs.

 7                       I think one of the issues that we’ve

 8   run into in recent time is that again, while we’ve

 9   had some very promising entrepreneurs come out of

10   business school and engineering schools who are

11   people of color, they may not have mentors who can

12   help them, in terms of developing a software

13   company or hardware company or whatever the

14   technology is that they may be working on.

15                       They may be very fine technologists,

16   but they have very little experience in the

17   business world.            At the end of the day, no matter

18   how good the technology, you’ve got to be able to

19   package it and sell it and make a business out of

20   it.

21                       And so I think this is an area that our

22   committee should look at a little bit more, because

23   it does have a very significant impact and link to

24   whether or not these entrepreneurs can qualify and

25   get access to private equity capital.                        That

26   concludes the report.

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 1                       CHAIR JOHNSON:          Thank you.         Any

 2   questions?

 3                       MR. WALLAU:         I think that you’re

 4   looking at it mostly with the broadcast respect,

 5   because I know that’s (inaudible), the broadcast

 6   respect (inaudible) of the committee.                        It might be

 7   helpful or useful to identify -- as I was listening

 8   to the presentation, it occurred to me that a lot

 9   of the things that were said are true of everyone

10   who is an entrepreneur, like Hispanic, Asian,

11   whatever.

12                       There are start-up problems.                   They’re

13   just part of the business.                  That’s just the

14   capitalist part of the problem for a lot of people

15   (inaudible) who try to go into business, and the

16   big companies always have advantage, and they’re

17   always going to be talking to each other at a big

18   table, and a lot of people don’t see that.

19                       It just might be useful -- I know I’m

20   not suggesting that in solving the problem of

21   limited diversity and microscopic diversity, in the

22   industries that we’re talking about, that we

23   shouldn’t address the problems faced by everyone

24   entering into these businesses.                     But it also might

25   be helpful just to try to figure out is there

26   something specific to people of color getting into

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 1   these businesses, other than simple discrimination.

 2   Is there something -- it may be just

 3   discrimination.

 4                       And therefore, having identified

 5   something specific about, that you were trying to

 6   include in these businesses, we might be able to

 7   come up with solutions and speak for those specific

 8   issues, rather than the global issues that affects

 9   everyone trying to get, all entrepreneurs trying to

10   get into businesses, like you were talking about.

11                       CHAIR JOHNSON:          Any comments or

12   reactions?

13                       SPEAKER:       Ginger, just a follow-up

14   comment.         You’re absolutely right, that many of the

15   topics that were discussed are common to any

16   entrepreneur.           But I think one of the biggest

17   challenges is identifying financial resources.

18                       I mean with all due respect, someone

19   coming out of -- an African-American engineer

20   coming out of Stanford, for example, may or may not

21   be able to find a way to get an introduction to

22   some majority venture funds in Silicon Valley or in

23   New York or in Texas or wherever that entrepreneur

24   plans to establish their business.

25                       They may be able to get introductions

26   to some of the NAIC member funds, and I think the

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 1   NAIC groups do a very good job in terms of

 2   conducting the outreach, in order to identify these

 3   promising entrepreneurs.

 4                       But when you’re talking about an

 5   organization whose funds manage a total of $5

 6   billion, and compare that to how much money that’s

 7   gone into, say, telecom investments in just any one

 8   year, there’s a huge discrepancy there.

 9                       So issues of access to capital

10   continue, of the majority funds, or general private

11   equity funds, is an issue.

12                       SPEAKER:       (inaudible) because that sort

13   of trickles up also, because on the --

14                       CHAIR JOHNSON:          Could you get closer to

15   the microphone?

16                       SPEAKER:       In the senior lender panel

17   that was held that day, it was noted that

18   frequently, the senior lenders are brought in

19   through a network of contacts that flow up out of

20   the equity investors.                So to the extent that the

21   pool of equity investors is smaller, and their

22   networks are more limited, that likewise makes it

23   more difficult for senior lenders to come in to the

24   financing picture, which makes the cost of money

25   more expensive and makes the deal more difficult to

26   put together.

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 1                       CHAIR JOHNSON:          Any other comments, Mr.

 2   Chairman?

 3                       CHAIRMAN POWELL:            I don’t know.      I find

 4   it intriguing, but I think Alex does make a point

 5   that we should think about, because, you know, in

 6   my limited experience with money people, they’re

 7   ruthlessly arms merchants.                  You know, and

 8   unabashedly so.            I think that if we talk about

 9   access to capital, in some of kind of high,

10   abstract way, most of the ones I know who will

11   confide say “This is business.                     You’re just telling

12   me about the problems of entering a business.                       Go

13   away.”

14                       I mean, I think it would help if we

15   couldn’t either identify that there’s systematic

16   persistence that can’t be explained otherwise; it

17   could be discriminatory or implicitly

18   discriminatory, or false perceptions, you know,

19   about somebody’s ability just because of their

20   status.

21                       Or there’s sort of an affirmative side,

22   which is that there’s something important, in terms

23   of sort of social good, about actually actively

24   trying to encourage greater opportunity for the

25   value of society.             But you know, my arms merchants

26   go “Yes, that’s great.                Sign me up but don’t call

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 1   me.”       That would require, I think, real horsepower

 2   at a national level as well, from leaders at higher

 3   pay grades than mine.

 4                       But I do think that for six years I’ve

 5   heard access to capital, and I always had the same

 6   reaction.         Well, how much of this is -- it’s hard

 7   to be an entrepreneur, and how much of this is

 8   systematic, permanent racism?                    I’ve come to the

 9   conclusion it isn’t me you’re trying to convince,

10   which is the problem.                It’s people who don’t have

11   to play in your world at all, and there’s nothing

12   you can do to compel them.

13                       You know, so we either need to -- we

14   need to get deeper and have better arguments and

15   more sophisticated arguments about this, I think,

16   if we hope to be effective.                   And then the last

17   comment I would say is I also think there’s a whole

18   community we have to -- and Ginger’s done some of

19   this -- we have to expand out to.

20                       I mean, the FCC, this committee, even a

21   lot of the industries, you know, there’s a whole

22   banking finance universe out there that I think is

23   where we really need to get into, because FCC has

24   no money.         It’s not going to have, nobody’s going

25   to give us any money, you know.

26                       I’m somewhat skeptical about what

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 1   policies would actually -- that we would do, which

 2   would dramatically, or at least in some order of

 3   magnitude, increase the flows of money.                            I think

 4   there’s a whole finance world out there, that part

 5   of the networking or the expansion of our

 6   relationships would really benefit us.

 7                       MR. WALLAU:         (inaudible) I note

 8   (inaudible) has nothing to do with diversifying the

 9   owners of broadcast stations, is that (inaudible)

10   access to capital, lending companies do not view

11   investments in smaller broadcast deals as being

12   attractive.

13                       That’s absolutely right.                That’s

14   regardless -- that’s just the way lending

15   institutions look at small 100+ markets, in terms

16   of cash flow, in terms of returns.                       I mean, it’s

17   just -- they’re not looked at as good investments.

18                       So it’s hard, unless you’re aggregating

19   a whole lot of them, it’s hard to go in and get a

20   lending institution to get excited about operating

21   a small station.             You know, the Disney Company

22   doesn’t have a lack of access to capital markets,

23   but the Disney Company hasn’t invested in any small

24   markets.         It doesn’t make sense.               I don’t think

25   it’s good business.

26                       But that’s the place where an

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 1   entrepreneur would start, with a small station, and

 2   build themselves up.                 So you’ve got this disconnect

 3   between lending institutions that think they’re bad

 4   business decisions and not a lot of growth

 5   opportunities, and therefore want to save their

 6   money to allocate it to the different types of

 7   investment propositions, and entrepreneurs, who

 8   have to start there, just because they can’t start

 9   in a major market.

10                         So it’s just -- it is important to

11   understand, I think, where the issues are, just

12   part of the overall economy, I mean driven by just

13   economics and where it’s driven by other things,

14   these are positive.                 Now I think the Chairman’s

15   right.           If you do want to go out and say -- he’s

16   right about it on both hands, on both statements he

17   made.

18                         The sharks who are in the investment

19   community, the money people won’t share.                             But

20   they’re -- you actually might have an appealing

21   proposition to other entities that might have -- we

22   need to identify if there are people who would want

23   to be involved in that kind of a proposition, just

24   because it’s the right thing to do.

25                         I mean, all of the companies, you know,

26   that you oversee are involved in some way in doing

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 1   some of those, whether it’s a broadcast station

 2   trying to do some kind of public service work

 3   through use of its broadcast time.                       Everybody’s

 4   involved in some way, some falling short, some

 5   overreaching, in terms of serving the public

 6   interest.         So this might be another way to try to

 7   drive that proposition.

 8                       SPEAKER:       You may be right, that this

 9   is a uniquely -- I’m not certain of this yet.                       I

10   don’t think we got to this point in the panels we

11   have, but you may be right, that it’s a uniquely --

12   a minority problem as much as an entrepreneurial

13   hurdle, that all entrepreneurs are going to face.

14                       But to the extent that most minority

15   entrants into the market are going to come into

16   small markets, you know, these panelists were

17   saying over and over again that with small market

18   deals or small deals, you know, under $15 million,

19   under $10 million, it gets very difficult, because

20   there is no cash flow.                So they’re really starting

21   from scratch.

22                       And I think you’re also right that

23   we’re getting into a whole new finance world,

24   because the themes that came up over and over again

25   was you have to educate -- you have to get out to

26   these small, local and regional banks and banking

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 1   associations, and educate them on how to do

 2   telecommunications deals and broadcast deals and

 3   wireless deals, but it scares them.                       They don’t

 4   know how to go about it.

 5                       And also it was -- because that’s where

 6   these entrepreneurs need to go.                     They can’t go to

 7   the large, national banks.                  They’re looking for the

 8   $25 million and up deals.                  You’re going to have to

 9   educate the small regional groups.

10                       Then the other issue that came up was

11   educating the secondary market, which I found very

12   interesting, because usually these loans are

13   bundled, and they’re sold on the secondary market,

14   and they -- and you have to educate the purchasers

15   of these notes on the secondary market, to tell

16   them, you know, that these types of transactions

17   are not as risky or can be structured in a way that

18   they’re worthwhile.

19                       Then thirdly and lastly was to educate

20   the banking regulators on these transactions.                       That

21   came up several times, that the banking regulators,

22   you know, they don’t see inventory.                       They see it as

23   a highly leveraged transactions, and they tend to

24   miscategorize these types of -- these loans, to

25   make it more difficult for the money to flow.

26                       Again, that is a problem that all

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 1   entrepreneurs are going to run into, not

 2   necessarily just minority entrepreneurs.                           But

 3   certainly to the extent that most entrants, new

 4   minority entrants into the markets are looking at

 5   these smaller loans, small markets, that it’s

 6   choking them off from the capital.

 7                       CHAIRMAN POWELL:            One thing we should

 8   think about, and that’s very thoughtful, Frank.                          I

 9   never thought about the local lending institutions.

10   But we all -- whenever I hear this debate, I have

11   never heard it discussed in any field other than

12   broadcasting.

13                       So one of the things that occurs to me,

14   I’m sort of just would be more curious, it would

15   illuminate the debate, is what are the lending

16   experiences for minorities in other things in our

17   portfolio?          It would be very telling if they’re all

18   the same.

19                       But it might be eye-opening if they

20   varied, because clearly what we’re saying is we

21   have the danger of an uneconomic proposition for

22   anybody.         If that’s where we’re going to try to

23   make the biggest difference, you know, we’re going

24   against -- we may be going sort of fundamentally

25   against, you know, the economic realities.

26                       But part of our answer should be, well,

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 1   okay, we can keep pounding there, but also back to

 2   the point of where else might you take that

 3   interest, or leverage from it into something else,

 4   where perhaps the fruits are greater.

 5                       But I don’t know.            I’ve never heard

 6   anyone talk about, you know, lending to minority

 7   Internet companies or lending to minority wireless

 8   companies.          A little bit on wireless, I guess,

 9   we’ve heard a little bit --

10                       SPEAKER:       I was about to comment, Mr.

11   Chairman, on the telecom side, because it seem to

12   be a fairly different phenomena than in broadcast,

13   because you’re generally not talking about owning a

14   telephone company.

15                       I mean, my God who wants to, and it’s

16   so, so very capital-intensive until, you know,

17   you’re talking -- I mean, you show up.                         You’ve got

18   $70 billion, and I can tell you, people are going

19   to know who you are, no matter what color you are

20   and you can get at the table to make the deal.

21                       But that’s not realistic.                So there are

22   services opportunities.                 The access to capital

23   issue can still be the same, because it goes back

24   to the risk proposition, I think, that David

25   mentioned and that Alex commented on.

26                       A real reality is when you’re sitting

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 1   doing business, leadership primarily what they

 2   bring to the table is judgment.                       So if I’m going to

 3   do business with someone that is large, with

 4   someone that’s proven, and I am a just like you,

 5   that company, that company and that company has

 6   also done business with them, when they go into

 7   business and they fail, or the profit margins don’t

 8   come out the way that you thought they were going

 9   to come out, or it turns out that you lost money on

10   this deal but you got to where you needed to get to

11   at the end of the day, well, that’s business.

12                         And nobody looks at you really strange.

13   But if you chose to do that with a new minority

14   company, and you’re taking a chance on the David

15   Steward as his being your first customer, or a new

16   Internet company and it goes down, the risk

17   composition is very different, because as the

18   manager now, as the leader of the company, the

19   organization, the division that decided to make

20   that decision, I all of a sudden have a judgment

21   issue.           This was poor judgment.

22                         I mean, both of them failed.                   One of

23   them you could accept, because it was more

24   mainstream and more proven.                     So I think if there is

25   something that we can do that would increase the

26   credibility of the new people that are moving

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 1   forward.         I think awards is one way, and I think we

 2   should look at awards as something other than just

 3   an accolade for the company.

 4                       But the award gives some integrity and

 5   it says that when you made the choice to do

 6   business with this person, you weren’t just sitting

 7   back here having a bad day and making a bad

 8   judgment, that credibly, you were drawn to this for

 9   some very logical reasons.                  That’s why I think we

10   can kind of cast recognitions in a different way.

11                       I also think that, at least on the

12   telecom side, it’s been my experience that many

13   times the company has to be the initial risk taker,

14   and sometimes you have to finance the person, which

15   creates an interesting kind of partnership.                        So you

16   infuse that capital.

17                       We have had experience where one of the

18   largest African-American owned telecom companies in

19   the country started that way.                    Credible, runs a

20   great business, you know, has access on its own.

21   But when he began, you had to make several millions

22   of dollars of investment in partnership, and that

23   may be another way of filling the void that Ginger

24   talks about, that is absent in the financial

25   community, because the deal’s not big enough for

26   them to really register with or to care about

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 1   getting into.

 2                       Then I think if we could identify -- I

 3   think by doing some of those partnerships, you

 4   create success stories, and then you can use those

 5   success stories to do some real apples to apples

 6   analysis.         I don’t buy the proposition that, you

 7   know, businesses that are infused by venture

 8   capital companies of color tend to fail.                           I mean,

 9   you’d have to really -- more often than others.

10                       You’d have to really convince me that

11   that’s an apples to apples, that you’re talking

12   about the same kind of applicant; that you’re

13   talking about a comparable opportunity; that you’re

14   talking about -- and business people understand

15   that.       So when you can go in and show that this is

16   -- it doesn’t become a special opportunity; it

17   becomes a business opportunity.

18                       Even though there are risks associated

19   with this, when you break them down, there are

20   going to be risks with people entering this

21   industry in this time, in these economic

22   conditions, with this kind of competition.                          So I

23   think we have to learn how to address it from the

24   way that people who are making the decisions and

25   the lending decisions start to -- are prone to

26   think about it.

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 1                       But I would just bet that if there’s a

 2   market where there are no dollars available, and we

 3   can prove that there is opportunity there, and that

 4   it is successful opportunity, that there are -- I

 5   know it’s been our instance, when we get vendors up

 6   and they are well-established, they can go and get

 7   access to capital.

 8                       Of course, the bank certainly doesn’t

 9   want us running a telecommunications company and a

10   bank.       So they’d much rather loan money than have

11   us loaning money on a successful venture.                          They

12   just have to get to where they can see it proven.

13                       So I do think that there are some small

14   things that can be done that when you add them

15   together incrementally, they make a compelling

16   business case for doing this, and it translates

17   into language that we are trained to work.

18                       CHAIRMAN POWELL:            Can I just go -- I

19   have to run.           I just want to make one final.                First

20   of all, that’s extremely insightful and I think a

21   new and creative way to think about it, because I

22   see companies do this all the time.                       It’s the

23   effort at getting secured validation.                        I mean, I’m

24   watching this, because I see entrepreneurial

25   companies entering our space all over the place.

26   Voiceover IP companies, you know.                      One of the first

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 1   people they have on the payroll is this

 2   communications marketing expert, who kills

 3   themselves getting articles written about you,

 4   getting you at conferences, getting you on lists.

 5                       I have to say this is not something I

 6   normally see associated with a lot of the minority

 7   ventures that I know.                What tends to happen, to be

 8   blunt, is we get segregated.                    Right?      It’s great to

 9   be in Ebony, but that’s not going to get the money.

10   You know, you need to be Fortune and Forbes.                        You

11   need to be in the magazines that the people with

12   the money read.

13                       So it would be interesting, for

14   example, if we could talk Fortune into, right?                        Can

15   you write an issue once a year, in which you

16   featured, you know, minority companies in the

17   communications sector, who are having successes?

18   Every one I’ve ever met in the business world, when

19   that happens to them, tells me the world takes off.

20                       You know, one article in the right

21   magazine featuring you can really take someone off.

22   So maybe that’s another way, you know, to talk to

23   the people that we’re trying to reach.

24                       I’m going to have to run, but one last

25   thing I wanted to leave you with is, you know, not

26   to forget that what we’re trying to do is be

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 1   personal ambassadors as well, and we’re going to

 2   San Antonio tomorrow for a localism hearing, and

 3   one of the things, you know, I’m going to do, with

 4   Priscilla’s help, is we’ve put together a diversity

 5   day with students, high school and college-age

 6   students, to talk about careers in communications.

 7                       So we’re going to spend an hour and a

 8   half and some lunch time, just as a coincidence of

 9   us being there anyway, and we’re going to keep

10   doing things like that.                 I think everyone on this

11   committee should really think about opportunities

12   when they’re traveling or going to things.                           Can you

13   add an hour to do something like that?                         We’re going

14   to stick our toe in the water with that tomorrow.

15   So I just wanted to --

16                       SPEAKER:       Jenny (inaudible).

17                       CHAIRMAN POWELL:            Oh, is that right?

18   Jenny’s going to be there?                  You’re going to be at

19   the dinner?

20                       MS. ALONZO:         Yes.

21                       CHAIRMAN POWELL:            Terrific.          So thank

22   you, and thank you for being here.                       I won’t take

23   any more time.

24                       CHAIR JOHNSON:          Thank you, Mr.

25   Chairman.

26                       (Applause)

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 1                         CHAIR JOHNSON:          Any final questions

 2   there?           Or comments?        Ginger?

 3                         MS. LEW:       I would like to put one issue

 4   on the record, because it’s an important one that

 5   has an impact for investors.                      I alluded to it in my

 6   remarks, and that is this issue about the 51

 7   percent ownership question, in order to be treated

 8   as a qualified minority owned company.                           This goes

 9   to the issue of some of the supplier programs that

10   the government has, and some of the services

11   program that the government has.

12                         If you’re an entrepreneur who’s

13   starting on -- this is all going to be very

14   hypothetical and very, very simplistic.                              Okay, so I

15   want to give those two caveats.                       Let’s say you’re

16   an entrepreneur who wants to starts a wireless

17   company and sell services to the government, and

18   you have -- you’re not going to put any money into

19   the deal, okay?

20                         But you need to raise $50 million for

21   equipment, (inaudible) company, whatever it might

22   be.      Let’s make it $25 million, okay?                      The 51

23   percent ownership rules would then mean that this

24   company, post money valuation, in order words,

25   after the money’s been put into the deal, the $25

26   million has been put into the deal, would now be

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 1   worth $51 million.              This is with the entrepreneur

 2   not having put any money into the investment, okay?

 3                       The entrepreneur needs more money, you

 4   know, a year and a half from now, later, and needs

 5   to raise another $25 million.                    Now in my simple

 6   math world, the post-money valuation of that would

 7   be somewhere around $76 million or $75 million.

 8   But because the entrepreneur has to maintain 51

 9   percent ownership, the deal now has to be post-

10   money valuation $102 million, okay?

11                       As a result of that, it almost makes it

12   impossible for entrepreneurs to get financing,

13   because most investors, I mean, the numbers don’t

14   work in the investment world.                    I just want to

15   illustrate that, because that -- people have

16   oftentimes wondered why don’t venture capitalists

17   invest in more minority supplier-owned companies

18   and services, etcetera.

19                       Because when you do that type of math,

20   the ultimate exit from the investment would mean

21   that you would have to sell this company for a

22   multiple that, you know, comparable companies

23   wouldn’t sell for.              So it becomes a real challenge.

24                       CHAIR JOHNSON:          Thank you.

25                       SPEAKER:       I’m just going to --

26                       CHAIR JOHNSON:          Frank?

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 1                       SPEAKER:       What current requirements are

 2   there -- those are SBA?                 It’s under the SBA regs?

 3   Okay, all right, all right.

 4                       CHAIR JOHNSON:          Anything else?         Is that

 5   it?

 6                       SPEAKER:       No, that’s all.           That’s

 7   helpful.

 8                       CHAIR JOHNSON:          Okay, thanks Frank.

 9   Our final presentation is by Transactional

10   Transparency.           Steve?

11                       MR. HILLARD:         Thank you.         I’m batting

12   clean-up, so I’m going to be real brief here.                         I

13   think each of you has a handout.                      I did want to

14   thank Madam Chairwoman and the FCC representatives,

15   the experts that have helped all the committees,

16   and Chairman Powell and each of the Commissioners.

17                       I wanted to report in this on the

18   activities of the Transactional Transparency and

19   related outreach subcommittee, a couple of quick

20   intangibles that I think each of the subcommittees

21   has experienced.             But we have definitely had the

22   benefit of active participation, an earnest course

23   of discussion over a number of topics, and I think

24   I’m very pleased by the gravity of the way everyone

25   is taking the challenge of addressing this chronic

26   problem of lack of representative diversity.

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 1                       If you look on page 2, kind of posting

 2   up the core of what our Subcommittee’s been looking

 3   at, and it echoes some of the other considerations

 4   of a number of the other subcommittees, is really

 5   that a key barrier to achieving diversity is access

 6   to deal flow.           Just in a succinct sort of way, and

 7   that’s really become one of the key focuses of what

 8   this subcommittee is going for, to address.

 9                       We expect to do a fairly extensive

10   program of outreach, having spent a lot of time

11   really assessing within the membership what do we

12   think are some of the core issues to be addressed,

13   and what are some of the mechanisms that may be

14   available.

15                       Now our task, and I think the hard work

16   for our Subcommittee is ahead of us, in terms of a

17   lot of outreach, to test and refine and make some

18   practical judgments about some of the ideas we’re

19   going to share with you.

20                       So if you turn over to the next page,

21   it’s really what are some of the categories of how

22   to address this problem, which we again, has been a

23   theme here today, of access to deal flow,

24   essentially as a companion to access to capital.

25   The scope of our efforts really I think will, at

26   least as a report today, focus on three categories

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 1   of potential recommendations.

 2                       An affirmative deal flow enhancement

 3   mechanisms, and these, I think, we would take up as

 4   a challenge, that the Commission does have the

 5   power to -- it currently exercises it to some

 6   extent, but to create real tools that create points

 7   of opportunity for diversity transactions.

 8                       Second is an examination of the merits

 9   and issues relating to a transactional non-

10   discrimination rule, and we’ll come to each of

11   these with a separate page in a second.                            Lastly, to

12   really catalogue and assess and make specific

13   recommendations, for again a theme that I think has

14   been common today, of information, education,

15   clearinghouse, voluntary programs, Good

16   Housekeeping seals and a number of those ideas that

17   I think do have -- make real differences.

18                       If you’ll look at page, I think it’s

19   page 4, on the affirmative deal flow enhancement

20   mechanisms, the consideration of the Subcommittee

21   is really that the FCC really can create business

22   opportunities that add to or create enhancement of

23   diversity, that these are real tools that can be

24   implemented, expanded, and the array -- again, I

25   think many of these have been covered today -- but

26   everything from spectrum leasing provisions,

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 1   creation of new licenses, and if you will, bite-

 2   sized chunks of opportunities for ownership.

 3                       We talked a little bit, I think, about

 4   radio a little bit ago.                 Expansion in policing of

 5   auction rules, such as the designated entity

 6   program.         I think kind of the philosophy behind

 7   this is that these, while they’re somewhat

 8   mechanical, really do create the points of

 9   interaction and opportunity that create the

10   presence and the partnering ability and the

11   presence that really leads to kind of a long-term

12   staying power that I think, at least I was

13   certainly impressed with, with Mr. Steward’s

14   company today.

15                       So it’s not -- while these are somewhat

16   mechanical, they’re not the -- they do create the

17   opportunities for a longer-term presence in the

18   industry.         Similarly, I think the Commission does

19   have the power to create affirmative legal

20   incentives that we’ll be addressing, again, to

21   enhance the opportunities for partnering.

22   Everything from, I think, the tax certificates have

23   been a classic case of that, to expedited

24   processing of certain criteria met, and other

25   regulatory incentives.

26                       Lastly, to promote voluntary agreements

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 1   from business associate

 2                       (Tape change)

 3                       SPEAKER:       (tape picks up) kinds of

 4   entities.         I think the crux of this is that there

 5   are real concrete programs that, as the Chairman

 6   said, can create access to the arms merchants.

 7                       On page 5, another thing that the

 8   Subcommittee, I think, has accepted as part of our,

 9   a very serious part of our charge, is to examine

10   the potential for a transactional, non-

11   discrimination rule that may, for example, be

12   coupled with a certification process.                        We will be

13   spending some significant time considering the

14   merits, how to implement that kind of potential

15   rule, whether it requires a specific certification

16   or some other affirmative act by an FCC licensee.

17                       We will clearly be spending some

18   serious time looking at the pragmatics of that,

19   including issues such as how transaction operate,

20   that has an effect on an ongoing business, asset

21   valuation, transactional delay, enforcement

22   challenges, and also considering alternatives to

23   that.       But that is a, what I would call, four-

24   square, one of the key considerations of the

25   Subcommittee.

26                       Then the last category is really what

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 1   we would call more of an informational kind of

 2   category, to examine a number of mechanisms that

 3   have been talked about today, in terms of databases

 4   of opportunities, educational programs and I think

 5   the idea of programs that in effect create a Good

 6   Housekeeping seal for, as an incentive for

 7   investment banks, private equity funds, to work

 8   with diverse elements, is also something that we’re

 9   going to examine.

10                       I think the crux of it is this is, if

11   you will, a survey of those areas which the

12   Subcommittee has indicated are where we expect to

13   spend the crux of our time, and as I said, Madam

14   Chairwoman, this is really where part of our hard

15   work begins to test each of these, and formulate

16   them into recommendations to come back to the

17   committee with.

18                       CHAIR JOHNSON:          Thank you.         Any

19   questions of Steve?               Any other comments from his

20   committee members?              Excellent presentation.               I

21   appreciate it very much.

22                       Now we need to go back to the financial

23   committee, because there are a couple more

24   presentations to be made.                  Commissioner Rivera?

25                       MR. RIVERA:         Julia, thanks.             Just to --

26   in deference to the hour, I’m going to be very

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 1   brief, and I think Frank is also.                      But just to give

 2   you the context, the Subcommittee empanelled three

 3   panels last Tuesday.               We were here six days ago.

 4   Ginger’s was one of them, dealing with the equity

 5   markets.         Frank dealt with primarily senior debt.

 6                       The panel that I moderated dealt really

 7   with some of the policy areas that the Commission’s

 8   going to have to deal with, or the committee’s

 9   going to have to deal with, as we move forward and

10   make our recommendations.                  So having done this just

11   six days ago, none of us are really in a position

12   to make any recommendations like the other, many of

13   the other panels or presentations.                       We will be

14   coming back to the committee with some specific

15   recommendations.

16                       The panel I moderated had five

17   speakers.         Vince Pepper, a practicing

18   communications lawyer, for those of you who don’t

19   know him.         Lois Wright, who’s vice president and

20   corporate counsel, Inner City Broadcasting and

21   president of Inner City Cable.                     Then we had three

22   academics, Phil Napoli (phonetic), who’s the

23   director of the Don McGannon (phonetic)

24   Communications Research Center at Fordham; Al

25   Hammond, who’s a Professor of Law at Santa Clara

26   University School of Law and Director of the

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 1   Broadband Institute of California; and Leonard

 2   Baines (phonetic), who’s a Professor of Law at St.

 3   John’s University.

 4                       Then we had a civil rights lawyer talk

 5   to us, and this was Tom Henderson, who’s Deputy

 6   Director and Director of Litigation for the

 7   Lawyer’s Committee for Civil Rights Under the Law.

 8   Again, just being very brief here, I would

 9   encourage anyone who’s interested to look at the

10   full transcripts.             They are on the website of these

11   presentations, and they were very, very good.

12                       Vince basically gave us a historical

13   presentation, taking us back to TV-9 and the

14   Court’s mandate to the Commission to begin taking

15   race into consideration when awarding licenses.

16   Lois Wright talked primarily about consolidation,

17   and how NABOB has made a recommendation to deal

18   with the issue of consolidation in minority

19   ownership.

20                       Phil Napoli talked primarily about some

21   research that he did, and he urged the Commission

22   to secure aggregate financial data, ratings data,

23   programming data, and as well as surveying data,

24   from owners, advertisers, and audience members, in

25   order to gain a well-rounded picture of challenges

26   facing minority-owned media outlets, and the

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 1   contributions of such outlets to the media

 2   marketplace and the factors that affect their

 3   ability to function.

 4                         Al Hammond talked.             He was commissioned

 5   by the -- by Chairman Kennard (phonetic), to

 6   conduct one of the Commission’s Adarand studies.

 7   He proposed that the Commission establish data

 8   collection methodologies that are not based on the

 9   political outcome you wish to achieve but which

10   fairly seek to ascertain the impact of the

11   Commission’s policies on the broadcast industry as

12   a whole, and minorities in particular.

13                         Mr. Henderson talked about Adarand and

14   a case called Concrete Works.                      He suggests that a

15   remedial justification provides the basis for race-

16   conscious efforts with regard to ownership, as well

17   as aspects of broadcasting and avenues to

18   participation in broadcasting, discrimination in

19   industry, and in opportunities to qualify and

20   participate in broadcasting, are a proper basis for

21   remedial activity.

22                         He also suggested a second

23   justification under Grutter (phonetic) and Bakke

24   was diversity, as an end in itself.                         And finally,

25   Leonard Baines talked about the Commission’s KPMG

26   study.           It was also one of the Commission’s Adarand

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 1   studies.         It analyzed the effectiveness of the

 2   comparative hearing process in producing minority

 3   ownership.

 4                        He also talked about Justice O’Connor’s

 5   opinion in Grutter, and contrasted it and compared

 6   it to her opinion in Metro Broadcasting.                            Again, I

 7   urge those of you who are interested to take a look

 8   at the copy of the transcript that’s available on

 9   the website.

10                        With that, I’m going to turn it over to

11   Frank.

12                        SPEAKER:       I’m just going to take a

13   minute.          Again, as Henry pointed out, I mean, we

14   had a day-long session of panels, with the

15   regulatory issues in the morning and then the two

16   lending and investment panels in the afternoon.

17   Ginger’s panel handled equity investments and mine

18   handled senior debt.

19                        The big concern with senior debt is

20   that there has been a significant dry-up in the

21   amount of institutional lenders that are available

22   to entrepreneurs and to minority entrepreneurs,

23   women, but new entrants into the marketplace, to

24   get loans for acquisitions, build-outs, things of

25   that nature.

26                        It’s the banks, the local banks, that

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 1   these entrepreneurs have traditionally gone to.                      I

 2   mean, in the past five or six years or more,

 3   perhaps now, there has been a rapid growth in the

 4   availability of venture capital, and certainly

 5   during the technology boom venture capital was all

 6   the rage.

 7                       But traditionally, it’s been the

 8   institutional lender at various levels that

 9   entrepreneurs have gone to get their business

10   loans, and that money has just completely almost

11   disappeared in the -- for small telecommunications

12   companies.

13                       We had three speakers.               We had Jerome

14   Fowlkes (phonetic), a director from BIA Capital; we

15   had Tonya Crossley (phonetic), a managing director

16   with the Media Group at Fleet Boston Financial;

17   Cable Williams, managing director of Allied

18   Capital; and Leanne Oliver, who’s very interesting.

19   She’s a deputy administrator with the Financial

20   Systems Group at the U.S. Small Business

21   Administration.

22                       I’ll just, you know, boil it down.

23   Basically, they observed that there is essentially

24   a gap that has developed in the senior lending

25   community, whereby basically, from the five to say

26   15 million dollar range -- this is some of the

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 1   things that I already said to the Chairman earlier

 2   -- that it is very, very difficult for new

 3   entrants, to get in and get a loan at that level.

 4                       That’s because at the lower level,

 5   there isn’t the cash flow available in the

 6   businesses to loan upon.                 So they’re really just

 7   looking at asset value.                 You’re looking at a

 8   business that has no inventory, and so it’s

 9   difficult to loan on that.

10                       If you get below $2 million, the SBA,

11   as Leanne Oliver came in, has their loan guarantee

12   program that’s available to them.                      It’s fairly

13   limited, but at least there’s something there at

14   the very, very, very low end.                    But really, when you

15   get above that, there’s nothing until you get up

16   into the upper strata.

17                       So Cable Williams pointed out that

18   basically there’s no middle market.                       The middle

19   market has just sort of evaporated on senior

20   lending.         So then they try to look at how can we

21   fill that middle market up again.                      Again, it was

22   we’re -- you’re going to have difficulty looking at

23   the big national lenders to fill that gap.                         We’re

24   really -- who we want to try to bring back into the

25   picture is, are the small institutional lenders,

26   the small regional banks, the state banks, that can

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 1   fill that in.

 2                       They are scared by the fact that they

 3   don’t really understand the industry, whether it’s

 4   broadcasting or otherwise.                  They really just don’t

 5   understand it.            They hear all these things about --

 6   Jerome Fowlkes said, you know, with the inability,

 7   for instance, to take a security interest in the

 8   license, especially when you don’t have cash flow,

 9   you’re just looking at asset value.

10                       The one and only most valuable asset in

11   the business is your license, and the only thing

12   you can’t take a security interest in.                         Thanks a

13   lot, they’re saying.

14                       So the idea is to educate them on how

15   these loans can be structured, and educate them on

16   how the business operates, so that we can bring

17   them back in and make that money available.

18                       Then Cable Williams pointed out that

19   these loans are bundled, and they’re sold out on

20   the secondary market.                So you want to start, you

21   want to educate the purchasers.                     He’s actually

22   supposed to get me a list of those purchasers of

23   these bundled notes on the secondary market, so

24   that we can start developing a list of targeted

25   institutions that are going to need this type of

26   educating.

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 1                       Leanne Oliver from SBA has already sent

 2   me a list of the banks, the small banks that she’s

 3   dealt with, that have made available the under $2

 4   million loans in the media markets over the past

 5   three years. Interesting list.

 6                       Then the last recommendation was to

 7   improve the SBA program, see if there’s any way,

 8   and I don’t know whether it’s within the purview if

 9   this committee or not, but to see if there’s some

10   way that the SBA can somehow lift its upper limit,

11   because if we can slowly raise their limit, and

12   then try to fill in the middle markets through some

13   of type of an education process or otherwise,

14   basically to try to fill in that middle gap,

15   because when you’re in the five to 15 million

16   dollar range, that’s where most of these new

17   entrepreneurs are coming in at, and that’s where

18   the money is non-existent.

19                       CHAIR JOHNSON:          Okay.

20                       SPEAKER:       Oh, and by the way, I should

21   say that the entire day’s proceedings, as Henry

22   pointed out, not just the transcripts are

23   available.          You can actually see -- they were all

24   videotaped, and you can actually watch them, watch

25   a videotape stream of it.                  You know, it’s archived

26   off of the FCC’s website.

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 1                       CHAIR JOHNSON:          Excellent.

 2   Commissioner?

 3                       COMMISSIONER ADELSTEIN:               Just two quick

 4   comments, Madam Chair.                First is I understand that

 5   there were a lot of people on the phone, but it was

 6   only one way.           They can hear us and we couldn’t

 7   hear them.          So I think Commissioner Barrett was in

 8   fact on the line, and is somewhat frustrated by his

 9   inability to be heard.

10                       Secondly, these panels, the members of

11   the Subcommittee worked very hard to bring these

12   panels together, and kudos to them, because they

13   really did bring together a tremendous set of

14   experts.         Particularly hats off to David, who

15   worked very hard, to pull the first panel together.

16   Thank you.

17                       CHAIR JOHNSON:          Thank you.         I have to

18   just echo and compliment, because as I was walking

19   through the halls today, I kept hearing about the

20   day that you all had with respect to how it was

21   broken up and the level of participation.                          So we’re

22   anxiously awaiting those written, codified

23   recommendations, that we can incorporate into what

24   we’re going to present to the FCC.                       It was obvious

25   to me that the FCC’s interested in them, too.

26                       So, thank you again Commissioner and

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 1   Frank.           I apologize for not understanding how the

 2   presentations were to occur.                      Any questions of the

 3   Commissioner or Frank or Ginger?                        No?    Seeing none,

 4   then we will go into the public comment and closing

 5   remarks.          Any general comments or questions?

 6                         We may finish right on time.                   Is that a

 7   -- Mr. Honig?

 8                         MR. HONIG:        No.     After the public

 9   speaks, I had another matter to raise.                           But --

10                         CHAIR JOHNSON:          Okay.      Any public

11   comments?           Seeing none.          Committee member?

12                         MR. HONIG:        Madam Chair, is it -- did I

13   misunderstand that the other members on the phone

14   can listen, but they can’t speak and be heard?

15                         CHAIR JOHNSON:          No, they could actually

16   -- they could speak.                 But the last time around,

17   when we did the workshop when it was being streamed

18   over the Internet, it wasn’t possible that day.

19                         SPEAKER:       I don’t think that’s right.

20   I think that even this time --

21                         CHAIR JOHNSON:          No.

22                         MR. LEE:       Julia?

23                         CHAIR JOHNSON:          Roscoe and everybody

24   else?

25                         MR. LEE:       Hello?

26                         CHAIR JOHNSON:          Oh, there he is.

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 1                       SPEAKER:       Oh, they’re here.               Okay.

 2                       CHAIR JOHNSON:          All right.

 3                       MR. LEE:       Julia?

 4                       CHAIR JOHNSON:          Uh-huh?

 5                       MR. LEE:       This is Richard Lee.               I’ve

 6   been listening, and Commissioner Barrett was on,

 7   but he couldn’t get through.

 8                       CHAIR JOHNSON:          He couldn’t get -- ahh,

 9   okay.

10                       MS. TYLER:        And it’s Lauren Tyler.               I’m

11   not quite sure you were able to hear me either.                              I

12   think a couple of people tried to break in at

13   different points, but it was -- we could hear fine,

14   but it was difficult to break in.

15                       MR. LEE:       Right.

16                       CHAIR JOHNSON:          Okay, thank you.

17                       MR. LEE:       Just let me add that the

18   presentations from last Tuesday’s Financial

19   Subcommittee will be on the website tomorrow, and

20   we’ve gotten tapes of those presentations, one for

21   each subcommittee.

22                       CHAIR JOHNSON:          Excellent.         Thank you

23   very much.          Any others on the call with any


25                       MS. JOHNSON:         Julia, I did have a

26   question.         Will we have access to the presentations

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 1   given in the room today, on the web as well?

 2                       CHAIR JOHNSON:          Yes.      Is that Marva?

 3                       MS. JOHNSON:         Yes.

 4                       CHAIR JOHNSON:          Yes, we will.

 5                       MS. JOHNSON:         Okay, thank you.

 6                       CHAIR JOHNSON:          Any others?            Any other

 7   questions from our telephonic audience?                            David?

 8                       MR. HONIG:        Since the members on the

 9   phone are able to hear, then I think it is

10   appropriate to go forward with this.                        I’m going to

11   circulate a draft and very short resolution on a

12   matter that is somewhat time-sensitive.                            It really

13   -- it relates to the distress sale policy, which

14   falls closest to the ambit of the Financial Issues

15   Subcommittee, because it is in fact one of the

16   models for the type of incentive-based programs

17   that the committee is considering.

18                       This is a policy that’s been in effect

19   since 1978.          It really came out of the first

20   committee like this, that was empanelled in 1977,

21   as most of us know, by Chairman Wiley.                         The policy

22   was adopted in ‘78 under the Ferris administration.

23   It was defended successfully in the Supreme Court

24   by the Commission in 1990 in Metro Broadcasting,

25   where the Commission contended that it satisfied

26   strict scrutiny.             The Court approved it under a

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 1   lesser standard, and it has not been

 2   constitutionally challenged since.

 3                       It is like that, although not for

 4   constitutional reasons, the policy may be under

 5   review by the Commission at some time in the

 6   reasonably near future.                 So what I’m trying to is

 7   craft a resolution that does not address some of

 8   the constitutional or operational aspects of the

 9   policy, but rather speaks to it in the sense that

10   we as members of the Commission’s constituency, who

11   stand on the mountaintop and look out over the

12   entire valley of this issue, might want to address

13   it globally.

14                       Therefore, it is drafted as a sense of

15   the committee resolution, that this is an important

16   policy, that we’ll need to have a variety of

17   initiatives to promote minority ownership, of which

18   this would be one, and that the Commission should

19   preserve and if possible expand upon the distress

20   sale policy.

21                       CHAIR JOHNSON:          Okay, thank you.       And I

22   support -- David and I have had an opportunity to

23   talk about this, and he’s actually brought me, as

24   well as many of the members, both on the phone and

25   in the room, up to speed on the issues.

26                       For those of us who are generally not

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 1   as familiar with the industry, the individuals that

 2   it does impact.              What we need to determine is

 3   whether or not we are prepared to vote this out

 4   today.           We have quite a few people in the room

 5   today, and I’m not certain as to the quorum.                         It

 6   would be wonderful if we could, because I’m

 7   understanding that he’s saying it is time-

 8   sensitive.

 9                         There are members on the phone.                Could

10   we -- is this something that could logistically be

11   done today?            Or, and you may have to help us, Jane

12   on that, because if it can, that would be

13   wonderful, at least for discussion.

14                         MR. WALLAU:         I have two questions.           A,

15   what’s the time sensitivity, and B, this isn’t my

16   business.           I’m not a lawyer; I run a television

17   network.           I would not pass the test on what a

18   distress sale policy is.                   So to be asked to vote on

19   it without having anything, any discussion of it, I

20   just -- I find, if the majority wants to do it, the

21   majority rules.              I don’t think it’s the right way

22   to sort of -- for this committee to set policy.

23                         CHAIR JOHNSON:          It might be.

24                         SPEAKER:       I think generally there is a

25   question, in my mind, about the process by which

26   resolutions are voted upon, since, you know, my

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 1   subcommittee had some and we decided not to put

 2   them forward today because we weren’t sure of the

 3   exact procedure for bringing them forward.

 4                       MS. MAGO:        I think the procedure really

 5   should be to put paper before the committee, in a

 6   way that you can be able to evaluate it, have a

 7   discussion, and then have a vote of that.                          What I’m

 8   sensing here is that perhaps folks are not ready to

 9   think about this one on a quick basis, but there

10   may be an alternative.

11                       MR. HONIG:        What is the procedure with

12   respect to quorums?               Are there rules that govern --

13                       MS. MAGO:        There is no specific rule on

14   quorum.

15                       MR. HONIG:        Let me make this

16   suggestion, and maybe you can take it as an

17   amendment to the motion.                 Even though there is no

18   specific rule on quorum, it would still be wise if

19   we had a quorum.             At the same time, because many of

20   us live in various places around the country, and

21   apparently there are some members that are not

22   fully familiar with the policy.

23                       Perhaps we could decide today,

24   informally, that within the next two weeks, I’ll

25   volunteer to send a more elaborate discussion of it

26   around, be available to answer questions, with the

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 1   idea that then, at a certain time, members might be

 2   able to fax or e-mail in their votes to a central

 3   source, and that would constitute the vote of the

 4   committee, as soon as we have a quorum that votes.

 5                       CHAIR JOHNSON:          Let’s see if that --

 6   can that process work through Jane?

 7                       SPEAKER:       Well, I think someone asked,

 8   what is the time-sensitive, what is the timeframe

 9   that we’re talking about?

10                       MS. MAGO:        I don’t think there is a

11   specific timeframe.               I mean, there’s a -- what

12   David referred to is there is a proceeding that

13   there’s been a motion in, that’s here at the

14   Commission.          Right?

15                       MR. HONIG:        That’s right.

16                       MS. MAGO:        And that’s an adjudicatory

17   proceeding, and I don’t want to talk about the

18   merits of that, because I think it would be

19   inappropriate for us to do that.                      This is on the

20   broadest scale.            There is not a deadline.

21                       But I think that the proposal that

22   David makes, that he circulate more information to

23   the members, and perhaps we can try to set up a

24   dialogue through, you know, through electronic

25   means, we are the Federal Communications

26   Commission, to see if we can figure out how to have

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 1   a conversation among the members, that then could

 2   precipitate a vote, and we can figure out how to

 3   precisely accommodate that.

 4                       But I think it requires that there be

 5   some opportunity for discussion among the members,

 6   not just a one-way street.                  Here’s your

 7   information, go ahead and vote.                     I think that has

 8   to be that kind of discussion.

 9                       I will also say that when the committee

10   deliberates, under the Federal Advisory Committee

11   Act there is a requirement that this be public, so

12   there would be -- you know, the back and forth

13   exchange on this would have to be something that

14   would be a matter of public record.                       We could put

15   it on the website or something like that.                          It’s a

16   little bit cumbersome to try to figure out how to

17   do this.

18                       SPEAKER:       Are we under the impression

19   that it would be -- our next meeting would be too

20   late to act on the resolution, in terms of

21   (inaudible) at the Commission?

22                       MS. MAGO:        I’m not sure of that --

23                       MR. HONIG:        It probably would be too

24   late to do that.             But this may be a healthy

25   development, though, if we’re able to have a

26   dialogue.         Everyone hits “reply all” and the

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 1   results are made available in the file for public

 2   inspection.            You can simply say where it is, where

 3   to go.           That’s a healthy thing, and it allows us to

 4   do our work as these whatever matter it is comes up

 5   in the interim between when we meet.

 6                         CHAIR JOHNSON:          Well, Jane has

 7   committed to kind of work through the logistics and

 8   see if we can come up with -- and ensure that we

 9   can come up with a process that works, and that is

10   efficient and effective, and also meets all of the

11   rules and regs that we need to --

12                         MS. MAGO:        Yes.     We have to make sure

13   we touch all our FACA bases.

14                         CHAIR JOHNSON:          Right.

15                         MR. TEMPLE:         Jane, I just had sort of a

16   -- I don’t want to get too legal eagle here, but

17   you said, I mean, to the extent that there’s an

18   adjudicatory proceeding here, if we pass a

19   resolution -- I’m trying to think.                         If we pass a

20   resolution on an issue that is a key issue in an

21   adjudicatory proceeding, I’m assuming; I don’t

22   know, is that -- does the committee run the risk of

23   somehow getting embroiled in this adjudicatory --

24                         I don’t think that we want to become

25   involved in this adjudicatory proceeding.                            But I

26   guess -- I just want to make sure that we’re not

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 1   inadvertently becoming involved in a matter here

 2   that we should be observing, but not necessarily --

 3                       MS. MAGO:        The committee, on a very

 4   broad level.           I mean, what you’re being asked to do

 5   is not to involve yourself in the specific details

 6   of any case, and that’s why we’re not getting into

 7   any of that.

 8                       But if it becomes the sense of the

 9   committee that you want to make a comment to the

10   agency, advice to the agency, that we, I think,

11   what David says, preserve and, if possible, expand

12   the policy, that is a type of general information,

13   general advice that I think is beyond -- you know,

14   it’s not one proceeding-specific.                      His comment on

15   the proceeding is the matter of timing, right?

16                       MR. HONIG:        Yes.

17                       CHAIR JOHNSON:          Okay.

18                       MR. WALLAU:         I personally am totally

19   open to the idea of endorsing something, if that’s

20   the proper role of the committee.                      But in terms of

21   the process, as Riley spoke to, it seems that --

22   David, I’m sure you’re totally familiar with this,

23   and there’s no doubt in your mind, and you’re fully

24   conversant with all aspects of it, and you see it

25   to be something that you’re recommending that the

26   committee recommend.

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 1                         I would love to see us -- I think our

 2   responsibility at the committee is do some form of

 3   outreach, to try to identify some voices who would

 4   speak to this in a way that would inform us better

 5   about the possible -- I mean, some views on this,

 6   even if they’re negative views, so we could

 7   understand if there have been any unintended

 8   consequences of the role on our committee, which

 9   has a very specific transactional transparency

10   goal, that that’s something that we all endorse,

11   you know, absolutely as a positive thing in

12   concept.

13                         The issue is, whether by putting

14   certain requirements on transactions, you create

15   disincentives to the industry and end up doing harm

16   to the overall industry while you were trying to do

17   good, and you end up messing things up.                              I have no

18   idea.

19                         You know, this sounds benign.                    But I

20   just don’t know enough, and I would think that you

21   need to do something beyond even David’s position

22   on it.           I’d look just to hear, try to do some kind

23   of outreach as a part of what we do as a committee,

24   to just kind of identify points of view outside of

25   this room, that might help us make a more informed

26   decision.

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 1                        CHAIR JOHNSON:          Okay.      David, we’re

 2   going to take a couple of more comments, and Jane’s

 3   taking note as to how we come up with a process

 4   that will work, to educate everyone.

 5                        MS. MAGO:        Yes.     The purpose of this is

 6   to have an open discussion, where you can have the

 7   robust views, and the process, as we will figure it

 8   out, will accommodate that, and we’ll try to figure

 9   out how we can get that done.

10                        MR. HONIG:        If I can respond.            I don’t

11   want to identify or talk about, and the resolution,

12   I think, tries not to address the particular

13   adjudication.            There may be other ones.

14                        In fact, honestly I don’t know of

15   anyone that has articulated in any proceeding,

16   including that particular one, an objection to the

17   policy.          But it certainly would be constructive if

18   someone knows of someone who has some objection or

19   some concern, to let the committee members hear

20   from that person or present that person or entity’s

21   position.

22                        As it happens, the parties in the

23   particular case have waived ex parte and both

24   support the policy and MMTC, point of information

25   only, has filed an amicus.                   That’s the procedural

26   status.

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 1                       CHAIR JOHNSON:          Okay.      Any final


 3                       MR. WALLAU:         I have to go to law school

 4   if I’m going to continue coming here.

 5                       (Laughter)

 6                       CHAIR JOHNSON:          Commissioner?

 7                       COMMISSIONER ADELSTEIN:               I think that

 8   there were originally about seven initiatives that

 9   the Commission had adopted, to promote minority

10   ownership.          I think they’re all gone now, except

11   this one, and I think that’s why David suggested

12   that it was the role of this committee, as the

13   Diversity Committee in the Digital Age, to speak to

14   this policy.

15                       I’m sure, Madam Chairman, that’s one of

16   the reasons that you decided to support this

17   resolution.          I support it also, and I certainly

18   have no qualms about developing a process.                         We need

19   to do that Riley, and I think Alex is certainly

20   within his rights and probably obligations to ask

21   to be more informed.

22                       But I was just trying to give just a

23   little historical perspective, in terms of what

24   this is all about, and what I think David is trying

25   to accomplish here.

26                       CHAIR JOHNSON:          I think when we develop

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 1   the process and people receive a more comprehensive

 2   background from David, the white papers, you’ll see

 3   that it is pretty benign, but yet it’s very

 4   powerful with respect to providing opportunities.

 5                       But we do need to have a process, so

 6   that everyone feels comfortable when they’re

 7   voting, and Jane has committed to working with the

 8   committee.          We’ve heard the comments to get views

 9   of those that understand the area, so that you can

10   have a rich document.

11                       If you have any questions, I’m certain

12   between Jane and David and others, we’ll try to

13   entertain those, address this as quickly as

14   possible.         If we can do it between the meetings,

15   and as soon as possible we will.                      If not, we know

16   the latest would be May, I guess, because we’d have

17   a full committee meeting for discussion, debate and

18   dialogue.

19                       I’m hopeful we can come up with a

20   process that could move a little more

21   expeditiously.            Okay.      Any other comments?           Seeing

22   none from the public, then this meeting is

23   adjourned.          Thank you all.

24                       (Whereupon, the meeting of the Advisory

25   Committee on Diversity for Communications in the

26   Digital Age was adjourned.)

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                                   NEAL R. GROSS
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