Incentive Auction Advocates Urge the FCC to Reexamine Diversity in the Digital Age

by Jacqueline Clary on February 11, 2013

Spectrum AuctionThe greatest civil rights challenge of modern times is achieving universal broadband access, adoption, and informed use.  Civil rights groups are as heavily invested in the outcome of the shift in resources that will result from the voluntary spectrum incentive auction as broadcasters and wireless providers.

Why?

Simply put, wireless service is making great strides to provide broadband access to traditionally underserved communities and to bridge the digital divide.  Incentive Auction Advocates (IAA), a coalition of 36 national diversity and civil rights organizations, recently filed comments with the FCC reiterating the necessity of bringing new spectrum to the market quickly, while enabling greater opportunities for more diverse participation in the wireless market and prioritizing diverse ownership and programming on all platforms.

In a relatively short time, Congress and the FCC have been able to turn the National Broadband Plan recommendation to “make 500 megahertz newly available for broadband use within the next 10 years [and 300 MHz] newly available for mobile use within five years” into a fairly comprehensive – albeit divisive – rulemaking proposal.  As our illustrious second in command Joe Biden might say, this is a Big (!) Deal.

As demand overtakes the available supply, the greatest loss – worse than the higher price for slower wireless speeds – will be the social costs and the loss of opportunity.  Wireless broadband is providing a unique access point for low-income and minority consumers.

Through its actions in the incentive auction proceedings and FCC Commissioner statements during MMTC’s 2013 Broadband and Social Justice Summit, the Commission is aware of this trend and the need for a strong legislative and regulatory framework that promotes mobile broadband.

During the Summit, Commissioner Ajit Pai explained why mobile needs to be prioritized at the FCC. “Ultimately, if the airwaves are clogged, providers are going to do the natural thing when supply is limited and demand is rising,” he warned.  “They are going to increase prices.  Well, which population does increased prices hurt disproportionately?   Of course it’s the communities that cannot afford it [and] who rely on mobile broadband even more.”

Commissioner Mignon Clyburn also illustrated why the FCC’s allocation of funds for fixed and mobile broadband deployment in USF and other broadband programs is crucial, particularly for low-income families.  “Recognizing that often times there can be only one [device] in the house [for families with fixed incomes], … they will choose the device that will give them the most bang for their buck and the most use for their overall engagement, and 99 times out of 100 mobile is going to come in first,” she said.  “It just makes the most sense.”

From a civil rights standpoint, we need more spectrum because as barriers to wireless service increase, we risk “reversing the beneficial impact that the ‘Minority Wireless Miracle’ has had on closing the digital divide[.]”

However, despite this urgent need for more spectrum, we cannot ignore the fact that the FCC is changing the face of the industry.  This presents a significant opportunity, perhaps the last opportunity, to encourage new and diverse entry in the wireless industry.  The communications sector has a long history of excluding diverse participation until well after a given platform was established and the prime assets were distributed.  This is so evident in the media ownership context that the court has taken note and started retaining jurisdiction over remanded issues.  During major auctions that took place during the four years that the impermissible 2006 Designated Entity (DE) rule changes were in effect, the value of licenses won by DEs dropped from approximately 70 percent to low-single digits as a result of greater barriers to accessing capital and the ability to compete.

Delaying diverse participation in emerging industries has a real impact on our society and economy.  To prevent the structural exclusion of diverse wireless licensing, the Commission should examine how to generate DE participation through increased bidding credits and, if necessary, requesting authority to hold a closed DE auction.  The Commission should also issue an NPRM on the Diversity Committee’s proposal to apply a race-and gender-neutral preference for overcoming disadvantages.

Finally, IAA recognizes the continued importance of diverse ownership and programming in every media platform.  IAA recommends that the Commission prioritize diverse ownership and programming in the reverse auction process through incentive programs, including one that would allow broadcasters who participate in the reverse auction to obtain a tax certificate so long as they continue to provide programming on another platform.

The incentive auction effectively represents the crossroads in the FCC’s diversity policies.  If the Commission fails to correct past regulatory mistakes, we risk a homogenous wireless industry that reflects traditional communications platforms rather than one that reflects our country’s changing demographics or one that reflects the majority of wireless consumers.  All eyes are on the Commission as it determines its next steps.

  • Jacqueline Clary

    Jacqueline Clary is the John W. Jones Fellow at the Minority Media and Telecommunications Council. In this position, she focuses on a variety of policy issues to advance minority participation in the media and telecommunications industries. Ms. Clary earned her B.A. from John Carroll University, her J.D. from Syracuse University College of Law, and is a member of the New York State Bar.

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