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"Thinking Ahead"
William E. Kennard
Federal Communications Commission
NAACP 1998 Annual Convention
Telecommunications Forum
Atlanta, GA
July 13, 1998

I'm honored that you invited me to take part in this discussion on restoring minority ownership in the broadcasting and cable industries.

I'm also honored to be here with these distinguished panelists who know much about our subject. I know we'll have a terrific discussion.

But as we talk, I also hope that we can put our subject in its broader context: the emergence of the Information Age.

It is, after all, the single most profound development of our time. It will define the way that people think about this period in our history. There will be a time when historians look back and conclude that the decades in which we live were those of transition: from an economy guided by the needs of the Industrial Age to an economy of the Information Age.

We see this transition all around us.

Information technology is changing the way people live, communicate, and do business. More and more, it defines our potential in society. It determines how we learn -- and how we earn a living.

I saw a TV commercial for orange juice awhile back: "Orange juice -- it's not just for breakfast anymore." Well, opportunity in communications is not just about broadcasting and cable anymore.

The communications and information business now makes up 14% of our economy. That means jobs. And six of every 10 new jobs are computer related.

The new technology touches every worker in every sector of the economy.

The civil rights challenge for the next century is to make sure that African-Americans -- and all Americans -- share in the benefits of the Information Age.

This challenge has three components -- three areas where we as African-Americans must work to ensure that we are full participants in the Information Age economy.

We must have access to technology, employment opportunities and opportunities for ownership.

Access. Employment. Ownership.


Right now, not enough African-Americans have access to the new technology.

At a time when many people spend time worrying about how to get high speed Internet access into America's homes, let's not forget that 13% of African-American households still don't have basic telephone service.

Some of the facts about our lack of access are puzzling.

For example, why are African-Americans less likely to have telephone service than white Americans -- even those making $50,000 per year? In fact, we know from long-running FCC surveys of telephone subscribership that African-Americans and Hispanic Americans have lower levels of telephone subscribership at all levels of income. This is not just because more minorities are poor. What's the reason?

Why do the areas where Native Americans live have the lowest subscribership levels in the continental United States, with telephone subscribership at times less than 50%? Is it because of poverty, or location in rural areas? Or are there additional underlying factors?

Knowledge is power. That's why I support the efforts of this organization to survey telecommunications companies to determine how well they are serving the African-American community. The facts emerging from that study will light the way to solutions.

This has certainly been true in the past. A couple of years ago, just before Congress passed the landmark Telecommunications Act of 1996, the California Public Utilities Commission decided to investigate issues related to telephone subscribership by minorities in California. So they worked with two or three of the largest telephone companies in the state, and those companies commissioned customer surveys by a public pollster. What they found was that many people who were not telephone subscribers had been subscribers until recently. The most common reason for falling off the network? Disconnection for failure to pay toll charges.

So last year, as part of universal service reform, the FCC addressed this issue head on. Now, companies that receive federal universal service support will not be permitted to disconnect low income customers' local service for non-payment of toll bills. The companies will also bring the new technology to bear on this problem. They will also give low-income consumers better tools to manage their toll bills, either by blocking toll calling altogether or -- even better -- by offering computer billing systems that cap the amount of toll calling.

Now, let's talk about employment. . .


Here again, the NAACP has been a terrific ally of the FCC.

We must continue to play a leadership role in eliminating barriers to equal employment opportunity for all Americans in the Information Age.

And we must do so at a time when the traditional tools we have used are facing a hostile political and judicial environment. Recently, the D.C. Circuit ruled in Lutheran Church v. FCC that the FCC's rules to promote equal employment opportunity for women and minorities are unconstitutional. The NAACP brought that case; we stood side-by-side with the NAACP. The court ruled against us. It said our rules are unconstitutional. I don't agree.

After all, these rules require broadcasters to make an effort to conduct an inclusive search. Inclusive searches are the foundation of equal opportunity. If you don't know about a job, you can't apply.

To strike down those rules is to strike at the heart of any effort to level the playing field for minorities and women who want opportunities to compete in this marketplace.

Because I feel so strongly, the FCC has asked the Court to reconsider.

I don't know whether the court will agree to rehear the case. But I do know this: where there is a will there is a way. And even if the court refuses to rehear the case, we will find another way to advance opportunity for minorities to be guaranteed equal employment opportunity.

If we in the minority community do not have opportunities to work in the fastest growing sector of this economy, we simply will not be a part of this communications revolution. It will belong to the rest of America. And only the rest of America will fully benefit.

The last prong of the challenge is ...


I've been in the communications field for almost 20 years. I've seen how technology and entrepreneurial spirit have transformed the landscape.

Well, timing is everything.

Whether FM radio, or cable television, or cell phones, each new idea provided tremendous opportunity for wealth creation -- for those who time things right.

So while we must talk about opportunity in broadcasting and cable today, let's not forget new technology.

Take the Internet, where electronic commerce -- the buying and selling of goods in cyberspace -- is exploding. It will be a $20 billion industry this year -- and $350 billion by 2002.

The opportunity for entrepreneurs comes early in the life cycle of these industries. And so the African-American community must be alert to the new opportunities appearing on the horizon every day.

Percy Sutton knows this. First he pioneered minority ownership in broadcasting; then moved into cable television; then he became a pioneer in personal communications services, a new generation of digital telephones. Now he is building a business to provide telephone service via satellite to Africa.

Bob Johnson knows this. He had a vision to serve an unmet need in the marketplace: cable programming targeted to African-American audiences.

Rupert Murdoch did the same thing, and built the Fox Network; focused on serving unmet needs of black metropolitan audiences.

Bob Johnson told me that the history of creation of wealth in the African-American community is the history of exploiting markets bypassed by the larger community.

What is the appropriate role of government in fostering opportunity?

Some say none at all. They say, "Let the marketplace govern."

I disagree.

I have an abiding faith in the free market. Overall, it has built our country's economy into what it is: the greatest economy in the world. We see this nowhere more than in communications. Our country invented the telephone, the television, the VCR, the computer. We invented cable television. We have invented and developed the digital television standards that will transform television broadcasting. Perhaps most significant of all, we invented the Internet.

Americans have seen firsthand, in long-distance and in the prices and choices for the telephones that we now buy for our homes, that competition generally will bring us the best products with the mix of quality, price and service that fits what consumers want.

But faith in the free market overall doesn't mean that we have to be blind to areas where the market isn't working as well as it should, or where it just plain fails to deliver the right result for our society. The unchecked free market, for example, would result in telephone service for the most rural parts of America being priced so high that people simply couldn't afford telephone service. But our country has a national policy to have everyone connected -- which is called universal telephone service.

Classical economic models of perfect competition assume that everyone in the marketplace, the producers of goods and services and the buyers, have perfect information. All producers know exactly what their customers want. All customers know exactly what they want and the range of options. And they can all precisely evaluate the cost and benefit tradeoffs.

But these assumptions are far off from the real world. This gap usually defines the difference between economic theory and business opportunity. Fortunes are made in the business world when one entrepreneur sees a need, can enter the market, interact with customers, and fill the need. If he or she is successful, others will imitate and follow.

Now ordinarily we expect the marketplace to be self-correcting. That is, that the marketplace will correct flaws in the knowledge of producers and consumers by entrepreneurial trial and error.

I agree -- so long as barriers to entry, to getting into the market, are relatively low. But if barriers to entry are high, then the marketplace loses this self correcting mechanism. Parts of the market, or the needs of specific groups of consumers, will be left unserved until the existing market participants find the new opportunity.

Let me put this more plainly -- when there are high entry barriers minorities and other underserved communities are solely dependent upon large, bureacratic corporate service providers. Consumers are less likely to have adequate service. To take the extreme example, in a monopoly, it is the monopolist's perception of who is going to be lucractive that will drive investment. If the monopolist believes that minorities won't buy cable service or Internet access service or telephone service, the monopolist will be less likely to invest to serve the minority community. The monopolist's perception becomes the reality of information access.

But if we create a competitive market environment and lower the barriers that have kept minority entrepreneurs out of the marketplace, then the picture changes. If a minority entrepreneur -- or anyone else for that matter -- sees a market niche in the minority community, they can enter the market and serve.

If markets are open and we can lower entry barriers, minority entrepreneurs can help narrow the digital divide.

It's perfectly appropriate for government to create opportunity where the marketplace fails to do so. At the FCC we've sought to do just that.

We provided auction bidding credits for small firms wanting to enter the spectrum-dependent businesses like Personal Communications Services and paging.

We affirmed the legal obligation of PCS, cellular and other wireless service providers to make their services available for resale. That's the practice of letting a company without local telecom facilities buy local service wholesale from the existing company, then resell to consumers.

It's a way for small and minority-owned businesses to expand, even if they don't have much capital.

We've also tried to use tax certificates to help minority companies access capital, by affording broadcast station sellers a capital gains tax deferral if they sold to minority buyers. It was a program eliminated by Congress, even though it was very successful in creating opportunity for a generation of minority broadcasters.

In April, I issued a challenge to the broadcast industry to create opportunities for minorities and women. And many companies have answered that challenge.

Government can and should play a role in fostering opportunity. We can't guarantee success, but we can foster opportunities.

We have to make sure that the next generation of entrepreneurs in the African-American community is focused on the market needs of the next generation. That leads me the last point I want to make today. . . the role of technology in educating the next generation of African-American leaders.

That is...


Let's face it. Students who lack on-ramps to the opportunities of the information age won't have access to the off-ramps into those good jobs of the 21st Century.

Right now not enough of those on-ramps exist. There is a digital divide in this country. On one side of this divide are affluent kids. On another side are low income kids, rural kids, and minority kids.

Only 14% of classrooms in poor and minority school districts are connected to the Internet.

The percentage of white children with home computers is triple the percentage of black and Latino kids.

While enrollment in college computer courses rose 40% in 1996, many minority students show up for college not having had access to networked computers.

In order to fulfill the promise of equality in education for all Americans -- the promise of Brown v. Board of Education -- we've got to make sure every child in America has the tools to compete and win in that new economy.

I have watched the debate about affirmative action in California. Opponents of affirmative action claim that the decline in minority enrollment proves that most minorities are unprepared to compete in the University of California system. Proponents of affirmative action, on the other hand, claim that the decline in minority enrollment proves that there is discrimination in higher education unless it is combatted by preferential admissions.

This debate misses the point.

The problem is that most opponents of affirmative action refuse to take responsibility for improving the K-12 educational system. They are willing to sacrifice the opportunity of thousands of minority high school graduates to make a point -- or perhaps in the hopes that their benign neglect will somehow magically transform education at the K-12 level.

But I also find that too many proponents of affirmative action are unwilling to grapple with the reality that affirmative action is a short-term remedy and not the long-term cure for inequity in our society. Too many are too willing to tolerate a K-12 system that is not working for the majority of minority children in America. They are too quick to excuse the failures in public education that leave too many poor and minority students unprepared for their futures.

The longterm solution is not new. It's as old as Brown v. Board of Education. We must ensure racial equality in education. But the new twist is that technology is dramatically transforming education in this society and, if we don't make sure that all kids have equality of access to technology, the digital divide will only widen.

We have an initiative that will help us do just that.

It's called the education rate, or "e-rate." It provides a way for all of the schools in America to allow kids to learn the technology of the Information Age. And I have taken steps to ensure that the poorest and most rural schools are first in line for this funding.

Some people tell me that, as a nation, we can't afford to make this investment -- this investment to give all children the technological tools that will give them the opportunity to succeed in the Information Age. Well, I am here to tell you that we can't afford not to make this investment.

The NAACP has been at the forefront in support of the e-rate initiative, and must redouble its effort because the e-rate is under attack.

If the e-rate initiative is scaled back even more, or scrapped entirely, minority and rural children will suffer.

We can't let that happen. So join me in the effort to connect our nation's classrooms to the Internet. I need your help. The school children of America need your help.

I hope that the NAACP will answer the call to save the e-rate. A resolution in support of the e-rate has been proposed for the NAACP's consideration. I urge this organization to adopt it.

We are at a pivotal moment in the history of education.

In the time of my grandparents, at the beginning of this century, civil rights leaders fought to make free public education a reality for all Americans. For my parents' generation, at the middle part of this century, civil rights leaders fought to bring racial equality to education.

The challenge for our generation is to bring equality of access to technology to education. That is the next civil rights challenge for our generation.

If we fail to prepare our children for the Information Age, it will not be merely a market failure. It will be a moral failure.

On the other hand, if we create a partnership that enables us to succeed, we have an unparalleled chance to use the new technology to bring the entire world together.

I'm talking about the World Cup.

I thought about this when I watched the World Cup this week. I actually don't know much about soccer. I have trouble with a sport where you can't use your hands -- and where you use your head to smash the ball. But yesterday over two billion people watched that Final - the most watched event in the history of the world.

They watched in their homes. They watched on large screens in the streets. They watched in bars -- not just in Rio or Paris but all around the world.

Now, people around the world were interested mostly in the game.

But I'm not the first to point out that they saw something else: an amazing example of racial harmony.

Especially the French team.

As a black man who is interested in history I understand very well why France would wind up with players born in Ghana, and Senegal, and Guadalupe and Algeria -- and one player from New Caledonia whose name means "angry man" in his aboriginal tongue.

Yet for much of the world it came as a surprise that the team didn't look like -- as the Washington Post put it - "people named Marcel and Pascal who eat croissants for breakfast."

And when they electrified the world by winning -- against another multiracial community: Brazil -- I couldn't help thinking that the world was getting a lesson in racial harmony it couldn't have a generation back.

From television.

From the communications industry.

From a new technology undreamed of a generation back.

My hope is that our multiracial country can act as a team.

My hope is that we can remove the barriers that have denied minorities full participation in the communications marketplace.

It should be easier than soccer. We can give each other a hand. And we can use our heads in the old-fashioned way -- thinking up good ideas.

I look forward to hearing your good ideas in the next few minutes.

Thank you.