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Remarks of
William E. Kennard, Chairman
Federal Communications Commission
Before the
Citizenship Education Fund
New York, NY
June 17, 1999

(as prepared for delivery)

"Back to the Future: Renewing the Tax Certificate for the Information Age"

Thank you, Percy, for that generous introduction.

Many of you have been to conferences like this one before – meetings where we talk about how to expand opportunities in the communications industry. For many of us, we've been in this struggle for many years.

We meet today at time when the opportunities are greater than ever before. It is an extraordinary time to be in the communications field.

The communications industry is re-shaping our society and culture. Through phone lines, cable wires, and the airwaves, Americans can now access information wherever and whenever they want. Everything from parenting to educating, from commuting to comparison shopping has been touched by the communications revolution.

And it's fueling our prosperity. As much as one-fourth of our economic growth – growth which has produced the longest peacetime expansion of the economy in history – comes from the information technology sector.

A recent study estimated that last year the Internet economy generated $300 billion in revenue and was responsible for 1.2 million American jobs. Impressive. But that number is constantly changing because the technology and the industry is constantly changing – churning with the energy of entrepreneurs and the innovations of engineers.

I know that there is more opportunity than ever before, for I meet with the CEO's of these companies everyday, and go to a different trade convention almost monthly.

But what I notice in these meetings and at these shows is that the communications industry -- an industry that sends ideas and information to the American people – does not reflect the rich diversity of our nation today. And it certainly doesn't reflect what our nation will look like in the coming century.

I have a picture of my father in my office. And sometimes I look at that photo and think about the opportunities that he had – and didn't have – as a black man in America.

He was a professional, and he was able to create a successful architecture practice. But he did so in spite of the opportunities that he didn't have.

Then, I think about how society changed from his generation to mine. Because of the hard work and struggle of men like Percy Sutton, Jesse Jackson, and Herb Wilkins, there were opportunities there for me to seize that were not there for my father.

Our nation has made tremendous progress, progress that we have all seen just in our lifetimes. But the challenge for this generation is to open this door of opportunity even wider. So that one day the people who walk into the office of the chairman – or chairwoman – of the FCC will not just represent their clients, but will represent the diversity of our nation.

We should expect – we should demand – nothing less for our country. And because of the explosion of the New Economy, we – men and women in the communications industry – can't waste a day.

The famed University of Texas football coach, Darrell Royal, a man who led that team to three national championships, once said that, "Luck is what happens when preparation meets opportunity."

If that's that the definition of luck, then I've been lucky. I was lucky since my preparation, my schooling, the values of hard work and love of learning that I was taught by my parents were able to meet an opportunity.

The challenge before us is: how do we create opportunity for minorities and women? How do we create good luck for those who throughout our history were resigned to limited horizons and unlucky lives?

How do we create this conditions for positive change in the communications industry?

In the 1970's, members of Congress, the Carter Administration, and activists wanted to open up opportunities for minorities in broadcasting. Their plan was to set aside broadcast licenses for these groups.

The NAB said don't do that. We'd rather have a tax certificate plan. And after working together, that's what we got in 1978.

Under this program, if an owner of a broadcast property – like a radio or TV station – sold it to a minority, they would not have to pay capital-gains tax.

Since 1978, the FCC issued 359 certificates to companies who sold to minorities– most of which concerned the sale of radio stations. Although a small number, the impact of this program on opening up this industry has been great.

Before 1978, minorities owned approximately .05 percent (or 40) of the approximately 8,500 broadcast licenses.

As of September of 1994, that number increases eight-fold to 2.9 percent of 11,128 licenses. Still a small number, but a giant leap forward to a communications industry that looks like the nation it broadcasts to.

But this program wasn't perfect. It could have been improved. But before we could do anything, the program ran into partisan politics, and it was killed by Congress. The program was over.

But that doesn't mean that we can't create a little luck. It doesn't mean that we must stop our efforts to open the doors to opportunity.

Already, the debate is underway on how to create this opportunity. And we're not the only ones engaged in it. Al Gore and John McCain, Charlie Rangel and Jesse Jackson, Michael Powell, Eddie Fritts, and Lowry Mays and Mel Karmazin are all looking for solutions.

Some are focusing on partnerships between big broadcast companies and small minority businesses. Some are establishing investment funds. Whatever their approach, they are focusing on what works, and that means focusing on money – on how to develop capital.

We know that the tax certificate program worked. That's why we can and should initiate a new tax certificate program.

A new tax certificate program should level the playing field by allowing small businesses of all types to have the same tax advantages that large corporations have.

Just as the communications industry is becoming increasingly dominated by large corporations, tax certificates would rejuvenate the role of small companies and entrepreneurs.

And it would do so not just in radio, TV, and cable, but in all telecommunications businesses including wireline, wireless, and satellite. It would open doors in the media industries of the future.

And within this incentive should be an added boost -- an additional incentive to give minorities and women an affirmative opportunity to gain a foothold in the communications business.

Now, there are those who would yell and scream that this program is unfair; that this is just a back-door quota program or a scheme of government hand-outs. And there are others who would argue that opponents of this program are supporting discrimination.

This is a false choice. We don't need wedge-issues or identity politics that divide our nation. We need sensible solutions that recognize that there are past inequities that we have not yet fully rectified and commitments to diversity of viewpoints and democracy that we all cherish.

We need solutions that recognize that that we tried some approaches in the past that did not work and some that even subverted other principles that we as a nation hold dear. But we need the courage not to just reflexively defend the status quo, but to find ways that promote equality of opportunity for all Americans.

A new tax incentive program should follow this course. First, it should not be a quota or a government mandate. It should give new entrepreneurs a ticket into the marketplace, but once there allows market forces to choose the winners and losers.

To this end, it should impose limits on how many times you can benefit from a certificate. This must be a hand up, not a hand-holding. The responsibility lies with the new license holder to make the best of it.

Also, we need strict standards on firms eligible to purchase licenses so that large corporations or unscrupulous deal-makers operating as fronts are not the ones to benefit from this program.

And we need safeguards to make sure that we don't attract those to this business interested in the indiscriminate flipping of properties. We need new owners committed to building businesses and creating wealth that helps and serves their communities.

This program is sensible. It honors our commitment to equality for opportunity while respecting market forces and the hard work of entrepreneurs everywhere. It would go a long way to correcting injustices of the past, and preparing us for the future.

Think about the future for a second. Think about what America will look like in the next century. Perhaps as early as 2005, and certainly within the next ten years, Hispanics will become the nation's largest minority group.

By 2050, Hispanics will constitute almost one-quarter of the U.S. population, while Asians will total more than 8 percent. At the same time, the percentage of Americans classified as non-Hispanic whites will fall to under 53 percent. Already, here in New York City, more than one-third of the population is foreign-born.

Anyway you cut it, the next century will be a diverse century.

Indeed, we are living through a period of immigration as transformative as the waves of immigration from Eastern and Southern Europe at the beginning of this century. We are undergoing demographic shifts as exciting and paradigm-busting as the communications revolution.

Some choose to ignore our multi-cultural landscape. As some of our friends in Washington insist, we live in a colorblind society.

I like what Al Gore says about this. People who say we are living in a colorblind society use their colorblindness the way a hunter uses a duck blind. They hide behind it and pretend that the ducks don't notice.

Well, we notice. Of course, we notice. The world notices. We remain the world's greatest – and successful -- experiment in democracy. Now, the experiment is becoming whether the world's strongest and most powerful democracy can also be its most diverse.

Those of us in this room are crucial to this experiment. We stand at the intersection of perhaps the two most important forces shaping our society and our economy: the revolution in communications and the changing demographics of America.

We need to use our talents to build a better America.

That's why at the FCC, I've focused our attention on using technology to bridge the divides of race, class, and opportunity in our society.

Last month, we funded the e-rate program to wire schools and libraries to the Internet to its cap. With this move, we'll be able to wire 528,000 public school classrooms to the Internet. By funding to the cap, we will be able to help schools that teach 40 million American children. We will be able to wire one-third of the public schools in rural America, and reach students in the poorest schools in every corner of our nation.

The FCC has also focused its attention on making sure that the 54 million Americans with disabilities can use these new technologies to live fuller and richer lives.

And we've worked hard to bring basic phone service – a vital necessity for safe lives and productive neighborhoods – to the poorest of Americans, including those living on Indian reservations.

And that is why, the FCC looks forward to working with all of you on making sure that minorities and women have access to employment and ownership opportunities in the communications industry.

Because you know as well as I that luck doesn't come from a rabbit's foot or a four-leaf clover. It comes from having an opportunity to rise as far as one's God-given talents. It comes from a society committed to creating these opportunities.

And it only comes when people like you – businesspeople, Congress, activists, and citizens – engage in a struggle to make those opportunities possible.

We've done it before. Working together, we can do it again. Thank you.