That efforts to integrate more women and minorities into the multibillion dollar wireless industry have largely failed is testament to the changing politics of affirmative action and the capital-intensive nature of the telecommunications business. Especially in the Age of Auctions.
The policy failure is also testament to how swiftly political winds can change direction.
The Federal Communications Commission earlier this month came out with a diversity report, mandated by a Telecommunications Act of 1996 amendment authored by Rep. Bobby Rush, (D.-Ill.). The report identifies various regulatory and financial obstacles faced by women, minorities and small businesses trying to enter the wireless industry. The report also outlined measures the agency has taken to remove barriers and foster diversity. The FCC vowed to continue efforts to further those objectives.
Based on data gathered to date, the FCC said the record “strongly indicates that minorities and women have experienced tremendous obstacles in participating in the telecommunications industry.”
In 1993, the then-Democrat-controlled Congress recognized the lack of diversity in telecommunications and tried to address the problem by weaving bidding credits, low interest installment loan payments and other incentives into spectrum auction legislation in hope of increasing the number of women, minorities, small businesses and rural telephone companies in the wireless business.
For a brief time, the policy succeeded modestly. Some women and minorities-seizing government aid-picked up licenses to operate regional narrowband personal communications services networks.
But the 1993 congressional diversity directive was all but obliterated when the Supreme Court and the Republican Revolution spoke-roared-in 1995. Minority tax certificates meant to encourage female and minority telecom ownership were killed off; then bidding credits; then the prospect of diversity itself.
Today, the handful of diversity initiatives-including the congressionally mandated FCC plan eliminating small business market entry barriers and a plan that establishes a Telecommunication Development Fund for small business-have succeeded in spite of the anti-affirmative action turnabout. But these programs by legal and political necessity have neutral charters that mask a broader purpose.
The legal necessity stems from the Supreme Court’s 1995 Adarand Constructors Inc. v. Pena decision to curb federal affirmative action programs, a position the high court took previously with regard to race and gender preferences in state contracting.
For women and minorities seeking to enter the wireless industry, the Adarand decision was bad enough. But the timing added to the hurt. The ruling was handed down in June 1995, before the FCC got around to auctioning “entrepreneur block” licenses for broadband PCS.
Outgoing FCC member Rachelle Chong says regulatory inertia contributed to the problem. “Although I am pleased to see that we are once again pledging to proceed with this Adarand study, I am concerned about the length of time that it has taken to get the study underway,” Chong said in a separate statement on the FCC’s May 8 report on eliminating small business entry barriers.
Under Adarand’s “strict scrutiny” test, affirmative action programs have to be narrowly tailored to further compel government interest. To meet that standard, a record of past discrimination must be compiled.
The FCC is assembling such a record and will issue a report later this year, but it has taken nearly two years to launch the project. That’s a lifetime in the new, digital auction environment in which $22 billion in wireless licenses comprising more than 120 megahertz has been sold.
As such, the train has left the station. The historic window of opportunity is closed. And what spectrum remains available to women and minorities has questionable value.
After the Adarand ruling, the FCC and Congress tried to champion small business in digital pocket phone auctions with the unspoken goal that doing so would advance the interests of women and minorities as well. But it didn’t happen. Instead, foreign money and backing from dominant U.S. telecom players dominated the broadband PCS entrepreneur’s block auction.
The agency has allowed geographic partitioning of licenses and disaggregation of spectrum to help compensate for lost ground in the post-Adarand era.
Politically, affirmative action suffered another big setback when Democrats lost Congress to Republicans in the 1994 midterm election. The high court’s ruling in Adarand emboldened lawmakers like former Senate Majority Leader Bob Dole (R-Kan.) and Rep. John Canady (R-Fla.) to go beyond Adarand and root out all affirmative action through legislation.
However, House Speaker Newt Gingrich (R-Ga.), is unlikely to let any legislation go forward unless Republicans have an alternative to offer in place of affirmative action.
The Republican leadership, mainly Gingrich, also wants to broaden the party’s political base and avoid further disenfranchising African Americans and Hispanics.
In his second term, President Clinton wants to explore options to address race problems in America. Though he desperately wants history to record that the federal budget was balanced on his watch, the president feels as passionately about race as any other social issue.
At the same time, Clinton is limited in what he can do. The president, aided by the Justice Department, earlier this month issued new rules for awarding government contracts in keeping with the Adarand affirmative action-limiting guidelines.
