WASHINGTON-As the Justice Department broadens its antitrust probe of WorldCom Inc.’s proposed $37 billion purchase of MCI Communications Corp., Rev. Jesse Jackson’s Rainbow/Push Coalition is using the mega-merger as a springboard to advocate increased diversification in the booming telecommunications industry.
Last week, Jackson, Federal Communications Commission Chairman Bill Kennard and Reps. Bobby Rush (D-Ill.) and John Conyers (D-Mich.) gathered in Chicago to lambaste the consolidation trend that has swept the telecom industry since the 1996 telecom act was made law. The landmark legislation was designed to promote competition through deregulation.
“Over the past 60 years, the FCC has given almost all of the radio-frequency spectrum to whites for free,” said Jackson.
Justice, among other things, is concerned about how a WorldCom-MCI alliance would affect Internet growth given the partnership would control half of that market. The department, according to The Wall Street Journal, is subpoenaing information from competitors of WorldCom and MCI and has added outside experts to review the deal.
There is speculation WorldCom and MCI are hunting for a major wireless buy, something that could draw even more attention to an unprecedented transaction that has managed to attract opposition from a coalition of strange bedfellows such as Internet service providers, four Baby Bells, organized labor, the National Council of Churches, black- and Hispanic-owned broadcasters and small-and minority-owned telecom businesses.
In addition, the European Union is closely scrutinizing the deal because of Internet-concentration concerns.
Jackson said minorities in telecom got some relief during the past 20 years from the tax-certificate policy. But it has been all downhill for women and minorities since then.
The GOP Congress killed tax certificates in 1995. Later that year, the Supreme Court curbed federal affirmative-action programs. That, in turn, prompted the FCC to kill bidding credits for women and minorities in wireless auctions.
Now, some in Congress want to pass legislation to kill race- and gender-based preferences altogether.
“These mergers, of mind-boggling size, threaten democracy because they will cost jobs, increase prices, decrease opportunity and deprive Americans of fair access to the stream of electronic communications,” said Jackson.
The Rainbow/Push coalition plans to take its show on the road to rail against the WorldCom-MCI merger and to press for government intervention to foster diversification in the telecom industry.
In addition, the Chicago-based group will stump for a 12-point plan to rein in merger activity and promote minority ownership.
The recommendations are as follows:
1. The FCC should hold a public hearing on competition and equal opportunity.
2. The FCC should hold public hearings on all telecom-media mergers valued at more than $500 million.
3. The FCC should require minority-ownership impact statements before taking any regulatory action or approving major deals.
4. Congress should reinstate the tax-certificate policy.
5. The FCC should ask Congress to create the American Communications Investment Bank, which would be funded by the private sector to promote telecom diversity.
6. Expand 100-fold the congressionally mandated Telecommunications Development Fund, which today is capitalized at $23 million from interest on upfront auction payments on wireless licenses.
7. The FCC should restore the broadcast Fairness Doctrine policy.
8. The FCC, having given broadcasters free analog TV channels, should require digital TV licenses to reserve at least one full-time channel for public access.
9. The FCC should create new FM radio licenses for small cities and neighborhoods.
10. The FCC should promote telecom minority contracting by those regulated by the agency.
11. The FCC should require a “red-lining impact statement” for every proposed tariff and merger or acquisition.
12. The FCC should conduct a study, funded by auction revenues, on barriers to minority ownership in the telecom industry.
Kennard, in prepared remarks, said that as the first African American FCC chairman, he is sensitive to the low and shrinking participation of minorities in the telecommunications industry.
Indeed, the Congressional Black Caucus decided against challenging Kennard’s Senate confirmation last year in exchange for his promise to actively address minority telecom issues. The CBC supported Ralph Everett, a former aide to Sen. Ernest Hollings (D-S.C.), over Kennard.
“We need to create the sense of urgency and imperative about these issues that says to all people in government and industry: We know that this revolution in technology is changing our society. And we want you to know that we want this revolution to change our society for the better. We want this revolution to be inclusive. We insist on it,” Kennard stated.
To get there, Kennard called for improved access to communications technology, employing Americans for high-tech jobs rather than recruiting skilled foreign labor and increasing minority ownership in emerging telecom businesses.
It is unclear, though, how much Kennard will be able to affect change. The law gives him next to no room for set-asides or preferences and support for minority telecom activism within the FCC, and outside the agency is suspect.
Fellow Commissioner Michael Powell, also African American, recently said telecom policies should be race and gender neutral.
Thus, it appears the best Kennard can do is use his office as a bully pulpit to encourage the private sector to embrace telecom diversity.
The NAACP, meanwhile, announced earlier this year it will encourage blacks to boycott wireless and wireline telecom firms that lack progressive hiring and contracting policies.
