- The Washington Times - Tuesday, March 2, 2004

Our nation’s entrepreneurial spirit and diversity are the roots of our strength. By tapping into the potential of that spirit and diversity, we open new doors to social and economic success for Americans and the country.

The vibrant communications sector of our economy should reflect this strength in diversity. It is with this objective in mind that we are committed to creating realistic opportunities for small businesses — particularly those in rural areas — and those owned by minorities and women. We offer two initiatives to make this a reality.

First, we have called, and will continue to call, on members of Congress to support a tax-incentive program that would promote opportunities for small businesses, particularly those owned by minorities and women. This is the third Congress in which a bill has been introduced to eliminate market-entry barriers that stand in the way of such small businesses owning communications companies. And this is the third Congress in which the bill has been stalled in both chambers. With our country currently reflecting on Black History Month, now is the time for Congress to act on the Telecommunications Ownership Diversification Act.

Second, the Federal Communications Commission last year established a Federal Advisory Committee on Diversity in the Digital Age. The committee’s charge is to provide guidance to the FCC on policies and practices that could increase the diversity of ownership and could create opportunities for minorities and women to advance to managerial positions in the communications sector, as well as other related sectors of the economy. We expect that this committee will produce concrete suggestions that the commission, working with Congress, can put into place to achieve our goals.

Why are these dual initiatives so important? According to a recent report, small businesses account for approximately 99 percent of all businesses in America, employ more than half the American workforce and create two-thirds of all new jobs. Small businessgrowthinthe communications sector is creating new competition, stimulating investment and innovation, producing jobs and fueling productivity gains and economic growth.

The American public benefits greatly from existing small business entrepreneurs in the communications sector. These businesses give consumers more choice, lower prices, and innovative and higher-quality products and services. For example, the FCC has found that minority broadcast station owners, when compared to non-minority owners, provide more public affairs programming on events or issues concerning ethnic or racial minority audiences, are more likely to broadcast in languages other than English, are more likely to staff their stations with minority employees and are more likely to participate in minority-related events in their communities. And small businesses are driving much of the digital migration by offering high-speed Internet access services, like WiFi, to countless communities, and new Internet applications, such as Internet voice services, to a growing number of eager consumers.

As small businesses continue to make inroads in communications, however, minorities remain underrepresented in the ownership of communications companies. According to a 2001 report released by the federal government’s National Telecommunications and Information Administration,minorities owned 449 of the 11,865 full-power commercial radio and television stations in the United States, or 3.8 percent. Such figures stand in sharp contrast to the population figures as a whole for 2001, in which minorities represented nearly a third of the total U.S. population.

How can we increase small business ownership, particularly by minorities and women, in the communications industry? One way is to provide market-based incentives to aid small business owners. The current tax code discourages large businesses from doing deals with small businesses, especially during tough economic times. This is because small businesses typically offer cash when buying communications properties, which results in a taxable gain to the seller. Larger companies, by contrast, can offer stock to a seller, with little or no taxable consequences. The Telecommunications Ownership Diversification Act would remedy this problem by allowing large businesses to defer certain taxable gains when communications assets are sold to qualifying small businesses. In addition, we must find creative solutions to the age-old problem of a lack of access to capital by small — and especially minority-owned — businesses.

Small businesses have proven year after year that they can deliver real economic growth. As the digital migration marches forward, it will continue to offer untold opportunities for a new generation of entrepreneurs building new businesses and developing new applications for new technologies. The tremendous potential that exists must not be short-circuited — whether by the unfair and unintended consequences of the tax code or by a lack of creative solutions to capital formation hurdles. The time for action is now.

Sen. John McCain is an Arizona Republican. Michael K. Powell is chairman of the Federal Communications Commission.

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