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FCC Makes It Easier for Minorities to Win Licenses : Broadcasting: Women-owned businesses and minority-owned firms will get a 40% discount at the next auction of frequencies.

August 18, 1994|From Bloomberg Business News

The Federal Communications Commission took steps Wednesday to give minorities and women a better shot at winning licenses in the government's next auction of the airwaves.

The agency said it will give women- and minority-owned firms a 40% discount on certain licenses they win in the FCC's next auction. That is up from a 25% discount in the series of auctions just completed.

The agency also expanded its definition of small business to include firms with annual revenue of up to $40 million so that more entrepreneurs will be eligible to make installment payments on their winning bids.

When Congress instructed the agency last year to begin auctioning broadcast licenses, it told the FCC to ensure that minorities, women and small businesses could compete against existing industry giants. In the agency's first auction last month, none of the 10 licenses to offer advanced paging and messaging services were captured by those special groups.

Several minority bidders at the auction for nationwide "narrow-band" licenses complained that the FCC had failed to live up to its congressional mandate, even though the agency had said it would give them 25% discounts on certain licenses.

The new rules are an attempt to do a better job at meeting Congress's aims.

"We're learning as we go," said Donald Gips, deputy chief of the FCC's office of plans and policy. "We want to increase the opportunities available to minority- and women-owned businesses, and we believe increasing the bidding credit will help them attract the capital necessary to compete in this auction."

The 40% discounts will apply to 10 of the 30 licenses that will be sold in the FCC's next sale. That auction, for regional licenses to offer advanced paging and messaging services, will begin Oct. 25, the agency said.

Last month, the FCC held its first two auctions of licenses to use certain slices of the radio spectrum. Ten nationwide licenses to offer advanced paging services were sold for $617 million, while 594 licenses to offer interactive TV services were sold for a total of $214 million.

Until then, the government had given the licenses away free. Last year Congress, directed the FCC to begin auctioning them as a way to raise money for the federal government.

The winners in the first auction will use their licenses to set up nationwide networks of advanced paging and messaging services. For example, they could use them to offer pagers that collect voice messages, or that send written messages as well as receive them.

Six companies--including Paging Network Inc. and McCaw Cellular Communications--paid a total of $617 million for the licenses. Twenty-nine firms, including nine that were minority- or women-owned, signed up to bid for them.

"From looking at that auction, a larger bidding credit seems necessary to allow them to compete," Gips said. "The (low) bidding credit was one of the factors that resulted in no minority- or women-owned businesses winning licenses."

While no designated entity won a license in the first event, the FCC had more success in assisting women and minorities in the second auction, which was for interactive TV services. More than 60% of the licenses were won by women and minorities, the FCC said.

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