Grain Defended at MMTC Conference as One DE Likely to Take Part in AWS-3 Auction

The FCC last week approved an order giving Grain, a private equity and telecom infrastructure firm, and similarly situated companies a limited waiver of parts of the commission’s rules. In a multiparty transaction, Grain leased spectrum licenses it had bought on the secondary market to AT&T and Verizon (CD July 25 p5). Smaller telecom firms at times rely on leasing and wholesale arrangements as a means to access additional capital and increase their capacity to participate in a highly capital-intensive sector. Grain did not buy its licenses as a DE, instead buying them on the secondary market. David Grain has been a major donor to Democratic and some Republican candidates, which led some critics to suggest the approval of the waiver was politically motivated (CD July 24 p3).

"One DE is trying to compete and try to fulfill really the mandate of Congress” that spectrum be made available to DEs in FCC auctions, Coley said. But there has been “a campaign to try to eliminate this one DE that seems to have the best chance of being a competitor,” she said. Minorities shouldn’t just be “digital sharecroppers” and “consumers of spectrum” but should “actually get an opportunity to own spectrum,” she said.

MMTC President David Honig went further, suggesting that Grain had been the victim of a “smear” campaign. “It’s just so wrong,” he said in an interview. “Somebody needs to say that.”

Without the waiver, no DE is likely to bid in the AWS-3 auction, Honing said. “The only way to deal with this was through a waiver.” Grain is unique among minority-owned businesses in that it builds, owns and operates communications towers, he said. Honig said political contributions never play a role in FCC decisions. Nobody goes to the commissioners and says “we contributed to this party or that,” he said. “A commissioner who got a pitch like that would call security.”

Jackson weighed in on Grain’s behalf in a written statement released Friday. “Contrary to some of the public debate as to the timing of DE participation, small, minority- and women-owned businesses simply can’t be placed on hold, waiting for the best time to enter the market,” he said. “As more and more consumers of color robustly and dynamically engage in the new digital economy, why bring issue and concern around a request seeking relief to participate simply as a bidder, not a winner, in an auction only a few months away?”

Nicolaine Lazarre, general counsel of the National Urban League, who also spoke at the conference Monday, said few minority bidders have participated in recent FCC auctions. The main issue is access to capital, she said. “Anything that could encourage more [minority] ownership in general is a positive thing.”

There’s a general recognition that more minorities and women should be able to buy FCC licenses, said Jane Mago, NAB general counsel, also at the MMTC conference. “The DE rules are intended to try to improve that,” Mago said. The rules “also need to be associated with access to capital."

Negative reaction to the FCC’s granting a waiver to Grain was characterized as partisan posturing by Maryland State Sen. Catherine Pugh and Alan Williams of the Florida House of Representatives, both Democrats and of the National Black Caucus of State Legislators. Calling the reaction “political bickering,” Williams said allowing minority-owned businesses to participate in spectrum proceedings like the AWS-3 auction was an important step toward minorities becoming producers in the broadband sphere rather than only users. “We need to have the communications and telecommunications business be reflective of the population,” said Williams.

The attacks on the Grain waiver feel similar to the initial attacks that led to the demise of the minority tax credit, said MMTC Chief Research and Policy Officer Nicol Turner-Lee.

Tax Credit Return Sought

Speakers from the Hispanic Technology and Telecommunications Partnership and National Urban League backed changes to DE rules and expressed support for MMTC’s stances on the DE waiver granted to Grain and against net neutrality rules based on Communications Act Title II reclassification. “We cannot afford to see the dismal [minority ownership] numbers we've seen in broadcasting projected to the other side of the industry,” Turner-Lee said.

Congress and the FCC should make it easier for minorities and women to own businesses that participate in broadband and other advanced communication industries, said industry, public interest and Capitol Hill officials at MMTC’s conference. Minorities and women should be as focused on becoming producers of broadband devices and technology as they are on using them, said . She urged attendee to support rule changes that would encourage minority-owned company participation in spectrum proceedings as DEs.

Several speakers said the tax credit should be resurrected, including Rep. John Conyers, D-Mich. “It needs new life,” he said, citing the small number of minority-owned stations as the reason to bring the credit back. Conyers said an upcoming Congressional Black Caucus event would include a panel on reinstating the tax credit. Rep. G.K. Butterfield, D-N.C., called the representation of minorities in the boards of telecom companies “deplorable.” Mago compared the FCC on ruling Grain to its stance on TV station joint sales agreements. Though the commission found that companies in JSAs exert “undue influence” on sidecar companies, its stance on Grain’s relationship with AT&T and Verizon takes the opposite tack, Mago said.

Speakers also compared the reaction to the Grain waiver to negative reaction from public interest groups to MMTC’s opposition to basing new net neutrality rules on Title II reclassification. “It must have been quite a sale,” said HTTP Chief Legal Officer Martin Chavez, responding to the idea that MMTC, the National Urban League and other minority-focused public interest organizations had sold out by supporting lighter net neutrality regulation. Chavez and Urban League’s Lazarre defended the position taken by MMTC and their own groups. “We have just as much interest in net neutrality” as other public interest groups, said Lazarre. , Monty Tayloe