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THE WHITE HOUSE

Office of the Vice President

For Immediate Release June 23, 1994

STATEMENT BY THE VICE PRESIDENT

On June 29, the Federal Communications Commission will adopt rules for conducting auctions to assign licenses to broadband personal communications services (PCS) providers. President Clinton and I strongly support the Commission's efforts to incorporate into the competitive bidding process a means to promote and protect small businesses and businesses owned by minorities and women.

The Commission reportedly is considering a proposal to reserve two "entrepreneur's blocks" within each Basic Trading Area for businesses whose annual revenues are below a certain threshold -- for example, $100 million. A small business designation for these blocks is the most direct, effective mechanism for preserving opportunities for them. Congress also stated its concern for preserving opportunities for small businesses and businesses owned by women and minorities when it authorized the Commission to use auctions to assign broadband licenses.

In addition, the Commission should permit small businesses to reduce up-front costs through a system of installment payments where, for example, a qualified business could pay the cost of the license over a period of time.

The Administration also encourages the Commission to ensure that businesses owned by minorities and women are not excluded from the competitive business process. Study after study indicates that such businesses are significantly underrepresented in most telecommunications markets and that access to capital is the principal impediment to their increased participation in those markets. To help solve this problem, small business owners and businesses owned by minorities and women who are otherwise eligible to participate in the "entrepreneur's blocks" auctions should be given a bidder's preference -- that is, they should be able to purchase a desired license for a specified discount below their winning auction bid.

Finally, the Commission should allow larger firms to make non-majority, non-controlling equity investments in businesses owned by women and minorities without voiding their eligibility for the "entrepreneur's blocks." Allowing larger investments would risk enriching individuals for serving the interests of larger firms, rather than creating a new generation of minority and women business owners who provide special knowledge and skills to serve their communities. For much the same reason, the Administration also would support limits on transfers of "entrepreneur's blocks" licenses to non-eligible firms for a specified period of time (e.g. 3-5 years) after they were first acquired at auction.