WASHINGTON-The Federal Communications Commission last week removed race- and gender-based bidding credits for next month’s entrepreneur block auction of 493 personal communications services licenses, despite President Clinton’s impassioned-albeit qualified-embrace of affirmative action.
The FCC, noting support from prospective bidders, said dropping female and minority bidding credits removes legal uncertainties arising from the Adarand Supreme Court decision to limit federal affirmative action programs and prevents further delay of the Aug. 29 auction.
Congress in 1993 mandated that women, minorities, small businesses and rural telephone companies-collectively called designated entities-receive special treatment in auctions for wireless telecommunications licenses.
The entrepreneur block auction-originally designed for these groups and limited to firms with $125 million or less in gross annual revenues-was originally scheduled for this spring but was postponed after a Mississippi rural telephone company challenged minority and female bidding credits in court.
Telephone Electronics Corp. subsequently withdrew its lawsuit after striking a deal with PCS PrimeCo L.P., the wireless partnership of Nynex Corp., Bell Atlantic Corp., U S West Inc. and AirTouch Communications Inc., enabling it to offer next-generation pocket telephone service in sections of the New Orleans-Baton Rouge market.
The FCC said the July 18 ruling is not a retreat on affirmative action, refusing to concede that race- and gender-based bidding credits removed from the entrepreneur block auction could not sustain constitutional scrutiny or that such incentives would not be used again.
“The FCC is committed to ensuring that the communications revolution is inclusive, not exclusive,” said FCC Chairman Reed Hundt.
Hundt has declined to commit the agency to restoring female and minority bidding credits in future auctions.
The commission, however, said it is “considering the means we should take to develop a supplemental record that will support use of such provisions in other spectrum auctions.”
Under new rules, a 25 percent bidding credit and installment payment terms previously limited to small firms controlled by women and minorities are available to only “small businesses” with $40 million or less in gross annual revenues.
In addition, the FCC relaxed eligibility criteria for small business applicants to exclude gross revenues and total assets of affiliates that individually or collectively would fall under the $125 million cap.
The rule revisions address concerns raised by three major African American firms-Black Entertainment Television Inc., Essence Communications Inc. and Urban Communications-and others, which feared their ability to compete in the auction would diminish as a result of regulatory restrictions.
Some minority organizations argue neither the Adarand ruling nor new Justice Department affirmative action guidelines force the FCC to entirely abandon bidding incentives for women and minorities.
The high court adopted a stricter standard for federal affirmative action programs, requiring racial classifications serve a compelling governmental interest and that they be narrowly tailored to further that interest.
Affirmative action programs have come under increasing attack since Republicans took over the House and Senate last fall. In general, there is debate over whether such programs have outlived their mission and instead now cause discrimination rather than remedy it.
Senate Majority Leader Robert Dole, R-Kan., the leading GOP contender for president in next year’s election, plans to introduce a bill this week banning federal affirmative action programs. Similar legislation is being readied in the House by Charles Canady, R-Fla., chairman of the Judiciary subcommittee on the Constitution.
Sen. Phil Gramm of Texas, another Republican presidential candidate in 1996, plans to offer an amendment to an appropriations bill that eliminates some federal set-aside programs. The same stance is being taken by Gary Franks, R- Conn., one of two black Republicans in the House.
California Governor Pete Wilson, also in the running for Republican presidential nomination, recently signed an executive order to roll back affirmative action programs in the state, which has the most electoral votes. Other states are moving in the same direction.
Clinton last week came out strongly in favor of affirmative action, at the same time calling for changes. He ordered federal agencies to eliminate or reform programs that create quotas or preferences for unqualified individuals, cause reverse discrimination or continue any of these after the original purpose has been met.
“If properly done, affirmative action can help us come together, go forward, and grow together,” said Clinton, who has been pressured by African American leaders to hold the line on affirmation action or else risk losing support from his most important political base: blacks and women.
The five-month affirmative action review overseen by White House aide George Stephanopoulos concluded affirmative action programs “have worked to advance equal opportunity by helping redress problems of discrimination and by fostering the inclusion needed to strengthen critical institutions, professions and the economy.”
