Earlier this week the Minority Media and Telecommunications Council released a white paper describing a number of policy actions recommended for the Federal Communications Commission to use when addressing distribution of spectrum to minority or women-owned business enterprises. The MMTC has extensively documented the problem minority or women-owned enterprises face when attempting to enter the media markets as owners of radio or television stations. This problem of ownership also extends to ownership of wireless facilities and the licenses necessary for accessing spectrum; the electromagnetic waves that connect cell towers, broadcast stations, televisions, and smartphones.
Going up against well capitalized firms such as AT&T and Verizon is like David going up against a Goliath that has the added advantage of having sucked down some steroids. Raising capital in order to successfully bid on licenses that grant access to spectrum is difficult and that financial barrier works to keep many minority entrepreneurs out of the market to own wireless facilities. And the FCC has not been very passionate about re-igniting old policies like tax certificates or designated entity-specific auctions that could help lower barriers to media market entry.
Financial capital today is pretty cheap thanks to current monetary policy combined with absent at best or dysfunctional at worst fiscal policy. That won’t last for long as 2014 may be the year that our friends at the Federal Reserve may start considering when to stop buying assets and letting interest rates rise. That increasingly probable scenario could be problematic for minority owned business already pushing up on constraints, whether financial or societal, to capital access.
One alternative to broadcast spectrum may be unlicensed spectrum. Not only would access to and use of unlicensed spectrum get minority or women-owned firms into, say online media, much faster, successful use of unlicensed spectrum could be used as leverage for future licensed spectrum acquisitions.
Minority or women-owned firms could use or build Wi-Fi networks that consumers could use to access content, hopefully content owned or produced by the aforementioned minority or women-owned firms. Minority firms can build out networks providing health monitoring and other data services. We could see more minority and women-owned firms entering the market to provide devices and networks that offer broadband on the go. The NCTA has provided an informative graphic that you can see here.
The downside to unlicensed spectrum is that, if you are strictly pursuing a wireless communications business model, there may be issues of reliability primarily due to signal interference. Reliability issues may give financiers reason for pause.
While minority or women-owned businesses should not take their eyes off of the prize of wireless communications market entry, giving some priority to building and owning networks and devices for use in the unlicensed spectrum space may provide a successful pathway that can be leveraged in the future for market entry.