In preparation of an article for Politic365.com, yesterday I had the most insightful conversation with the co-founder and president of the Minority Media and Telecommunications Council David Honig. Entry into the media marketplace by members of the minority community is a top priority of the MMTC. For this reason, the MMTC is hosting tomorrow a forum on the spectrum crunch and how this crisis in the airwaves will impact minority communities.

We are hitting a wall on spectrum, Mr. Honig said to me and it’s going to have an impact on minority consumers and entrepreneurs. For consumers we’ll probably see degradation in services, particularly more dropped calls. As spectrum, like any resource, becomes scarcer, we’ll probably see higher prices. One can argue that all consumers, no matter their race, will see price increases, but for minorities there may be a greater negative incidence from an increase in cell phone rates.

For example, Black unemployment is around 13.8%, much higher than the national average of 8.3%. According to the Pew Research Council, White median household wealth is around $113,149 compared to Black household wealth of $5,677. The average income for Black households is $44,780 compared with White households who have an average income of $73,439.

Hispanics households, while having average household income of $51,540, have a household wealth of $6,325, according to Pew Research. The unemployment rate for Hispanics is also above the national average at 10.5%.

For minority entrepreneurs attempting to mitigate the damage of the last recession via self employment, entering the broadband, telecommunications or media markets with little equity or capital makes success even harder. Facing increasing spectrum’s increasing factor cost of production only adds to the burden.

Given MMTC’s knowledge and expertise with broadband and spectrum issues, the forum should provide attendees with great and useful policy insights.

The Minority Media and Telecommunications Council’s Latoya Livingston wrote an insightful blog post on how increasing available spectrum can help entry into the digital economy. Check out her post here.

Ms. Livingston’s article raises two important points. One, why is the FCC afraid of allowing a market strategy such as consolidation do the work that it is not equipped to do? Second, why does the FCC not recognize that growth in the wireless sector does not necessarily mean having a certain number of carriers in the sector?

If you want wireless services produced and distributed at lower costs, you need to allow for scale whenever possible. As wireless services improve with the additional spectrum, entrepreneurs will bring innovative products that enhance the use of wireless networks.

It’s okay to let the market stumble and find itself. We can’t afford to have the FCC trying to hold the industry’s hand every step of the way.

Today AT&T withdrew it’s bid to purchase T-Mobile deciding instead to take a $4 billion charge off. I expect T-Mobile to
eventually fade away into the Bavarian sunset unless it finds a way to build out a true 4G network and remain competitive
with AT&T and Verizon. While opponents to the transaction begin their holiday season on a high note, next year may not be that grand for T-Mobile’s new subscribers.

I expect rates to go up as a result of the Obama Administration’s preference for populism as opposed to good old fashioned
economics. Obviously the Justice Department does not read the U.S. Department of Labor’s jobs report. Some 315,000 people left the labor force in November. Unemployment for Blacks and Hispanics exceed the national average. These are the same consumers that subscribe to T-Mobile’s services. As the economy continues to flat line, more consumers seeking to offset long term unemployment by reducing household bills will gravitate to T-Mobile’s offerings.

The problem is that given T-Mobile’s smaller network, it will have to increase prices or curtail its services in order to meet the increasing demand. Just as prices are going up and quality of services are falling, a credit constrained parent, Duetsche Telekom, may decide to pull out of the U.S. market. Don’t know if the Justice Department knows this, but things aren’t so hot in Europe right now.

Should the Europeans decide to shore up their central banks with more capital, we may see rates climbing in Europe which will make getting financing even tougher for Deutsche Telekom.

For all its talk about global competitiveness, the Obama Admonistration appears to have dropped the ball on understanding
the meaning and impact of a global economy.

The GOP showdown in Ames, Iowa was a missed opportunity for the GOP to show that they are indeed a 21^st century party. Nary a one, including the two former high-powered corporate CEOs, Herman Cain and Willard “Mitt” Romney, spoke about broadband as a driver of economic opportunity.

The candidates could have done with IIA strategic counselor Henry M. Rivera’s insights into broadband. As reported on IIA’s blog, The Podium. Mr. Rivera dropped some knowledge on the attendees of the 2011 Educational Conference of the Labor Council for Latin American Advancement regarding how important broadband is to the economic development of the Latino community. Here is part of Mr. Rivera’s take on why broadband is an economic driver:

“First, broadband promotes economic growth and jobs. High speed connections accelerate business development by providing new opportunities for innovation, expansion and e-commerce. A 2010 Communication Workers of America study shows that every additional $5 billion invested in broadband infrastructure creates 250,000 jobs — 100,000 direct and indirect jobs from telecom and IT equipment spending plus another 150,000 in “network effects” spurring new online applications and services; and, with every percentage point increase in broadband penetration, employment expands by nearly 300,000 jobs. Broadband networks attract investment to areas that would not otherwise attract it, such as rural and inner-city areas, thus promoting the economic development of those areas. This is critical, especially in today’s economy.”

These are solid arguments for economic development and broadband. Too bad the GOP couldn’t make the connection.

A blog post on Media Matters for America’s website spent so much time emphasizing an alleged and tenuous conflict of interest involving Henry Rivera and AT&T that it completely missed the very significant issue of what a failure to approve AT&T’s acquisition of T-Mobile USA would mean to minority access to the Internet.

Pew Research found that while 59% of adult Americans go online via wireless devices, blacks and Latinos are more likely to own a cell phone (87%) versus whites (80%). In addition, 64% of African Americans and 63% of Latinos access the Internet via wireless devices.

This data supports Mr. Rivera’s view that AT&T’s acquisition of T-Mobile should be approved. Since T-Mobile is not in a position to expand its 4G network, blacks and Latinos would not enjoy the benefits of expanded 4g coverage, at least in the short run.