Measure would reward telcos

Oct 21, 2002  •  Post A Comment

Sen. John McCain, R-Ariz., introduced legislation last week that would give major tax breaks to broadcasters and other owners of telecommunications facilities who sell their properties to women, minorities and other small business entrepreneurs.
Under the measure, the Telecommunications Ownership Diversification Act of 2002, broadcasters who sell to small operators would be able to duck capital gains taxes, giving them incentive to deal.
“It is critically important that new entrants and small businesses have a chance to participate across the broad spectrum of areas that make up the telecommunications industry,” Sen. McCain said.
Sen. McCain introduced similar measures previously on two occasions. But those bills stalled, under a hail of criticism that they ran afoul of Supreme Court precedent by explicitly favoring women and minorities.
To get around the court’s anticipated objections, the new bill avoids specifically limiting the benefits to women and minorities. Instead, it cites “socially disadvantaged individuals, including, but not limited to, members of minority groups and women.”
“Increased participation by socially and economically disadvantaged businesses in the ownership of telecommunications facilities will enhance competition in the telecommunications industry,” the legislation says.
Similar mechanisms have been abused in the past, with deep-pocketed white businessmen setting up minority front groups to take advantage of the benefits.
So Sen. McCain said he’s including a provision that would require a new buyer benefiting from a transaction under the bill to hold the property for at least three years or to sell it only to another buyer that qualifies for the benefit during that period.
In addition, the bill would require Congress’s watchdog, the General Accounting Office, to monitor the legislation’s impact.
David Honig, executive director of the Minority Media and Telecommunications Council, said the introduction of the bill is a “landmark step in calling attention to the difficulties faced by small and especially minority businesses in entering the media and telecommunications industries.”
Federal Communications Commission Chairman Michael Powell said he supports the effort.