Telecom Playing Field Tilts Against Small Business, MMTC Panelists Say

"I don’t agree you should let the players play,” said lawyer Jenell Trigg of Lerman Senter. The situation allows minorities and women to be “pushed to the sidelines,” she said. Trigg broke down the 2008 $19-billion spectrum Auction 73, in which 84 percent of licenses went to AT&T and Verizon Wireless and 2.6 percent went to minority- and women-owned businesses. Those results lack the “robust opportunity” such auctions need, she said. The implications give a new meaning to “white spaces in the spectrum,” Trigg said. New market entrants need better incentives and the FCC, which has “not recognized the need or importance” of women- and minority-owned businesses, has not done enough, Trigg said. “We are not owners in this space.” The agency has adjusted auction rules on too short a notice in the past and “the reality is we need time,” she said.

Scale and scope matter, replied Verizon’s Jesse Crawford, a manager of supplier diversity. “We have to have players who can compete,” he said, despite saying he agreed “wholeheartedly” with Trigg’s message. Smaller businesses can’t compete “longevity-wise,” he said. Crawford offered an extended comparison about baseball and the inability of a Little League youth to ascend to Major League Baseball where “unbridled enthusiasm” doesn’t guarantee salvation. “I would submit that baseball is not spectrum,” Trigg replied. The nature and influence of size -- and what it can do, for better and for worse -- became a touchstone of the MMTC discussion. “The reality is these industries are so consolidated,” said Trigg, “that women- and minority-owned businesses are far and few between.” Ronald Johnson, MMTC treasurer, said the council has “historically addressed precisely these issues” and earlier that afternoon had defended the FCC’s commitment to diversity (CD July 19 p9). The commission held a workshop on supplier diversity for small businesses owned by minorities and women last week (CD June 14 p9).

The underlying concern turned to partnerships and the nature of them between telcos like Verizon, AT&T and Sprint Nextel and smaller suppliers and contractors. Verizon wants a “collaborative effort,” Crawford said. “We don’t write a check and step away.” Verizon features a Premier Supplier Academy, started in 2011, that offers these mentorship and education components, Crawford explained. “The key term for most suppliers to keep in mind is mutually beneficial relationships.” Verizon first established a supplier diversity program in 1984 and said it bought $4 billion from diverse suppliers in 2011 (http://xrl.us/bnhgap). Verizon’s top Washington executive noted in an earlier MMTC panel that the company’s commitment to diversity makes financial sense (CD July 19 p9). Partnerships have to develop where “small business can be owners in spectrum division,” Trigg said.

Certification is often helpful to forming these partnerships, panelists said. They mentioned the U.S. Small Business Administration’s 8(a) certification (http://xrl.us/bnhgff) for small businesses owned and controlled at least 51 percent by socially and economically disadvantaged individuals. “Certification is something that gets you in the door,” said Joset Wright, president of the National Minority Supplier Development Council. Wright praised telcos as potential partners: “They all put their money where mouth is and walk the walk.” Suppliers who want to work with Sprint need patience, said Strategic Sourcing Director Marvin Motley. “Narrow your focus,” he advised those who want to work with the carrier. Certification provides “definitely an advantage” in working with Sprint and means it doesn’t need to “worry about financial solvency” as much, Motley said, who added his company likes suppliers who are “ready to move with us.” Verizon sees certification as “definitely an advantage” and a force that adds “validity” and eases the telco’s reporting and tracking requirements, said Crawford.

Measurement is also key to including minorities and women in the supply chain, some panelists said. “That which gets measured gets done,” said Wright, who encouraged goals, plans and processes as part of a broader mission of “intentional inclusion” that reflects the demographics of a given community. One concern is not enforcing rules, said Wright, who said there’s “more enforcement on the private side than the public sector side” and suggested “punishment for those that do not comply” with regulations. Trigg countered that she prefers incentives and the carrot over the stick, partly because there are fewer constitutional issues potentially at play. The FCC “needs to step up,” Trigg said. She spoke of the FCC’s required submission of triennial reports, outlined in Section 257 of the Communications Act (http://xrl.us/bnhf5w). These reports have been “woefully late and woefully inadequate in some ways,” Trigg said. “There should be more vigorous reports.”