Conference Remarks by U. S. Rep. Bobby L. Rush
at the
Minority Media & Telecom Council's
8th Annual Access to Capital and Telecommunications Policy Conference

WASHINGTON - "First, let me begin by thanking all of you for welcoming me here to share a few remarks with you this morning. I commend the organizers of this event-including Joseph Miller and the IT entrepreneur, Kristal High, one of the dynamic women behind "Politics 365," as well as other event organizers for inviting me to join you this morning.

"I'm particularly pleased to be able to weigh in on a conference of this caliber whose focus, this year, is "Access to Capital and Telecom Policy."

"As most of you know, for years-from my days as an activist in Chicago through the years I've served my community, state and nation as a leader on Capitol Hill-one of my top priorities has always been to work to make sure that when resources are apportioned that they are done so equitably, fairly and in an open and above board fashion that welcomes the full participation of men and women of color, especially in the African American community.

"As many of you know, access to working capital and term financing for equipment loans by minority-owned startups, and even well established minority firms, has been a chronic problem in the United States for several generations. That was even the case when I first came to Congress, 18 years ago, where I began to serve on what is now referred to as the Subcommittee on Communications, Technology and the Internet.

"Unfortunately, that lack of access to capital is still the case, today!

"The sad fact of the matter is that talented, minority entrepreneurs may be long on ideas but are still short on access to capital in the year 2010.

"One thing that has changed dramatically since I came to Congress is that large, seven figure amounts of capital are not needed as much as before in getting a communications or media business up and going.

"Nowadays, with mastery of the Internet, the presence of more robust and less costly research databases, and increased globalization and outsourcing the sky's the limit for aggressive and innovative entrepreneurs. Why?

"Because it, literally, costs but a fraction of what it once did to conduct market research, design prototypes, or develop sound business ideas that can lead to the launch of media and communications businesses that are capable of generating hundreds of millions and, even, billions of dollars in revenues!

"What this means is that barriers to entry are, now, much lower for new entrants than they were in the past.

"Today, the current climate of reduced levels of capital, along with the continuing convergence of technologies and services, means that you, as entrepreneurs, and the enterprises you form are likely to face more competition in the next decade.

"In today's marketplace, what lower barriers to entry also means is that firms that do not quickly provide competitive and distinctive products and services, or those that are unable to adapt and increase their offerings, will be more short-lived in the marketplace than firms that make these adjustments. And how can they do this? Access to capital certainly plays a role.

"Needless to say ladies and gentlemen, it's always been my observation-both in Chicago's business community and in the national arena-that it's minority-owned firms that, by definition, have to work harder and think smarter just to get ahead.

"In fact, the talent in our community rarely lacks for solid ideas or, even, expertise. What they often lack is a supportive vision by those who can invest in their good ideas and professional track record by taking that leap of faith that's necessary to help their dreams become a reality.

"Hopefully, the effort those of you are making, today, by simply convening this conference will mark a major step forward in helping to open those doors of access to capital to those who are ready, willing and able to put it to good use.

"I am sure that many of you have heard lots of stories along these lines in the various presentations you've heard and participated in during this conference, especially as it relates to issues of cash flow. Cash flow is important to investors and lenders for many reasons, including its use as a key indicator of a business's health and the quality of its profits but, also, as an indicator of a firm's liquidity.

"Likewise, liquidity is also of paramount importance to investors – especially to early stage investors – who are continually on the lookout for the right time to liquidate their equity positions so they can reallocate, or reinvest, those profits in other businesses or, simply, book those profits for the benefit of their shareholders.

"But even considering circumstances like those I've just described, it will always be critically important to be able to show that your business can generate a healthy cash flow because that cash flow is likely to make financial institutions, including banks, venture capital, private equity firms, and even the government, to be much more likely to take a stake in, and make loans to your business.

"In the time I have left, I'm sure most of you could benefit from a few of my thoughts on some of the recent congressional, White House, and FCC initiatives which have been in the news lately. Especially those activities that help promote minority ownership of communications, media, technology businesses, related assets and FCC licenses.

"One promising move that was highlighted in a recent speech by one of the President's chief economic policy advisors, Lawrence Summers, was the fact that the Recovery Act included more than $100 billion in innovative investments to help, in part, spur growth in health information technology to create jobs while transforming our nation's health system.

"That's $100 billion dollars that the federal government has committed to spend over the next several years that is designed, in part, to serve as a catalyst to spur additional spending in the private sector. While we're doing our part, despite considerable opposition from the other party on Capitol Hill, as I alluded to earlier, a number of key media and communications businesses are constantly adapting their business models to respond to converging technologies or, as some call it, a "collision" of trends.

"These trends, which are elevating social networking, mobile, and cloud-based services and applications, above and beyond more traditional analog-based and mass media services and applications, have complicated our customary approaches to the classification and regulation of these services under the common carrier, radio, broadcast, cable, and private carrier titles and regulations of the Communications Act.

"In response to these trends, this past May, Senators Rockefeller and Kerry, and Representatives Waxman and Boucher, who are the respective chairs of the committees of jurisdiction over communications matters in the Senate and the House of Representatives, indicated that they would commence a stakeholder, bi-partisan, bicameral process to develop proposals updating the Communications Act.

"What this updating can lead to is more certainty about which business, marketing, technical, and operating decisions will be permissible and which will not. Having this certainty, especially as it relates to how consumers would like to use broadband technologies and how companies can provide communications, media, and technology products and services as efficiently as possible will bring more investment to minority enterprises.

"We have come to a point where the dominant technologies that power communications and the creation and delivery of media content have outgrown much of our obsolete regulatory regime and many of those deadlocked approaches.

"As I've already said, early stage investors love nothing more about an investment than seeing consistent revenue growth and knowing when an opportune time emerges to cash out of that investment. Such consistent performance in financial results and reporting is fostered, not hindered, by regulatory certainty.

"Without seeing that consistency, investors will invariably be more reluctant to take risks by investing in firms that do not have steady ‘rules of the road' to guide them. Without steady rules, those firms will have more trouble finding new ‘onramps' to competition, knowing where the speed bumps are, and where the speed limits allow them to step on the accelerator. Investors already have enough excuses, excuse me, I meant reasons, for not investing in some of your deals. Let's do what we can to take some of those reasons off of your bargaining tables.

"Let me say again, thank you so much for inviting me to spend some time with you this morning to share some of my thoughts, insights, and perspectives on these critical topics. It's going to take all of us to think creatively, and in new ways, in order to reverse the significant losses in minority ownership we have sustained in just the last decade.

"And, so, I urge you to come and see me if you have an idea as to how government can distribute licenses and facilitate the creation of business opportunities and arrangements in which minorities can share equitably in the next decade of the digital revolution.
"I'm happy to hear any questions that you may have at this time."

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