Communications Opportunity Act of 1994

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Communications Opportunity Act of 
1994''.

SEC. 2. FINDINGS.

    The Congress finds the following:
            (1) Section 309(j)(3) of the Communications Act of 1934 
        requires the Federal Communications Commission to disseminate 
        licenses among a wide variety of applicants, including small 
        businesses, rural telephone companies, and businesses owned by 
        members of minority groups and women (hereinafter in this Act 
        referred to as ``designated entities'').
            (2) Section 309(j)(4) of such Act requires the Commission 
        to ensure that small businesses, rural telephone companies, and 
        businesses owned by minority groups and women are given the 
        opportunity to participate in the provision of spectrum-based 
        services, and, for such purposes, requires the Commission to 
        consider the use of tax certificates, bidding preferences, and 
        other procedures.
            (3) License set-asides and installment payments are 
        additional policy tools available to the Commission for 
        ensuring that licenses are disseminated to designated entities.
            (4) Designated entities are greatly underrepresented in all 
        of the telecommunications industries. In particular, businesses 
        owned by members of minority groups and women suffer numerous 
        barriers to participating in the provision of 
        telecommunications services. Market entry is greatly 
        complicated by historically low participation and by a lack of 
        access to capital markets for businesses owned by members of 
        minority groups and women.
            (5) Because the electromagnetic spectrum is a public 
        resource and because minorities and women face discrimination 
        and other barriers to entering the telecommunication market, 
        there is a compelling public interest to promote diversity in 
        the participation in the telecommunications industries in order 
        to promote the goals of competitive prices for services, 
        service innovation, full employment, and diversity of opinions 
        and viewpoints in public discourse.
            (6) Because of the extremely capital intensive nature of 
        developing and deploying systems in new telecommunications 
        industries, and the ability of large corporations to amass 
        financial resources swiftly and efficiently, allocation of the 
        electromagnetic spectrum under a purely competitive approach 
        will greatly hinder access to licenses by designated entities, 
        especially business owned by members of minority groups and 
        women, wanting to provide telecommunications services. Without 
        the use of certain bidding preferences, in particular set-
        asides, business owned by members of minority groups and women 
        will not make significant progress in participating in the 
        telecommunications industries.

SEC. 3. PARTICIPATION BY DESIGNATED ENTITIES.

    (a) General Requirement.--The Commission shall ensure the 
participation of small businesses, rural telephone companies, and 
businesses owned by members of minority groups and women in the 
provision of spectrum-based services, particularly through licenses 
controlled by them.
    (b) Licensing Plan.--
            (1) Requirements applicable to competitive bidding.--If the 
        Commission decides to use competitive bidding to grant 3 or 
        more licenses which serve a market, the Commission shall 
        reserve at least one license, of up to 30 megahertz, for 
        bidding by designated entities only. If more than 6 licenses 
        serving a market are to be conferred through competitive 
        bidding, the Commission shall reserve at least 2 licenses, one 
        of which is at least 30 megahertz, for bidding by designated 
        entities only. In addition, the Commission shall provide 
        bidding preferences to designated entities which choose to bid 
        on other licenses, but may not substitute such preferences for 
        the license reservation required in this paragraph, or provide 
        such reservations to entities which are not designated 
        entities.
            (2) Additional requirements.--To the maximum extent 
        feasible, the Commission shall equalize licenses to be bid on 
        initially by size and area, and shall not discriminate between 
        designated entity licenses and other licenses.
            (3) Access to capital.--In developing rules regarding other 
        licenses and licensees for the same service, the Commission 
        shall take into account the impact of those rules on the 
        competitiveness and access to financing of designated entities. 
        To the extent possible the Commission should provide incentives 
        for nondesignated entities to invest as minority equity holders 
        in designated entity concerns. To the extent possible, the 
        Commission shall ensure that its preferences are not abused.
            (4) Simple procedures required.--Particularly for rural 
        areas, the Commission shall provide a simple regulatory 
        approval process to allow and encourage voluntary partitioning 
        of licenses between overall license holders and rural telephone 
        companies and others which wish to serve smaller portions of 
        the license area.
    (c) Competitive Bidding and Bid Financing.--
            (1) Considerations required.--The Commission shall 
        carefully consider the practical effect of its auction and 
        related requirements on designated entities, and shall seek 
        wherever possible to remove or lessen regulatory and business 
        barriers to successful participation by designated entities, 
        and to provide flexibility to designated entities. This 
        consideration shall include--
                    (A) lower application fees;
                    (B) the initial payment or downpayment shall be no 
                more than 10 percent of a winning bid for successful 
                designated entity bidders; and
                    (C) installment payments of the balance due over 
                the term of the license.
            (2) Flexibility.--The Commission shall extend similar 
        flexibility to requirements of financial capability for 
        designated entities which have won licenses. Good faith efforts 
        to pursue financing and construction shall meet the 
        requirements of title II and regulations enacted pursuant 
        thereto.
            (3) Additional methods.--The Commission shall consider 
        additional methods to maximize effective participation of 
        designated entities in auctions and the resulting marketplace. 
        These methods may include devices such as tax certificates.
    (d) Rules Applying to Designated Entities With Licenses.--
            (1) Waivers.--In general, designated entities should be 
        subject to the same rules as all other parties. The Commission 
        shall institute a waiver process whereby a designated entity 
        licensee can demonstrate why the public interest will be served 
        by granting flexibility to such an entity.
            (2) Transfers.--Designated entity licensees may freely 
        transfer a license to a third party, which qualifies as a 
        designated entity, without additional financial penalties or 
        obligations. A designated entity may transfer its license to a 
        nondesignated entity if the parties comply with the 
        requirements of paragraph (3).
            (3) Payments by transferees.--Any party which is not a 
        designated entity but which buys a controlling interest in a 
        license from a designated entity must pay the government the 
        balance due of the spectrum bid immediately. Until 3 years 
        after award, a nondesignated entity must pay, in addition, the 
        difference, if any, between the amount initially bid by the 
        designated entity and the market price for such licenses, based 
        on the average of nondesignated entity bids for similar 
        licenses in that market. The Commission shall establish a 
        formula for calculating this difference taking into 
        consideration any bidding credits.

Summary: Communications Opportunity Act of 1994 - Requires the Federal Communications Commission (FCC) to ensure the participation of small businesses, rural telephone companies, and businesses owned by minorities and women in the provision of spectrum-based services, particularly through licenses. Directs the FCC, if it uses competitive bidding to grant three or more licenses which serve a market, to reserve at least one license, of up to 30 megahertz, for bidding by designated entities. Reserves at least two licenses for bidding by designated entities, one of which is at least 30 megahertz, if more than six licenses are to be conferred through competitive bidding. Requires the FCC to provide bidding preferences to designated entities which choose to bid on other licenses, but prohibits the FCC from substituting such preferences for the license reservations. Directs the FCC to equalize licenses to be bid on initially by size and area and prohibits discrimination between designated entity licenses and other licenses. Requires the FCC, in developing rules regarding licenses and licensees for the same service, to take into account the impact of those rules on the competitiveness and access to financing of designated entities. Directs the FCC, particularly for rural areas, to provide a simple regulatory process to allow and encourage voluntary partitioning of licenses between overall license holders and rural telephone companies and others which wish to serve smaller portions of the license area. Requires the FCC to seek to remove or lessen regulatory and business barriers to successful participation by designated entities and to provide flexibility to such entities, including flexibility to requirements of financial capability. Authorizes designated entity licensees to freely transfer a license to a third party which qualifies as a designated entity, without additional financial penalties or obligations. Permits the transfer to non-designated entities but requires such parties to pay the balance due of the spectrum bid immediately. Requires such parties to pay the difference, if any, between the amount initially bid by the designated entity and the market price for such licenses, based on the average of non-designated entity bids for similar licenses in that market.