I

103D CONGRESS

2D SESSION H. R. 4682

To guarantee the participation of small businesses, rural telephone companies,

and businesses owned by members of minority groups and women in

spectrum auctions.

IN THE HOUSE OF REPRESENTATIVES

JUNE 29, 1994

Mr. RICHARDSON (for himself, Mrs. COLLINS of Illinois, and Mrs. SCHROEDER) introduced the following bill; which was referred to the Committee

on Energy and Commerce

A BILL

To guarantee the participation of small businesses, rural

telephone companies, and businesses owned by members

of minority groups and women in spectrum auctions.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘Communications Op5 portunity Act of 1994’’.

6 SEC. 2. FINDINGS.

7 The Congress finds the following:

8 (1) Section 309(j)(3) of the Communications

9 Act of 1934 requires the Federal Communications
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1 Commission to disseminate licenses among a wide

2 variety of applicants, including small businesses,

3 rural telephone companies, and businesses owned by

4 members of minority groups and women (hereinafter

5 in this Act referred to as ‘‘designated entities’’).

6 (2) Section 309(j)(4) of such Act requires the

7 Commission to ensure that small businesses, rural

8 telephone companies, and businesses owned by mi9 nority groups and women are given the opportunity

10 to participate in the provision of spectrum-based

11 services, and, for such purposes, requires the Com12 mission to consider the use of tax certificates, bid13 ding preferences, and other procedures.

14 (3) License set-asides and installment payments

15 are additional policy tools available to the Commis16 sion for ensuring that licenses are disseminated to

17 designated entities.

18 (4) Designated entities are greatly

19 underrepresented in all of the telecommunications

20 industries. In particular, businesses owned by mem21 bers of minority groups and women suffer numerous

22 barriers to participating in the provision of tele23 communications services. Market entry is greatly

24 complicated by historically low participation and by
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1 a lack of access to capital markets for businesses

2 owned by members of minority groups and women.

3 (5) Because the electromagnetic spectrum is a

4 public resource and because minorities and women

5 face discrimination and other barriers to entering

6 the telecommunication market, there is a compelling

7 public interest to promote diversity in the participa8 tion in the telecommunications industries in order to

9 promote the goals of competitive prices for services,

10 service innovation, full employment, and diversity of

11 opinions and viewpoints in public discourse.

12 (6) Because of the extremely capital intensive

13 nature of developing and deploying systems in new

14 telecommunications industries, and the ability of

15 large corporations to amass financial resources

16 swiftly and efficiently, allocation of the electro17 magnetic spectrum under a purely competitive ap18 proach will greatly hinder access to licenses by des19 ignated entities, especially business owned by mem20 bers of minority groups and women, wanting to pro21 vide telecommunications services. Without the use of

22 certain bidding preferences, in particular set-asides,

23 business owned by members of minority groups and

24 women will not make significant progress in partici25 pating in the telecommunications industries.
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1 SEC. 3. PARTICIPATION BY DESIGNATED ENTITIES.

2 (a) GENERAL REQUIREMENT.—The Commission

3 shall ensure the participation of small businesses, rural

4 telephone companies, and businesses owned by members

5 of minority groups and women in the provision of spec6 trum-based services, particularly through licenses con7 trolled by them.

8 (b) LICENSING PLAN.—

9 (1) REQUIREMENTS APPLICABLE TO COMPETI10 TIVE BIDDING.—If the Commission decides to use

11 competitive bidding to grant 3 or more licenses

12 which serve a market, the Commission shall reserve

13 at least one license, of up to 30 megahertz, for bid14 ding by designated entities only. If more than 6 li15 censes serving a market are to be conferred through

16 competitive bidding, the Commission shall reserve at

17 least 2 licenses, one of which is at least 30 mega18 hertz, for bidding by designated entities only. In ad19 dition, the Commission shall provide bidding pref20 erences to designated entities which choose to bid on

21 other licenses, but may not substitute such pref22 erences for the license reservation required in this

23 paragraph, or provide such reservations to entities

24 which are not designated entities.

25 (2) ADDITIONAL REQUIREMENTS.—To the max26 imum extent feasible, the Commission shall equalize
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1 licenses to be bid on initially by size and area, and

2 shall not discriminate between designated entity li3 censes and other licenses.

4 (3) ACCESS TO CAPITAL.—In developing rules

5 regarding other licenses and licensees for the same

6 service, the Commission shall take into account the

7 impact of those rules on the competitiveness and ac8 cess to financing of designated entities. To the ex9 tent possible the Commission should provide incen10 tives for nondesignated entities to invest as minority

11 equity holders in designated entity concerns. To the

12 extent possible, the Commission shall ensure that its

13 preferences are not abused.

14 (4) SIMPLE PROCEDURES REQUIRED.—Particu15 larly for rural areas, the Commission shall provide

16 a simple regulatory approval process to allow and

17 encourage voluntary partitioning of licenses between

18 overall license holders and rural telephone companies

19 and others which wish to serve smaller portions of

20 the license area.

21 (c) COMPETITIVE BIDDING AND BID FINANCING.—

22 (1) CONSIDERATIONS REQUIRED.—The Com23 mission shall carefully consider the practical effect of

24 its auction and related requirements on designated

25 entities, and shall seek wherever possible to remove
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1 or lessen regulatory and business barriers to success2 ful participation by designated entities, and to pro3 vide flexibility to designated entities. This consider4 ation shall include—

5 (A) lower application fees;

6 (B) the initial payment or downpayment

7 shall be no more than 10 percent of a winning

8 bid for successful designated entity bidders; and

9 (C) installment payments of the balance

10 due over the term of the license.

11 (2) FLEXIBILITY.—The Commission shall ex12 tend similar flexibility to requirements of financial

13 capability for designated entities which have won li14 censes. Good faith efforts to pursue financing and

15 construction shall meet the requirements of title II

16 and regulations enacted pursuant thereto.

17 (3) ADDITIONAL METHODS.—The Commission

18 shall consider additional methods to maximize effec19 tive participation of designated entities in auctions

20 and the resulting marketplace. These methods may

21 include devices such as tax certificates.

22 (d) RULES APPLYING TO DESIGNATED ENTITIES

23 WITH LICENSES.—

24 (1) WAIVERS.—In general, designated entities

25 should be subject to the same rules as all other par-
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1 ties. The Commission shall institute a waiver process

2 whereby a designated entity licensee can dem3 onstrate why the public interest will be served by

4 granting flexibility to such an entity.

5 (2) TRANSFERS.—Designated entity licensees

6 may freely transfer a license to a third party, which

7 qualifies as a designated entity, without additional

8 financial penalties or obligations. A designated entity

9 may transfer its license to a nondesignated entity if

10 the parties comply with the requirements of para11 graph (3).

12 (3) PAYMENTS BY TRANSFEREES.—Any party

13 which is not a designated entity but which buys a

14 controlling interest in a license from a designated

15 entity must pay the government the balance due of

16 the spectrum bid immediately. Until 3 years after

17 award, a nondesignated entity must pay, in addition,

18 the difference, if any, between the amount initially

19 bid by the designated entity and the market price

20 for such licenses, based on the average of

21 nondesignated entity bids for similar licenses in that

22 market. The Commission shall establish a formula

23 for calculating this difference taking into consider24 ation any bidding credits.

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