I 

109TH CONGRESS 

1ST SESSION H. R. 1661 

To amend the Small Business Act and the Communications Act of 1934 

to increase participation by small businesses in spectrum auctions conducted by the Federal Communications Commission. 

IN THE HOUSE OF REPRESENTATIVES 

APRIL 14, 2005 

Mr. RUSH introduced the following bill; which was referred to the Committee 

on Small Business, and in addition to the Committee on Energy and 

Commerce, for a period to be subsequently determined by the Speaker, 

in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned 

A BILL 

To amend the Small Business Act and the Communications 

Act of 1934 to increase participation by small businesses 

in spectrum auctions conducted by the Federal Communications Commission. 

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

3 SECTION 1. PURPOSE. 

4 The purpose of this Act is to increase telecommuni5 cations ownership opportunities for small businesses, in6 cluding small businesses owned or controlled by socially 

7 disadvantaged individuals, through Small Business Ad-
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1 ministration participation in a market-oriented restruc2 turing of the credit aspects of Federal Communications 

3 Commission telecommunications spectrum auctions. 

4 SEC. 2. ASSOCIATE ADMINISTRATOR FOR TELECOMMUNI5 CATIONS FINANCE. 

6 (a) IN GENERAL.—Section 4(b)(1) of the Small Busi7 ness Act (15 U.S.C. 633(b)(1)) is amended— 

8 (1) in the fifth sentence, by striking ‘‘five’’ and 

9 inserting ‘‘six’’; and 

10 (2) by adding at the end the following new sen11 tence: ‘‘One of the Associate Administrators shall be 

12 designated at the time of appointment as the Asso13 ciate Administrator for Telecommunications Finance 

14 and shall have the qualifications and responsibilities 

15 specified in subsection (g).’’. 

16 (b) QUALIFICATIONS AND RESPONSIBILITIES.—Sec17 tion 4 of the Small Business Act (15 U.S.C. 633) is 

18 amended by adding at the end the following new sub19 section: 

20 ‘‘(g) ASSOCIATE ADMINISTRATOR FOR TELE21 COMMUNICATIONS FINANCE.— 

22 ‘‘(1) IN GENERAL.—The Associate Adminis23 trator for Telecommunications Finance— 
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1 ‘‘(A) shall be an employee in the competi2 tive service or in the Senior Executive Service 

3 and a career appointee; 

4 ‘‘(B) shall be responsible to the Adminis5 trator for the supervision and management of 

6 financing in the area of telecommunications, in7 cluding the programs and other activities under 

8 section 38 and section 39; 

9 ‘‘(C) shall establish, with respect to tele10 communications concerns, the detailed defini11 tions or standards referred to in section 

12 3(a)(2); 

13 ‘‘(D) shall have authority— 

14 ‘‘(i) to prescribe maximum amounts 

15 for loan guarantees under any program 

16 under section 38 or 39; 

17 ‘‘(ii) to approve all loan guarantees in 

18 telecommunications; and 

19 ‘‘(iii) to approve all direct loans under 

20 section 38(a)(1); and 

21 ‘‘(E) in addition to any other duties under 

22 this Act, shall have authority to approve loan 

23 guarantees under section 7(a) with respect to 

24 Federal Communications Commission spectrum 

25 licenses acquired in the secondary market. 
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1 ‘‘(2) NEUTRALITY IN CHOICE OF PROGRAM BY

2 APPLICANT FOR LOAN OR LOAN GUARANTEE.—In 

3 the administration of the Telecommunications Spec4 trum Installment Loan Program under section 38 

5 and the Telecommunications Accelerated Certified 

6 Lender Program under section 39, the Associate Ad7 ministrator for Telecommunications Finance shall 

8 observe strict neutrality as to the choice that a po9 tential applicant may make as to the appropriate10 ness of a program for the applicant. The choice of 

11 one program over the other shall be solely that of 

12 the applicant and the Associate Administrator shall 

13 neither encourage nor discourage any applicant in 

14 that choice.’’. 

15 SEC. 3. SMALL BUSINESS ADMINISTRATION FINANCING 

16 FOR ENTREPRENEUR PARTICIPATION IN 

17 TELECOMMUNICATIONS SPECTRUM AUC18 TIONS CONDUCTED BY FEDERAL COMMU19 NICATIONS COMMISSION. 

20 The Small Business Act (15 U.S.C. 631 et seq.) is 

21 amended— 

22 (1) by redesignating section 37 as section 40; 

23 and 

24 (2) by inserting after section 36 the following 

25 new sections: 
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1 ‘‘SEC. 37. TELECOMMUNICATIONS FINANCE OFFICE. 

2 ‘‘(a) IN GENERAL.—There is established, within the 

3 Administration, an office to perform functions relating to 

4 the policies and programs of the Administration with re5 spect to financing in the area of telecommunications. The 

6 office— 

7 ‘‘(1) shall be known as the ‘Telecommunications 

8 Finance Office’; 

9 ‘‘(2) shall be headed by the Associate Adminis10 trator for Telecommunications Finance under sec11 tion 4(g); 

12 ‘‘(3) shall be staffed by employees who are from 

13 diverse backgrounds and who are highly skilled in 

14 the areas of telecommunications technology and tele15 communications financing; and 

16 ‘‘(4) shall be the principal entity within the Ad17 ministration for implementation of the programs 

18 under sections 38 and 39. 

19 ‘‘(b) FUNDING.—The expenses of the Telecommuni20 cations Finance Office shall be paid from the Tele21 communications Loan Guarantee Fund, established under 

22 section 715 of the Communications Act of 1934. 
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1 ‘‘SEC. 38. TELECOMMUNICATIONS SPECTRUM INSTALL2 MENT LOAN PROGRAM. 

3 ‘‘(a) IN GENERAL.—There is established a program, 

4 to be known as the ‘Telecommunications Spectrum Install5 ment Loan Program’, under which the Administrator— 

6 ‘‘(1) shall make direct loans to qualified tele7 communications borrowers for acquisition of spec8 trum licenses through Federal Communications 

9 Commission auction; and 

10 ‘‘(2) shall guarantee loans to qualified tele11 communications borrowers for telecommunications 

12 equipment and working capital in connection with 

13 any acquisition referred to in paragraph (1). 

14 ‘‘(b) DIRECT LOAN CONDITIONS.— 

15 ‘‘(1) LIMITATION ON DISBURSEMENT.—The Ad16 ministrator may not disburse any loan amount under 

17 subsection (a)(1) if the cost of the license involved 

18 exceeds the approved loan amount plus, as deter19 mined by the Administrator, cash available to the 

20 applicant for the purpose of paying the difference 

21 between the approved loan amount and the cost of 

22 the license. 

23 ‘‘(2) INTEREST AT MARKET RATE.—The rate of 

24 interest on a loan shall be the prime interest rate or 

25 such other competitive market rate as the Adminis26 trator determines to be appropriate. 
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1 ‘‘(3) INTEREST-ONLY PERIOD.—The Adminis2 trator, in accordance with criteria established by 

3 regulation, may provide, on a case-by-case basis, for 

4 an initial period during which a borrower under sub5 section (a)(1) shall pay interest only. In the case of 

6 such a determination, loan principal shall be amor7 tized over the remainder of the loan term. The max8 imum interest-only period under this paragraph is 6 

9 years. 

10 ‘‘(4) MAXIMUM LOAN TERM.—The term of any 

11 loan under subsection (a)(1) may not exceed the 

12 term of the spectrum license involved. 

13 ‘‘(c) LOAN GUARANTEE CONDITION.—The Adminis14 trator may make loan guarantees under subsection (a)(2) 

15 to a borrower under subsection (a)(1) only for tele16 communications equipment and working capital necessary 

17 to carry out the terms of the license to be financed. 

18 ‘‘(d) SECURITY INTEREST AND FORCED SALE CON19 DITIONS FOR DIRECT LOANS AND LOAN GUARANTEES.— 

20 The Administrator shall require, as a condition of any di21 rect loan under subsection (a)(1) and any loan guarantee 

22 under subsection (a)(2), that— 

23 ‘‘(1) any disbursement of a loan amount be 

24 fully protected by a secured interest in the proceeds 
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1 of a sale or other assignment of the license involved; 

2 and 

3 ‘‘(2) the loan agreement contain specific meas4 ures by which, in the case of a default by the bor5 rower, the lender may require the borrower to sell or 

6 otherwise assign the license. 

7 ‘‘(e) GENERAL APPLICABILITY; WAIVER EXCEP8 TION.—Loans and loan guarantees under this section shall 

9 be subject to all otherwise applicable provisions of this Act, 

10 except that the Administrator may waive any limitation 

11 on the amount of an individual loan or loan guarantee or 

12 on the total amount of loans or loan guarantees to a single 

13 borrower. 

14 ‘‘(f) TREASURY ACCOUNT.—The Administrator shall 

15 notify the Secretary of the Treasury of each loan trans16 action entered into under subsection (a)(1). Upon receipt 

17 of notice under the preceding sentence, the Secretary shall 

18 establish an account in the Treasury for the loan. 

19 ‘‘(g) DEFINITIONS.—As used in this section— 

20 ‘‘(1) the term ‘qualified telecommunications 

21 borrower’ means a small business concern that, as 

22 determined by the Administrator, has, in addition to 

23 the other requirements of this Act, a level of special24 ized telecommunications expertise (including tech25 nical knowledge, business skill, and management ex-
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1 perience) that is appropriate for the purpose for 

2 which the loan or guarantee involved is made; and 

3 ‘‘(2) the term ‘Administrator’ means the Ad4 ministrator, acting through the Associate Adminis5 trator for Telecommunications Finance. 

6 ‘‘(h) COLLECTION OF DATA.—The Administrator 

7 shall collect data with respect to the operation of the pro8 gram under this section. The data so collected— 

9 ‘‘(1) shall be accumulated on a calendar year 

10 basis; 

11 ‘‘(2) shall be maintained in an electronic data12 base; 

13 ‘‘(3) shall include information on the ethnicity, 

14 race, and sex of all applicants, whether the applica15 tions involved are approved, denied, withdrawn, or 

16 otherwise disposed of; and 

17 ‘‘(4) shall include other information that, as de18 termined by the Administrator, is relevant to the 

19 disposition of applications. 

20 ‘‘(i) REPORT.—Not later than December 31 of each 

21 year, the Administrator shall submit to the Congress a re22 port, with respect to the preceding calendar year, of the 

23 status of the program under this section. The report shall 

24 include— 
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1 ‘‘(1) a statistical analysis (without personal 

2 identifying information) of the diversity characteris3 tics of applicants and borrowers under the program; 

4 and 

5 ‘‘(2) a probability analysis with respect to the 

6 diversity of applicants who receive loans under the 

7 program. 

8 ‘‘SEC. 39. TELECOMMUNICATIONS ACCELERATED CER9 TIFIED LENDER PROGRAM. 

10 ‘‘(a) IN GENERAL.—There is established a program, 

11 to be known as the ‘Telecommunications Accelerated Cer12 tified Lender Program’, under which the Administrator— 

13 ‘‘(1) shall guarantee loans made to qualified 

14 telecommunications borrowers— 

15 ‘‘(A) for acquisition of spectrum licenses 

16 through Federal Communications Commission 

17 auction; and 

18 ‘‘(B) for acquisition of spectrum licenses in 

19 the secondary market for licenses originally ac20 quired through Federal Communications Com21 mission auction; and 

22 ‘‘(2) shall guarantee loans made to qualified 

23 telecommunications borrowers for telecommuni24 cations equipment and working capital in connection 

25 with any acquisition referred to in paragraph (1). 
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1 ‘‘(b) FUNDING.—The expenses of loan guarantees 

2 under subsection (a) shall be paid from the Telecommuni3 cations Loan Guarantee Fund, established under section 

4 715 of the Communications Act of 1934. 

5 ‘‘(c) APPROVED LENDERS.—Loans guaranteed under 

6 this section shall be made by lenders that are insured de7 positary institutions and are approved by the Adminis8 trator. In evaluating an institution for approval, the Ad9 ministrator shall take into consideration the financial sta10 bility of the institution, the experience and expertise of 

11 the institution in lending to telecommunications bor12 rowers, and the need for diversity in the management and 

13 ownership of approved institutions. 

14 ‘‘(d) LOAN GUARANTEE CONDITIONS.— 

15 ‘‘(1) LIMITATION ON DISBURSEMENT.—The Ad16 ministrator shall require, as a condition of any loan 

17 guarantee under subsection (a)(1), that the lender 

18 may not disburse any loan amount if the cost of the 

19 license involved exceeds the approved loan amount 

20 plus, as determined by the Administrator, cash avail21 able to the applicant for the purpose of paying the 

22 difference between the approved loan amount and 

23 the cost of the license. 

24 ‘‘(2) SECURITY INTEREST AND FORCED SALE

25 REQUIREMENTS.—The Administrator shall require, 
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1 as a condition of any loan guarantee under sub2 section (a), that— 

3 ‘‘(A) any disbursement of a loan amount 

4 be fully protected by a secured interest in the 

5 proceeds of a sale or other assignment of the li6 cense involved; and 

7 ‘‘(B) the loan agreement contain specific 

8 measures by which, in the case of a default by 

9 the borrower, the lender may require the bor10 rower to sell or otherwise assign the license. 

11 ‘‘(e) GENERAL APPLICABILITY; WAIVER EXCEP12 TION.—Loan guarantees under this section shall be sub13 ject to all otherwise applicable provisions of this Act, ex14 cept that the Administrator may waive any limitation on 

15 the amount of an individual loan guarantee or on the total 

16 amount of loan guarantees to a single borrower. 

17 ‘‘(f) DEFINITIONS.—As used in this section— 

18 ‘‘(1) the term ‘qualified telecommunications 

19 borrower’ means a small business concern that, as 

20 determined by the Administrator, has, in addition to 

21 the other requirements of this Act, a level of special22 ized telecommunications expertise (including tech23 nical knowledge, business skill, and management ex24 perience) that is appropriate for the purpose for 

25 which the loan or guarantee involved is made; and 
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1 ‘‘(2) the term ‘Administrator’ means the Ad2 ministrator, acting through the Associate Adminis3 trator for Telecommunications Finance. 

4 ‘‘(g) COLLECTION OF DATA.—The Administrator 

5 shall collect data with respect to the operation of the pro6 gram under this section. The data so collected— 

7 ‘‘(1) shall be accumulated on a calendar year 

8 basis; 

9 ‘‘(2) shall be maintained in an electronic data10 base; 

11 ‘‘(3) shall include information on the ethnicity, 

12 race, and sex of all applicants, whether the applica13 tions involved are approved, denied, withdrawn, or 

14 otherwise disposed of; and 

15 ‘‘(4) shall include other information that, as de16 termined by the Administrator, is relevant to the 

17 disposition of applications. 

18 ‘‘(h) REPORT.—Not later than December 31 of each 

19 year, the Administrator shall submit to the Congress a re20 port, with respect to the preceding calendar year, of the 

21 status of the program under this section. The report shall 

22 include— 

23 ‘‘(1) a statistical analysis (without personal 

24 identifying information) of the diversity characteris-
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1 tics of applicants and borrowers under the program; 

2 and 

3 ‘‘(2) a probability analysis with respect to the 

4 diversity of applicants who receive loans under the 

5 program.’’. 

6 SEC. 4. TELECOMMUNICATIONS LOAN GUARANTEE FUND. 

7 (a) IN GENERAL.—Title VII of the Communications 

8 Act of 1934 is amended by inserting after section 714 (42 

9 U.S.C. 614) the following new section: 

10 ‘‘SEC. 715. TELECOMMUNICATIONS LOAN GUARANTEE 

11 FUND. 

12 ‘‘(a) ESTABLISHMENT.— 

13 ‘‘(1) IN GENERAL.—There is hereby established 

14 the Telecommunications Loan Guarantee Fund 

15 (hereafter in this section referred to as the ‘Fund’) 

16 in the Department of the Treasury under the control 

17 of the Secretary of the Treasury (hereafter in this 

18 section referred to as the ‘Secretary’). 

19 ‘‘(2) INITIAL CAPITALIZATION OF FUND.—The 

20 first $10,000,000,000 of proceeds received from the 

21 auction of spectrum licenses by the Federal Commu22 nications Commission after the date of the enact23 ment of this section shall be deposited in the Fund 

24 and shall constitute the capitalization of the Fund. 

25 ‘‘(b) MAINTENANCE OF FUND.— 
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1 ‘‘(1) IN GENERAL.—Amounts in the Fund shall 

2 be deposited by the Secretary in depositaries des3 ignated by the Secretary which have also been des4 ignated by the Telecommunications Finance Office 

5 of the Small Business Administration as certified 

6 telecommunications lenders. 

7 ‘‘(2) INTEREST.—Interest paid by depositaries 

8 on amounts deposited in accordance with paragraph 

9 (1) shall be deposited in the Fund and be available 

10 for the purposes of the Fund. 

11 ‘‘(c) PURPOSE OF FUND.—Amounts in the Fund 

12 shall be available to meet any obligation of the Small Busi13 ness Administration arising under a loan guarantee issued 

14 by the Telecommunications Finance Office of the Small 

15 Business Administration in connection with a loan under 

16 section 38(a)(2) or section 39(a) of the Small Business 

17 Act.’’. 

18 SEC. 5. PARTICIPATION IN SPECTRUM AUCTIONS. 

19 Section 309(j)(5) of the Communications Act of 1934 

20 (47 U.S.C. 309(j)(5)) is amended— 

21 (1) by striking ‘‘No person’’ and inserting the 

22 following: 

23 ‘‘(A) IN GENERAL.—No person’’; and 

24 (2) by adding at the end the following: 
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1 ‘‘(B) QUALIFIED TELECOMMUNICATIONS

2 BORROWERS.—With respect to any person that 

3 meets the qualification requirements of this 

4 paragraph and that is a qualified telecommuni5 cations borrower under section 38 or 39 of the 

6 Small Business Act, the Commission shall ac7 cept, in lieu of any upfront payment or earnest 

8 money deposit required by Commission regula9 tion, a letter of credit provided to such bor10 rower under such section that equals or exceeds 

11 the amount of such required payment or de12 posit. In any competitive bidding conducted 

13 under this subsection in which the Commission 

14 identifies any such qualified telecommunications 

15 borrower as the high bidder at the time of de16 claring that the bidding has closed, the Com17 mission shall notify the Administrator of the 

18 Small Business Administration of the identity 

19 of such bidder, the amount of the high bid, and 

20 the total amount required to be deposited with 

21 the Commission to qualify for the award of the 

22 license under Commission regulations. In the 

23 case of a qualified telecommunications borrower 

24 under section 38, the amount of such deposit 
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1 may be satisfied by debiting the loan account of 

2 the borrower at the Treasury.’’. 

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