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. SCHROE-
DER) 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.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Communications Op-
portunity 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 mi-
nority groups and women are given the opportunity
to participate in the provision of spectrum-based
services, and, for such purposes, requires the Com-
mission to consider the use of tax certificates, bid-
ding preferences, and other procedures.
(3) License set-asides and installment payments
are additional policy tools available to the Commis-
sion 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 mem-
bers of minority groups and women suffer numerous
barriers to participating in the provision of tele-
communications 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 participa-
tion 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 electro-
magnetic spectrum under a purely competitive ap-
proach will greatly hinder access to licenses by des-
ignated entities, especially business owned by mem-
bers of minority groups and women, wanting to pro-
vide 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 partici-
pating in the telecommunications industries.
licenses to be bid on initially by size and area, and
shall not discriminate between designated entity li-
censes 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 ac-
cess to financing of designated entities. To the ex-
tent possible the Commission should provide incen-
tives 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.—Particu-
larly 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 Com-
mission 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 success-
ful participation by designated entities, and to pro-
vide flexibility to designated entities. This consider-
ation 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 ex-
tend similar flexibility to requirements of financial
capability for designated entities which have won li-
censes. 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 effec-
tive 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 par-
ties. The Commission shall institute a waiver process
whereby a designated entity licensee can dem-
onstrate 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 para-
graph (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 consider-
ation any bidding credits.
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