FCC Reports to Congress on Eliminating Market Entry Barriers For Entrepreneurs and Other Small Businesses

Section 257 of the Communications Act of 1934 mandates that, every three years, the Federal Communications Commission review and report to Congress on (1) efforts to identify and eliminate regulatory barriers to market entry in the provision and ownership of telecommunications services and information services, or in the provision of parts or services to providers of telecommunications services and information services by entrepreneurs and other small businesses and (2) proposals to eliminate statutory barriers to market entry by those entities, consistent with the public interest, convenience, and necessity.

The purpose underlying the requirements contained in Section 257 are: To promote the policies and purposes of this [Communications] Act favoring a diversity of media voices, vigorous economic competition, technological advancement, and promotion of the public interest, convenience, and necessity. In this 2009 Section 257 Report to Congress (2009 Report), the FCC examines regulatory actions taken to reduce market entry barriers by each rulewriting Bureau and Office within the FCC since the last triennial report. The FCC also makes recommendations for legislative action to reduce statutory barriers to market entry.

The FCC proposes that Congress adopt a new tax incentive program that would authorize the provision of tax advantages to eligible companies involved in the sale of communications businesses to small firms, including those owned by women and minorities. The proposed program could permit deferral of the taxes on any capital gain involved in such a transaction, as long as that gain is reinvested in one or more qualifying communications businesses. The proposed program could also permit tax credits for sellers of communications properties who offer financing to small firms. Additional conditions might include restrictions on the size of the eligible purchasing firm, a minimum holding period for the purchased firm, and a cap on the total value of eligible transactions. The provision of tax advantages has proven to encourage the diversification of ownership and to provide opportunities for entry into the communications industry for small businesses, including disadvantaged businesses and businesses owned by minorities and women.