The bill, introduced by Sen. Ernest Hollings, D-S.C., would also require the Federal Communications Commission to loosen local and national ownership rules as long as the "goal of media diversity is achieved," and to consider extending network non-duplication and syndicated exclusivity rules so they apply to phone companies as well as cable.
While broadcasters want to be allowed to use their spectrum for a wide array of digital services such as paging and data transmission, the bill would require the services to be broadcast-related.
"The service must have some nexus with broadcasting for which their license was originally granted," said a spokesman for the Senate Commerce Committee.
The bill, which would require broadcasters to pay fees to the government in ex- change for broader spectrum use, will not allow broadcasters to provide telephony and paging services, he said.
The Senate bill is an extensive overhaul of the 1934 Communications Act and opens up most communications markets to competition.
The bill would allow telephone companies, under separate subsidiaries, to offer cable programming within their service areas.
It would allow local phone companies to manufacture telecommunications equipment, provide electronic publishing and burglar alarm services and offer long-distance service under certain restrictions and FCC tests.
Cable companies would be permitted to offer phone service, and all providers of phone service will be regulated as common carriers.
The full Senate Commerce Committee will consider Sen. Hollings' proposed bill later this month.
As the bill is worded, said National Association of Broadcasters President-CEO Eddie Fritts, "It does not give us the type of flexibility we anticipate is needed to be competitive.
"The bill came together rather quickly. In my estimation there are other views that will come through during the hearing process."
While broadcasters say they are thrilled that the Senate bill will allow them to use their TV channels for nonprogramming purposes, other groups are vying to get their hands on that spectrum.
"It's the first time they ever admitted they had excess spectrum," said John Lane, a Washington lawyer representing local governments in an attempt to get additional spectrum for police and fire departments.
Last month the NAB board endorsed a lobbying plan that called on Congress to allow a single company to own two TV stations in each market, to allow broadcasters to use TV channels to offer whatever services customers might demand, and to ensure that broadcasters get preferred positions on channel lineups of companies building new broadband highways.
The Senate bill addresses most of those demands.