Congress is ready to give companies a huge tax break for deploying super-fast Internet service in rural areas and inner cities. But cable, satellite and phone companies are cautious about the legislation, saying they aren't sure if it will help or hurt them.
Senator John D. "Jay" Rockefeller IV (D-W.Va.) has taken the lead on the bill. Rockefeller's legislation would give a 10% tax credit to companies rolling out broadband services at upload speeds of 1.5 megabits per second and download speeds of .2 megabits per second to underserved areas. Companies that deploy so-called next-generation services, which would upload at 22 mb/s and download at 5 mb/s, would receive a 20% tax credit.
"This bill represents my commitment to making sure that no community is left behind in the technology revolution," Rockefeller said when he reintroduced the bill this January. "High-speed Internet access is critical to our economic future, and this bill will ensure that communities everywhere-whether rural or urban-will have the tools necessary to compete in the global economy."
Principally, Sens. Olympia Snowe (R-Maine) and John Kerry (D-Mass.) join Rockefeller in his efforts. Last year, Rockefeller worked with Sen. Patrick Moynihan (D-N.Y.) to introduce a similar bill, which Snowe and Kerry also backed.
The bill has other powerful supporters: Sen. Max Baucus (D-Mont.) for one, who is a ranking member of the Senate Finance Committee, where the bill initially will be considered. Senate Judiciary Committee Chairman Orrin Hatch (R-Utah) also is a key cosponsor. But one name not on the list of cosponsors is Senate Finance Committee Chairman Charles Grassley (R-Iowa).
One Washington lobbyist said Grassley is likely to support the bill because several farmers groups, a key Grassley constituency, are backing it. Farmers want to have broadband services because they can use them to check on crops and weather reports. The lobbyist also said tractor company John Deere supports the legislation because it wants to add wireless broadband hookups to its farm equipment.
In the House, Reps. Phil English (R-Pa.) and Robert Matsui (D-Calif.) last week introduced legislation that mirrored Rockefeller's.
Although it seems technology companies would jump at the chance to get back 10%-20% of their investment, industry representatives say serving these areas is so expensive that even a big tax break might not bring them there.
David Bolger, spokesman for the United States Telephone Association, said regional phone companies would much prefer to have legislation that would allow them to send high-speed data over state lines, something the 1996 Telecommunications Act forbids until they open their local phone markets to competition. Reps. Billy Tauzin (R-La.) and John Dingell (D-Mich.)-chairman and ranking member of the House Energy and Commerce Committee, respectively-have been pushing such a bill.
"We want to see the removal of regulation first ... then tax incentives," Bolger said.
A staffer said Rockefeller is open to passing a deregulatory bill, but that this one will be easier to get through Congress. "By doing this bill, we're not precluding doing that bill."
The staffer also admits industry isn't as enthusiastic about the bill as other constituents, such as advocates for rural populations. "You're not going to see a lot of people jumping up and down about this. It's not a home run for any company, but it's a home run for rural areas and inner-city users."
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