[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[S. 150 Introduced in Senate (IS)]







107th CONGRESS
  1st Session
                                 S. 150

 To amend the Internal Revenue Code of 1986 to provide an incentive to 
   ensure that all Americans gain timely and equitable access to the 
 Internet over current and future generations of broadband capability.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                            January 23, 2001

   Mr. Kerry introduced the following bill; which was read twice and 
                  referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL


 
 To amend the Internal Revenue Code of 1986 to provide an incentive to 
   ensure that all Americans gain timely and equitable access to the 
 Internet over current and future generations of broadband capability.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Broadband Deployment Act of 2001''.

SEC. 2. FINDINGS AND PURPOSE.

    (a) Findings.--Congress finds the following:
            (1) The Internet has been the single greatest contributor 
        to the unprecedented economic expansion experienced by the 
        United States over the last 8 years.
            (2) Increasing the speed that Americans can access the 
        Internet is necessary to ensure the continued expansion.
            (3) Today, most residential Internet users, especially 
        those located in low income areas, are extremely limited in the 
        type of information they can send and receive over the Internet 
        because their means of access is limited to ``narrowband'' 
        communications media, typically conventional phone lines at a 
        maximum speed of 56,000 bits per second.
            (4) Similarly, small businesses in low income areas are 
        also deprived of full information access because of their 
        dependence on narrowband facilities.
            (5) By contrast, many residential users located in higher 
        income urban and suburban areas and urban business users can 
        access the Internet from a variety of carriers at speeds in 
        excess of 1,500,000 bits per second, giving them a choice among 
        carriers and high-speed access to a wide array of audio and 
        data applications.
            (6) The result is a growing disparity in the speed of 
        access to the Internet and the opportunities it creates between 
        subscribers located in low income areas and subscribers located 
        in higher income urban and suburban areas.
            (7) The disparity in current broadband access to the 
        Internet is proving detrimental to the on-going economic 
        expansion.
            (8) It is, therefore, appropriate for Congress to take 
        action to narrow the current disparity in the level of 
        broadband access to the Internet.
    (b) Purpose.--The purpose of this Act is to accelerate deployment 
of broadband access to the Internet for users located in certain low 
income areas.

SEC. 3. BROADBAND CREDIT.

    (a) In General.--Subpart E of part IV of chapter 1 of the Internal 
Revenue Code of 1986 (relating to rules for computing investment 
credit) is amended by inserting after section 48 the following new 
section:

``SEC. 48A. BROADBAND CREDIT.

    ``(a) General Rule.--For purposes of section 46, the broadband 
credit for any taxable year is equal to 10 percent of the qualified 
expenditures incurred with respect to qualified equipment offering 
broadband services to underserved subscribers and taken into account 
with respect to such taxable year.
    ``(b) When Expenditures Taken Into Account.--For purposes of this 
section qualified expenditures with respect to qualified equipment 
shall be taken into account with respect to the first taxable year in 
which broadband services are offered by the taxpayer through such 
equipment to subscribers.
    ``(c) Special Allocation Rules.--For purposes of determining the 
broadband credit under subsection (a), if the qualified equipment is 
capable of serving both underserved subscribers and other subscribers, 
the qualified expenditures shall be multiplied by a fraction--
            ``(1) the numerator of which is the sum of the total 
        potential subscriber populations within the underserved areas 
        which the equipment is capable of serving, and
            ``(2) the denominator of which is the total potential 
        subscriber population of the area which the equipment is 
        capable of serving.
    ``(d) Definitions.--For purposes of this section--
            ``(1) Antenna.--The term `antenna' means any device used to 
        transmit or receive signals through the electromagnetic 
        spectrum, including satellite equipment.
            ``(2) Broadband service.--The term `broadband service' 
        means the transmission of signals at a rate of at least 
        1,500,000 bits per second to the subscriber and at least 
200,000 bits per second from the subscriber.
            ``(3) Cable operator.--The term `cable operator' has the 
        meaning given such term by section 602(5) of the Communications 
        Act of 1934 (47 U.S.C. 522(5)).
            ``(4) Commercial mobile service carrier.--The term 
        `commercial mobile service carrier' means any person authorized 
        to provide commercial mobile radio service as defined in 
        section 20.3 of title 47, Code of Federal Regulations.
            ``(5) Nonresidential subscriber.--The term `nonresidential 
        subscriber' means a person or entity who purchases broadband 
        services which are delivered to the permanent place of business 
        of such person or entity.
            ``(6) Open video system operator.--The term `open video 
        system operator' means any person authorized to provide service 
        under section 653 of the Communications Act of 1934 (47 U.S.C. 
        573).
            ``(7) Other wireless carrier.--The term `other wireless 
        carrier' means any person (other than a telecommunications 
        carrier, commercial mobile service carrier, cable operator, 
        open video system operator, or satellite carrier) providing 
        broadband service to subscribers through the radio transmission 
        of energy.
            ``(8) Packet switching.--The term `packet switching' means 
        controlling or routing the path of a digitized transmission 
        signal which is assembled into packets or cells.
            ``(9) Qualified equipment.--
                    ``(A) In general.--The term `qualified equipment' 
                means equipment capable of providing broadband services 
                at any time to each subscriber who is utilizing such 
                services.
                    ``(B) Only certain investment taken into account.--
                Except as provided in subparagraph (C), equipment shall 
                be taken into account under subparagraph (A) only to 
                the extent it--
                            ``(i) extends from the last point of 
                        switching to the outside of the unit, building, 
                        dwelling, or office owned or leased by a 
                        subscriber in the case of a telecommunications 
                        carrier,
                            ``(ii) extends from the customer side of 
                        the mobile telephone switching office to a 
                        transmission/receive antenna (including such 
                        antenna) on the outside of the unit, building, 
                        dwelling, or office owned or leased by a 
                        subscriber in the case of a commercial mobile 
                        service carrier,
                            ``(iii) extends from the customer side of 
                        the headend to the outside of the unit, 
                        building, dwelling, or office owned or leased 
                        by a subscriber in the case of a cable operator 
                        or open video system operator, or
                            ``(iv) extends from a transmission/receive 
                        antenna (including such antenna) which 
                        transmits and receives signals to or from 
                        multiple subscribers to a transmission/receive 
                        antenna (including such antenna) on the outside 
                        of the unit, building, dwelling, or office 
                        owned or leased by a subscriber in the case of 
a satellite carrier or other wireless carrier, unless such other 
wireless carrier is also a telecommunications carrier.
                    ``(C) Packet switching equipment.--Packet switching 
                equipment, regardless of location, shall be taken into 
                account under subparagraph (A) only if it is deployed 
                in connection with equipment described in subparagraph 
                (B) and it is uniquely designed to perform the function 
                of packet switching for broadband services, but only if 
                such packet switching is the last in a series of such 
                functions performed in the transmission of a signal to 
                a subscriber or the first in a series of such functions 
                performed in the transmission of a signal from a 
                subscriber.
            ``(10) Qualified expenditure.--
                    ``(A) In general.--The term `qualified expenditure' 
                means any amount chargeable to capital account with 
                respect to the purchase and installation of qualified 
                equipment (including any upgrades thereto) for which 
                depreciation is allowable under section 168.
                    ``(B) Certain satellite expenditures excluded.--
                Such term shall not include any expenditure with 
                respect to the launching of any satellite equipment.
            ``(11) Residential subscriber.--The term `residential 
        subscriber' means an individual who purchases broadband 
        services which are delivered to such individual's dwelling.
            ``(12) Satellite carrier.--The term `satellite carrier' 
        means any person using the facilities of a satellite or 
        satellite service licensed by the Federal Communications 
        Commission and operating in the Fixed-Satellite Service under 
        part 25 of title 47 of the Code of Federal Regulations or the 
        Direct Broadcast Satellite Service under part 100 of title 47 
        of such Code to establish and operate a channel of 
        communications for point-to-multipoint distribution of signals, 
        and owning or leasing a capacity or service on a satellite in 
        order to provide such point-to-multipoint distribution.
            ``(13) Subscriber.--The term `subscriber' means a person 
        who purchases broadband services.
            ``(14) Telecommunications carrier.--The term 
        `telecommunications carrier' has the meaning given such term by 
        section 3(44) of the Communications Act of 1934 (47 U.S.C. 153 
        (44)), and--
                    ``(A) includes all members of an affiliated group 
                of which a telecommunications carrier is a member, but
                    ``(B) does not include a commercial mobile service 
                carrier.
            ``(15) Total potential subscriber population.--The term 
        `total potential subscriber population' means, with respect to 
        any area and based on the most recent census data, the total 
        number of potential residential subscribers residing in 
        dwellings located in such area and potential nonresidential 
subscribers maintaining permanent places of business located in such 
area.
            ``(16) Underserved subscriber.--
                    ``(A) In general.--The term `underserved 
                subscriber' means a residential subscriber residing in 
                a dwelling located in an underserved area or 
                nonresidential subscriber maintaining a permanent place 
                of business located in an underserved area.
                    ``(B) Underserved area.--The term `underserved 
                area' means any census tract--
                            ``(i) the poverty level of which is at 
                        least 30 percent (based on the most recent 
                        census data),
                            ``(ii) the median family income of which 
                        does not exceed--
                                    ``(I) in the case of a census tract 
                                located in a metropolitan statistical 
                                area, 70 percent of the greater of the 
                                metropolitan area median family income 
                                or the statewide median family income, 
                                and
                                    ``(II) in the case of a census 
                                tract located in a nonmetropolitan 
                                statistical area, 70 percent of the 
                                nonmetropolitan statewide median family 
                                income, or
                            ``(iii) which is located in an empowerment 
                        zone and enterprise community designated under 
                        section 1391 or a renewal community designated 
                        under section 1400E.
    ``(e) Designation of Census Tracts.--The Secretary shall, not later 
than 90 days after the date of the enactment of this section, designate 
and publish those census tracts meeting the criteria described in 
paragraph (16)(B) of subsection (d), and such tracts shall remain so 
designated for the period ending with the termination date described in 
subsection (f).
    ``(f) Termination.--This section shall not apply to expenditures 
incurred after December 31, 2006.''
    (b) Credit To Be Part of Investment Credit.--Section 46 of the 
Internal Revenue Code of 1986 (relating to the amount of investment 
credit) is amended--
            (1) by striking ``and'' at the end of paragraph (2),
            (2) by striking the period at the end of paragraph (3) and 
        inserting ``, and'', and
            (3) by adding at the end the following new paragraph:
            ``(4) the broadband credit.''.
    (c) Special Rule for Mutual or Cooperative Telephone Companies.--
Section 501(c)(12)(B) of the Internal Revenue Code of 1986 (relating to 
list of exempt organizations) is amended--
            (1) by striking ``or'' at the end of clause (iii),
            (2) by striking the period at the end of clause (iv) and 
        inserting ``, or'', and
            (3) by adding at the end the following new clause:
                            ``(v) from sources not described in 
                        subparagraph (A), but only to the extent such 
                        income does not in any year exceed an amount 
                        equal to the credit for qualified expenditures 
                        which would be determined under section 48A for 
                        such year if the mutual or cooperative 
                        telephone company was not exempt from 
                        taxation.''.
    (d) Conforming Amendment.--The table of sections for subpart E of 
part IV of subchapter A of chapter 1 of the Internal Revenue Code of 
1986 is amended by inserting after the item relating to section 48 the 
following new item:

``Sec. 48A. Broadband credit.''.
    (e) Effective Dates.--
            (1) In general.--Except as provided in paragraph (2), the 
        amendments made by this section shall apply to expenditures 
        incurred after December 31, 2001.
            (2) Special rule.--The amendments made by subsection (c) 
        shall apply to amounts received after December 31, 2001.

SEC. 4. REGULATORY MATTERS.

    No Federal or State agency or instrumentality shall adopt 
regulations or ratemaking procedures that would have the effect of 
confiscating any credit or portion thereof allowed under section 48A of 
the Internal Revenue Code of 1986 (as added by section 3) or otherwise 
subverting the purpose of this Act.

SEC. 5. STUDY AND REPORT.

    (a) Sense of Congress.--It is the sense of Congress that in order 
to maintain competitive neutrality, the credit allowed under section 
48A of the Internal Revenue Code of 1986 (as added by section 3) should 
be administered in such a manner so as to ensure that each class of 
carrier receives the same level of financial incentive to deploy 
broadband services.
    (b) Study and Report.--The Secretary of the Treasury shall, within 
180 days after the effective date of section 3, study the impact of the 
credit allowed under section 48A of the Internal Revenue Code of 1986 
(as added by section 3) on the relative competitiveness of potential 
classes of carriers of broadband services, and shall report to Congress 
the findings of such study, together with any legislative or regulatory 
proposals determined to be necessary to ensure that the purposes of 
such credit can be furthered without impacting competitive neutrality 
among such classes of carriers.
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