[Congressional Bills 108th Congress]
[From the U.S. Government Publishing Office]
[H.R. 267 Introduced in House (IH)]







108th CONGRESS
  1st Session
                                H. R. 267

 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 HOUSE OF REPRESENTATIVES

                            January 8, 2003

 Mr. English introduced the following bill; which was referred to the 
                      Committee on Ways and Means

_______________________________________________________________________

                                 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 Internet Access Act of 
2003''.

SEC. 2. FINDINGS AND PURPOSE.

    (a) Findings.--The 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 and rural 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 and rural 
        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 current 
        generation broadband 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 and rural areas and 
        subscribers located in higher income urban and suburban areas.
            (7) At the same time, experts project that, under current 
        financial and regulatory conditions, the facilities needed to 
        transmit next generation broadband services over the Internet 
        to residential users at speeds in excess of 10,000,000 bits per 
        second will not be as ubiquitously available as is telephone 
        service until sometime between the years 2030 and 2040.
            (8) Experts also believe that, under current financial and 
        regulatory conditions, the disparity in access will be 
        exacerbated with the deployment of next generation broadband 
        capability.
            (9) The disparity in current broadband access to the 
        Internet, the slow pace of deployment of next generation 
        broadband capability, and the projected disparity in access to 
        such capability will likely prove detrimental to economic 
        expansion.
            (10) It is, therefore, appropriate for Congress to take 
        action to narrow the current and future disparity in the level 
        of broadband access to the Internet, and to accelerate 
        deployment of next generation broadband capability.
    (b) Purpose.--The purpose of this Act is to accelerate deployment 
of current generation broadband access to the Internet for users 
located in certain low income and rural areas and to accelerate 
deployment of next generation broadband access for all Americans.

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 the sum of--
            ``(1) the current generation broadband credit, plus
            ``(2) the next generation broadband credit.
    ``(b) Current Generation Broadband Credit; Next Generation 
Broadband Credit.--For purposes of this section--
            ``(1) Current generation broadband credit.--The current 
        generation broadband credit for any taxable year is equal to 10 
        percent of the qualified expenditures incurred with respect to 
        qualified equipment delivering current generation broadband 
        services to rural subscribers or underserved subscribers and 
        taken into account with respect to such taxable year.
            ``(2) Next generation broadband credit.--The next 
        generation broadband credit for any taxable year is equal to 20 
        percent of the qualified expenditures incurred with respect to 
        qualified equipment delivering next generation broadband 
        services to all rural subscribers, all underserved subscribers, 
        or any other residential subscribers and taken into account 
        with respect to such taxable year.
    ``(c) When Expenditures Taken Into Account.--For purposes of this 
section--
            ``(1) In general.--Qualified expenditures with respect to 
        qualified equipment shall be taken into account with respect to 
        the first taxable year in which--
                    ``(A) current generation broadband services are 
                delivered through such equipment to rural subscribers 
                or underserved subscribers, or
                    ``(B) next generation broadband services are 
                delivered through such equipment to rural subscribers, 
                underserved subscribers, or any other residential 
                subscribers.
            ``(2) Delivery of services.--For purposes of paragraph (1), 
        the delivery of current generation broadband services or next 
        generation broadband services through qualified equipment 
        occurs when such class of service is purchased by and provided 
        to at least 10 percent of the subscribers described in 
        subsection (b) which such equipment is capable of serving 
        through the legal or contractual area access rights or 
        obligations of the provider.
    ``(d) Special Allocation Rules.--
            ``(1) Current generation broadband services.--For purposes 
        of determining the current generation broadband credit under 
        subsection (a)(1) with respect to qualified equipment through 
        which current generation broadband services are delivered, if 
        the qualified equipment is capable of serving both the 
        subscribers described under subsection (b)(1) and other 
        subscribers, the qualified expenditures shall be multiplied by 
        a fraction--
                    ``(A) the numerator of which is the sum of the 
                total potential subscriber populations within the rural 
                areas and the underserved areas which the equipment is 
                capable of serving with current generation broadband 
                services, and
                    ``(B) the denominator of which is the total 
                potential subscriber population of the area which the 
                equipment is capable of serving with current generation 
                broadband services.
            ``(2) Next generation broadband services.--For purposes of 
        determining the next generation broadband credit under 
        subsection (a)(2) with respect to qualified equipment through 
        which next generation broadband services are delivered, if the 
        qualified equipment is capable of serving both the subscribers 
        described under subsection (b)(2) and other subscribers, the 
        qualified expenditures shall be multiplied by a fraction--
                    ``(A) the numerator of which is the sum of--
                            ``(i) the total potential subscriber 
                        populations within the rural areas and 
                        underserved areas, plus
                            ``(ii) the total potential subscriber 
                        population of the area consisting only of 
                        residential subscribers not described in clause 
                        (i),
                which the equipment is capable of serving with next 
                generation broadband services, and
                    ``(B) the denominator of which is the total 
                potential subscriber population of the area which the 
                equipment is capable of serving with next generation 
                broadband services.
    ``(e) 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) 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)).
            ``(3) 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.
            ``(4) Current generation broadband service.--The term 
        `current generation 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.
            ``(5) Multiplexing or demultiplexing.--The term 
        `multiplexing' means the transmission of 2 or more signals over 
        a single channel, and the term `demultiplexing' means the 
        separation of 2 or more signals previously combined by 
        compatible multiplexing equipment.
            ``(6) Next generation broadband service.--The term `next 
        generation broadband service' means the transmission of signals 
        at a rate of at least 22,000,000 bits per second to the 
        subscriber and at least 5,000,000 bits per second from the 
        subscriber.
            ``(7) Nonresidential subscriber.--The term `nonresidential 
        subscriber' means a person who purchases broadband services 
        which are delivered to the permanent place of business of such 
        person.
            ``(8) 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).
            ``(9) 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 current 
generation broadband services or next generation broadband service to 
subscribers through the radio transmission of energy.
            ``(10) Packet switching.--The term `packet switching' means 
        controlling or routing the path of a digitized transmission 
        signal which is assembled into packets or cells.
            ``(11) Provider.--The term `provider' means, with respect 
        to any qualified equipment--
                    ``(A) a cable operator,
                    ``(B) a commercial mobile service carrier,
                    ``(C) an open video system operator, or
                    ``(D) a satellite carrier, telecommunications 
                carrier, or other wireless carrier,
        providing current generation broadband services or next 
        generation broadband services to subscribers through such 
        qualified equipment.
            ``(12) Qualified equipment.--
                    ``(A) In general.--The term `qualified equipment' 
                means equipment capable of providing current generation 
                broadband services or next generation 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) or (D), 
                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) 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 is uniquely designed to perform the function of 
                packet switching for current generation broadband 
                services or next generation 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.
                    ``(D) Multiplexing and demultiplexing equipment.--
                Multiplexing and demultiplexing equipment shall be 
                taken into account under subparagraph (A) only to the 
                extent it is deployed in connection with equipment 
                described in subparagraph (B) and is uniquely designed 
                to perform the function of multiplexing and 
                demultiplexing packets or cells of data and making 
                associated application adaptions, but only if such 
                multiplexing or demultiplexing equipment is located 
                between packet switching equipment described in 
                subparagraph (C) and the subscriber's premises.
            ``(13) Qualified expenditure.--
                    ``(A) In general.--The term `qualified expenditure' 
                means any amount--
                            ``(i) 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, and
                            ``(ii) incurred after December 31, 2003, 
                        and before January 1, 2009.
                    ``(B) Certain satellite expenditures excluded.--
                Such term shall not include any expenditure with 
                respect to the launching of any satellite equipment.
            ``(14) Residential subscriber.--The term `residential 
        subscriber' means an individual who purchases broadband 
        services which are delivered to such individual's dwelling.
            ``(15) Rural area.--The term `rural area' means any census 
        tract which--
                    ``(A) is not within 10 miles of any incorporated or 
                census designated place containing more than 25,000 
                people, and
                    ``(B) is not within a county or county equivalent 
                which has an overall population density of more than 
                500 people per square mile of land.
            ``(16) Rural subscriber.--The term `rural subscriber' means 
        a residential subscriber residing in a dwelling located in a 
        rural area or nonresidential subscriber maintaining a permanent 
        place of business located in a rural area.
            ``(17) 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.
            ``(18) Subscriber.--The term `subscriber' means a person 
        who purchases current generation broadband services or next 
        generation broadband services.
            ``(19) 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)), but--
                    ``(A) includes all members of an affiliated group 
                of which a telecommunications carrier is a member, and
                    ``(B) does not include a commercial mobile service 
                carrier.
            ``(20) 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.
            ``(21) Underserved area.--The term `underserved area' means 
        any census tract which is located in--
                    ``(A) an empowerment zone or enterprise community 
                designated under section 1391,
                    ``(B) the District of Columbia Enterprise Zone 
                established under section 1400,
                    ``(C) a renewal community designated under section 
                1400E, or
                    ``(D) a low-income community designated under 
                section 45D.
            ``(22) Underserved subscriber.--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.
    ``(f) 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 
paragraphs (15) and (21) of subsection (e).''.
    (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 by striking ``and'' at the end of paragraph (2), by 
striking the period at the end of paragraph (3) and inserting ``, 
and'', and 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 by striking ``or'' at the end 
of clause (iii), by striking the period at the end of clause (iv) and 
inserting ``, or'', and 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) Regulatory Matters.--
            (1) Prohibition.--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 this section) or 
        otherwise subverting the purpose of this section.
            (2) Treasury regulatory authority.--It is the intent of 
        Congress in providing the broadband credit under section 48A of 
        the Internal Revenue Code of 1986 (as added by this section) to 
        provide incentives for the purchase, installation, and 
        connection of equipment and facilities offering expanded 
        broadband access to the Internet for users in certain low 
        income and rural areas of the United States, as well as to 
        residential users nationwide, in a manner that maintains 
        competitive neutrality among the various classes of providers 
        of broadband services. Accordingly, the Secretary of the 
        Treasury shall prescribe such regulations as may be necessary 
        or appropriate to carry out the purposes of section 48A of such 
        Code, including--
                    (A) regulations to determine how and when a 
                taxpayer that incurs qualified expenditures satisfies 
                the requirements of section 48A of such Code to provide 
                broadband services, and
                    (B) regulations describing the information, 
                records, and data taxpayers are required to provide the 
                Secretary to substantiate compliance with the 
                requirements of section 48A of such Code.
        Until the Secretary prescribes such regulations, taxpayers may 
        base such determinations on any reasonable method that is 
        consistent with the purposes of section 48A of such Code.
    (f) 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, 2003.
            (2) Special rule.--The amendments made by subsection (c) 
        shall apply to amounts received after December 31, 2003.
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