1.
This Act may be cited as the
Broadband Rural Revitalization Act of
2005
.
2.
(a)There
is established within the Department of Commerce, the Rural Broadband
Office.
(b)The
Office shall coordinate all Federal Government resources as they relate to the
expansion of broadband technology into rural areas.
(c)Not
later than 1 year after the date of the enactment of this Act, and annually
thereafter, the Rural Broadband Office shall submit a report to the Congress
that—
(1)assesses the
availability of, and access to, broadband technology in rural areas;
(2)estimates the
number of individuals using broadband technology in rural areas;
(3)estimates the
unmet demand for broadband technology in rural areas; and
(4)sets forth a
strategic plan to meet the demand described in paragraph (3).
3.Full funding for
Rural Broadband ServicesIt is
the sense of Congress that the loan program established in section 4 of the
Rural Electrification Act of 1936 (7 U.S.C. 901 et seq.), which is essential to
the economic well-being of small telecommunications providers and to the
quality of life for all rural residents, be funded fully.
4.Expensing of
Broadband Internet Access Expenditures for rural communities
(a)
Part VI of subchapter B of chapter 1 of the Internal Revenue Code
of 1986 (relating to itemized deductions for individuals and corporations) is
amended by inserting after section 190 the following new section:
191.
Broadband expenditures for rural communities
(a)
Treatment of expenditures
(1)
A taxpayer may elect to treat any qualified broadband
expenditure which is paid or incurred by the taxpayer as an expense which is
not chargeable to capital account. Any expenditure which is so treated shall be
allowed as a deduction.
(2)
An election under paragraph (1) shall be made at such time and
in such manner as the Secretary may prescribe by regulation.
(b)
Qualified broadband expenditures
For purposes of this section—
(1)
The term qualified broadband expenditure means,
with respect to any taxable year, any direct or indirect costs incurred and
properly taken into account with respect to—
(A)
the purchase or installation of qualified equipment (including
any upgrades thereto), and
(B)
the connection of such qualified equipment to any qualified
subscriber.
(2)
Certain satellite expenditures excluded
Such term shall not include any costs incurred with respect to
the launching of any satellite equipment.
(3)
Such term shall include so much of the purchase price paid by
the lessor of qualified equipment subject to a lease described in subsection
(c)(2)(B) as is attributable to expenditures incurred by the lessee which would
otherwise be described in paragraph (1).
(c)
When expenditures taken into account
For purposes of this section—
(1)
Qualified broadband 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 provided through such
equipment to qualified subscribers, or
(B)
next generation broadband services are provided through such
equipment to qualified subscribers.
(2)
(A)
Qualified expenditures shall be taken into account under
paragraph (1) only with respect to qualified equipment—
(i)
the original use of which commences with the taxpayer,
and
(ii)
which is placed in service, after the date of the enactment of
this Act.
(B)
For purposes of subparagraph (A), if property—
(i)
is originally placed in service after the date of the enactment
of this Act by any person, and
(ii)
sold and leased back by such person within 3 months after the
date such property was originally placed in service, such property shall be
treated as originally placed in service not earlier than the date on which such
property is used under the leaseback referred to in clause (ii).
(d)
(1)
Current generation broadband services
For purposes of determining the amount of qualified broadband
expenditures under subsection (a)(1) with respect to qualified equipment
through which current generation broadband services are provided, if the
qualified equipment is capable of serving both qualified subscribers and other
subscribers, the qualified broadband expenditures shall be multiplied by a
fraction—
(A)
the numerator of which is the sum of the number of potential
qualified subscribers within the rural 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 amount of qualified broadband
expenditures under subsection (a)(1) with respect to qualified equipment
through which next generation broadband services are provided, if the qualified
equipment is capable of serving both qualified subscribers and other
subscribers, the qualified expenditures shall be multiplied by a
fraction—
(A)
the numerator of which is the sum of—
(i)
the number of potential qualified subscribers within the rural
areas, plus
(ii)
the number of potential qualified subscribers within 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)
For purposes of this section—
(1)
The term antenna means any device used to transmit
or receive signals through the electromagnetic spectrum, including satellite
equipment.
(2)
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 1,000,000 bits per
second to the subscriber and at least 128,000 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 any
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)
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)
The term packet switching means controlling or
routing the path of any digitized transmission signal which is assembled into
packets or cells.
(11)
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,
(D)
a satellite carrier,
(E)
a telecommunications carrier,
(F)
any other wireless carrier, providing current generation
broadband services or next generation broadband services to subscribers through
such qualified equipment; or
(G)any carrier or
operator using any other technology.
(12)
A provider shall be treated as providing services to 1 or more
subscribers if—
(A)
such a subscriber has been passed by the provider’s equipment
and can be connected to such equipment for a standard connection fee,
(B)
the provider is physically able to deliver current generation
broadband services or next generation broadband services, as applicable, to
such a subscriber without making more than an insignificant investment with
respect to such subscriber,
(C)
the provider has made reasonable efforts to make such
subscribers aware of the availability of such services,
(D)
such services have been purchased by 1 or more such
subscribers, and
(E)
such services are made available to such subscribers at average
prices comparable to those at which the provider makes available similar
services in any areas in which the provider makes available such
services.
(13)
(A)
The term qualified equipment means equipment which
provides current generation broadband services or next generation broadband
services—
(i)
at least a majority of the time during periods of maximum
demand to each subscriber who is utilizing such services, and
(ii)
in a manner substantially the same as such services are
provided by the provider to subscribers through equipment with respect to which
no deduction is allowed under subsection (a)(1).
(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.
(14)
The term qualified subscriber means—
(A)
with respect to the provision of current generation broadband
services—
(i)
any nonresidential subscriber maintaining a permanent place of
business in a rural area, or
(ii)
any residential subscriber residing in a dwelling located in a
rural area which is not a saturated market, and
(B)
with respect to the provision of next generation broadband
services—
(i)
any nonresidential subscriber maintaining a permanent place of
business in a rural area, or
(ii)
any residential subscriber.
(15)
The term residential subscriber means any
individual who purchases broadband services which are delivered to such
individual’s dwelling.
(16)
The term rural area means any census tract
which—
(A)
is not within 5 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.
(17)
The term rural subscriber means any 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.
(18)
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 distribution of signals, and owning or
leasing a capacity or service on a satellite in order to provide such
point-to-multipoint distribution.
(19)
The term saturated market means any census tract
in which, as of the date of the enactment of this section—
(A)
current generation broadband services have been provided by a
single provider to 85 percent or more of the total number of potential
residential subscribers residing in dwellings located within such census tract,
and
(B)
such services can be utilized—
(i)
at least a majority of the time during periods of maximum
demand by each such subscriber who is utilizing such services, and
(ii)
in a manner substantially the same as such services are
provided by the provider to subscribers through equipment with respect to which
no deduction is allowed under subsection (a)(1).
(20)
The term subscriber means any person who purchases
current generation broadband services or next generation broadband
services.
(21)
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.
(22)
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.
(f)
(1)
Property used outside the United States, etc., not
qualified
No expenditures shall be taken into account under subsection
(a)(1) with respect to the portion of the cost of any property referred to in
section 50(b) or with respect to the portion of the cost of any property
specified in an election under section 179.
(2)
(A)
For purposes of this title, the basis of any property shall be
reduced by the portion of the cost of such property taken into account under
subsection (a)(1).
(B)
Ordinary income recapture
For purposes of section 1245, the amount of the deduction
allowable under subsection (a)(1) with respect to any property which is of a
character subject to the allowance for depreciation shall be treated as a
deduction allowed for depreciation under section 167.
(3)
Coordination with Section 38
No credit shall be allowed under section 38 with respect to any
amount for which a deduction is allowed under subsection (a)(1).
.
(b)
Special rule for mutual or cooperative telephone
companies
Section 512(b) (relating to modifications) is amended by adding
at the end the following new paragraph:
(18)
Special rule for mutual or cooperative telephone
companies
A mutual or cooperative telephone company which for the taxable
year satisfies the requirements of section 501(c)(12)(A) may elect to reduce
its unrelated business taxable income for such year, if any, by an amount that
does not exceed the qualified broadband expenditures which would be taken into
account under section 191 for such year by such company if such company was not
exempt from taxation. Any amount which is allowed as a deduction under this
paragraph shall not be allowed as a deduction under section 191 and the basis
of any property to which this paragraph applies shall be reduced under section
1016(a)(32).
.
(c)
(1)
Section 263(a)(1) of the Internal Revenue Code of 1986 (relating
to capital expenditures) is amended by striking or
at the end of
subparagraph (H), by striking the period at the end of subparagraph (I) and
inserting , or
, and by adding at the end the following new
subparagraph:
(J)
expenditures for which a deduction is allowed under section
191.
.
(2)
Section 1016(a) of such Code is amended by striking
and
at the end of paragraph (30), by striking the period at the
end of paragraph (31) and inserting , and
, and by adding at the
end the following new paragraph:
(32)
to the extent provided in section 191(f)(2).
.
(3)
The table of sections for part VI of subchapter A of chapter 1 of
such Code is amended by inserting after the item relating to section 190 the
following new item:
Sec. 191. Broadband expenditures for rural
communities.
.
(d)
Designation of census tracts
(1)
The Secretary of the Treasury shall, not later than 90 days after
the date of the enactment of this Act, designate and publish those census
tracts meeting the criteria described in paragraphs (16) and (22) of section
191(e) of the Internal Revenue Code of 1986 (as added by this section). In
making such designations, the Secretary of the Treasury shall consult with such
other departments and agencies as the Secretary determines appropriate.
(2)
(A)
For purposes of designating and publishing those census tracts
meeting the criteria described in subsection (e)(19) of such section
191—
(i)
the Secretary of the Treasury shall prescribe not later than 30
days after the date of the enactment of this Act the form upon which any
provider which takes the position that it meets such criteria with respect to
any census tract shall submit a list of such census tracts (and any other
information required by the Secretary) not later than 60 days after the date of
the publication of such form, and
(ii)
the Secretary of the Treasury shall publish an aggregate list of
such census tracts and the applicable providers not later than 30 days after
the last date such submissions are allowed under clause (i).
(B)
No subsequent lists required
The Secretary of the Treasury shall not be required to publish
any list of census tracts meeting such criteria subsequent to the list
described in subparagraph (A)(ii).
(e)
(1)
No Federal or State agency or instrumentality shall adopt
regulations or ratemaking procedures that would have the effect of eliminating
or reducing any deduction or portion thereof allowed under section 191 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 election to deduct
qualified broadband expenditures under section 191 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 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 191 of such Code, including—
(A)
regulations to determine how and when a taxpayer that incurs
qualified broadband expenditures satisfies the requirements of section 191 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 191 of such Code.
(f)No implication
regarding the need for next generation incentive in urban
areasNothing in this section shall be construed to imply that an
incentive for next generation broadband is not needed in urban areas.
(g)The amendments made by this section shall apply to
expenditures incurred after the date of the enactment of this Act and before
the date which is 12 months after the date of the enactment of this Act.