[Congressional Record Volume 146, Number 37 (Wednesday, March 29, 2000)]
[Senate]
[Pages S1904-S1905]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. ROCKEFELLER (for himself and Ms. Snowe):
  S. 2321. A bill to amend the Internal Revenue Code of 1986 to allow a 
tax credit for development costs of telecommunications facilities in 
rural areas; to the Committee on Finance.


           rural telecommunications modernization act of 2000

 Mr. ROCKEFELLER. Mr. President, I rise today to introduce the 
Rural Telecommunications Modernization Act. This Act would create a tax 
credit for companies that invest in providing broadband 
telecommunications services available in rural areas. The convergence 
of computing and communications has changed the way America interacts 
and does business. Individuals, businesses, schools, libraries, 
hospitals, and many others, reap the benefits of networked 
communications more and more each year. However, where in the past 
access to low bandwidth telephone facilities met our communications 
needs, today many people and organizations need the ability to transmit 
and receive large amounts of data quickly--as part of electronic 
commerce, distance learning, telemedicine, and even for mere access to 
many web sites.
  In some areas of the country companies are building networks that 
meet this broadband need as fast as they can. Technology companies are 
fighting to roll out broadband facilities as quickly as they can in 
urban and suburban areas. They are tearing up streets to instal fiber 
optics, converting cable TV facilities to broadband telecom 
applications, developing incredible new DSL technologies that convert 
regular copper telephone wires into broadband powerhouses.
  Other areas are not as fortunate. In rural areas access to broadband 
communications is harder to come by. In fact, there are only a few 
broadband providers outside big cities and suburban areas nationwide. 
This is because in many cases rural areas are more expensive to serve. 
Terrain is difficult. Populations are widely dispersed. Importantly, 
many of our broadband technologies cannot serve people who live more 
than eighteen thousand feet from a phone company's central office--
which is the case for most rural Americans.
  The implications for the country if we allow this broadband disparity 
to continue are alarming. Organizations in traditional robust 
communications and computing regions, often located in prosperous urban 
and suburban communities, will be able to reap the rewards of the so-
called ``New Economy.'' Organizations in other areas, often in rural 
areas, including many areas in my State of West Virginia, will suffer 
the consequences of being unable to take advantage of the astounding 
power of broadband networked computing.
  Just as companies that employ technological advances are decimating 
their less technologically savvy competitors, businesses in 
infrastructure-rich areas may soon decimate competitors in 
infrastructure-poor areas. This is just as true for rural students and 
workers trying to gain new skills who are competing against their non-
rural peers in the New Economy. The result of this digital divide could 
be disastrous for rural Americans: job loss, tax revenue loss, brain 
drain, and business failure concentrated in rural areas.
  Denying rural Americans a chance to participate in the New Economy is 
also bad for the national economy. Businesses will be forced to locate 
their operations and hire their employees in urban locations that have 
adequate broadband infrastructure, rather than in rural locations that 
are otherwise more efficient due to the location of

[[Page S1905]]

their customers or suppliers, a stable or better workforce, and cheaper 
production environments. Additionally, without adequate infrastructure, 
the businesses and individuals in these communications infrastructure 
poor areas are less likely to be integrated into the national 
electronic marketplace. Their absence would put a damper on the growth 
of the digital economy for everyone--not just for those in rural areas.
  Therefore, we must do everything we can to ensure that broadband 
communications are available to all areas of the country--rural as well 
as urban. The Rural Telecommunications Modernization Act addresses this 
problem.
  The Rural Telecommunications Modernization Act would give companies 
the incentive to build broadband facilities in rural areas by using a 
very focused tax credit. It would offer any company that invests in 
broadband facilities in rural areas a tax credit over the next three 
years. This tax credit will help fight the growing disparity in 
technology I just described.
  The credit is only available for certain investments. First, 
investments must be for ``broadband local access facilities.'' Second, 
investments must support ``high-speed broadband telecommunications 
services.'' And third, investments must serve only ``rural counties.''
  The Rural Telecommunications Modernization Act is part of the 
solution to the critically important digital divide problem. Rural 
Americans deserve the chance to participate in the New Economy. Without 
access to broadband services they will not have this chance. I hope 
that the Members of this body will support this important bill.
  I ask unanimous consent that the text of the bill be printed in the 
Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 2321

       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 ``Rural Telecommunications 
     Modernization Act of 2000.

     SEC. 2. CREDIT FOR TELECOMMUNICATIONS FACILITIES DEVELOPMENT 
                   IN RURAL AREAS.

       (a) In General.--Section 46(a) of the Internal Revenue Code 
     of 1986 (relating to 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:
       ``(4) the rural telecommunications facilities credit.''
       (b) Amount of Credit.--Subpart E of part IV of subchapter A 
     of chapter 1 of the Internal Revenue Code of 1986 (relating 
     to rules for computing investment credit) is amended by 
     inserting after section 47 the following:

     ``SEC. 47A. RURAL TELECOMMUNICATIONS FACILITIES CREDIT.

       ``(a) In General.--For purposes of section 46, the rural 
     telecommunications facilities credit for any taxable year is 
     an amount equal to the applicable percentage of the qualified 
     broadband local access facilities expenditures for such 
     taxable year.
       ``(b) Applicable Percentage.--For purposes of subsection 
     (a), the applicable percentage in the case of qualified 
     broadband local access facilities expenditures in connection 
     with--
       ``(1) broadband telecommunications facilities, is 10 
     percent, and
       ``(2) enhanced broadband telecommunications facilities, is 
     15 percent.
       ``(c) Qualified broadband local access facilities 
     expenditure.--For purposes of this section, the term 
     `qualified broadband local access facilities expenditure' 
     means any expenditure--
       ``(1) chargeable to capital account--
       ``(A) for property for which depreciation is allowable 
     under section 168, and
       ``(B) incurred in connection with broadband 
     telecommunications facilities or enhanced broadband 
     telecommunications facilities serving rural subscribers, and
       ``(2) incurred during the period--
       ``(A) beginning with the taxpayer's (or any predecessor's) 
     first taxable year beginning after the date of the enactment 
     of this section, and
       ``(B) ending with the taxpayer's (or any predecessor's) 
     third taxable year beginning after such date.
       ``(d) Definitions and Special Rules.--For purposes of this 
     section--
       ``(1) Broadband telecommunications facilities.--The term 
     `broadband telecommunications facilities' means broadband 
     local access facilities capable of--
       ``(A) transmitting voice, and
       ``(B) downloading data at a rate of 1.5 MBPS and uploading 
     data at a rate of .5 MBPS.
       ``(2) Enhanced broadband telecommunications facilities.--
     The term `enhanced broadband telecommunications facilities' 
     means the broadband local access facilities capable of--
       ``(A) transmitting voice, and
       ``(B) downloading and uploading data at a rate of 10 MBPS.
       ``(3) Determination of broadband local access facilities.--
     Broadband local access facilities--
       ``(A) begin at the switching point closest to the rural 
     subscriber, which is--
       ``(i) the subscriber side of the nearest switching facility 
     in the case of local exchange carriers,
       ``(ii) the subscriber side of the headend or the node in 
     the case of cable television operators, and
       ``(iii) the subscriber side of the transmission and 
     reception facilities in the case of a wireless or satellite 
     carrier,
       ``(B) end at the interface between the network and the 
     rural subscriber's location, and
       ``(C) do not include any switching facility.
       ``(4) Rural subscriber.--The term `rural subscriber' means 
     a subscriber who lives in area which--
       ``(A) is not within 10 miles of any incorporated or census 
     designated places 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.''
       (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) which is not described in subparagraph (A), in an 
     amount which does not exceed in any year an amount equal to 
     the applicable percentage of the qualified broadband local 
     access facilities expenditures (as determined in section 47A) 
     of the mutual or cooperative telephone company for such 
     year.''
       (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 47 the following:

``Sec. 47A. Rural telecommunications facilities 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 the date of the enactment of this Act.
       (2) Special rule.--The amendments made by subsection (c) 
     shall apply to amounts received after the date of the 
     enactment of this Act.
                                 ______