[Congressional Record Volume 149, Number 59 (Friday, April 11, 2003)]
[Senate]
[Pages S5358-S5361]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. ROCKEFELLER (for himself, Ms. Snowe, Mr. Baucus, Mr. 
        Hatch, Mr. Conrad, Mr. Kennedy, Ms. Stabenow, Mr. Breaux, Mrs. 
        Murray, Mr. Dayton, Mr. Leahy, Mr. Schumer, and Mr. Burns):
  S. 905. A bill to amend the Internal Revenue Code of 1986 to provide 
a broadband Internet access tax credit; to the Committee on Finance.
  Mr. ROCKEFELLER. Mr. President, I rise today to introduce the 
Broadband Internet Access Act of 2003. Last year, this bill had broad 
bipartisan support with 65 cosponsors. Its companion legislation in the 
House of Representatives had 227 cosponsors. If the Senate considers an 
appropriately targeted and sized economic growth package, which 
includes investment incentives for businesses, this legislation should 
be a priority for inclusion in that legislation as it will help jump 
start a struggling sector of the economy.
  The convergence of computing and communications has fundamentally and 
forever changed the way America lives and works. Individuals, 
businesses, schools, libraries, hospitals, and many others, reap the 
benefits of advanced networked communications exponentially each year. 
However, where just a decade ago access to low bandwidth telephone 
facilities met our communications needs, today many people, businesses 
and other organizations require 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. 
This need will only continue to grow. In the near future, access to 
broadband services will be as critical as having a telephone.
  Over the last several years, companies have built networks that meet 
today's broadband need as fast as they can. Even with the recent 
downturn in the telecommunications industry, technology companies 
continue to roll out the current generation of broadband facilities in 
urban and suburban areas. They continue to tear up streets to install 
fiber optics, convert cable TV facilities to broadband telecom 
applications and develop innovative new DSL technologies. As the 
economy improves, these companies will greatly expand the rate of 
deployment of these and other technologies for urban and suburban 
consumers providing them access to the cutting-edge technologies and 
services.
  Other areas of this country are not as fortunate. In rural and inner 
city areas access to even the current generation of broadband 
communications is limited. Investment continues to lag behind wealthier 
urban and suburban communities. This imbalance has only been 
exacerbated due to the telecommunications industry's recent financial 
troubles. In fact, only a limited number of broadband providers exist 
outside the prosperous areas of big cities and suburban areas 
nationwide. A few positive signs are occurring though. Small rural 
telecommunications companies are slowly expanding into providing these 
services. They are limited in their ability to provide these services 
because of the expense of installing the infrastructure. This is 
because in many cases rural areas are more expensive to serve, terrain 
is difficult and populations are widely dispersed. Importantly, many of 
our current 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. In inner cities, companies 
may believe that lower household income levels will not support a 
market for their services, so they choose not to invest in these 
communities. This is a classic situation of market failure that we must 
address.

  The implications for the country if we allow this broadband disparity 
to continue are alarming. People and businesses in well served 
communications and computing regions, often located in prosperous urban 
and suburban communities, will be able to build upon the inherent 
advantages of a networked economy. People and businesses in other 
areas, often in rural areas as in inner cities, including many areas in 
my State of West Virginia, would continue to be at an economic and 
educational disadvantage.
  We have seen how savvy businesses have crushed their competitors who 
failed to take advantage of technological innovations, businesses in 
infrastructure-rich areas that already have an advantage, ultimately 
could crush competitors in infrastructure-poor areas. This is equally 
true for rural and inner city students, workers trying to gain new 
skills, and regular individuals who want to participate in the 
information-based New Economy compete against their non-rural peers. 
The result could be devastating for Americans who live in rural areas 
or in our inner cities: job loss, tax revenue loss, brain drain, and 
business failure concentrated in their communities.
  Denying Americans who live in rural areas and inner cities a chance 
to participate in our information-based global 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 or inner city 
locations that are otherwise more efficient due to the location of 
their customers or suppliers, a stable or better workforce, and cheaper 
production environments. It is not an understatement to say that the 
deployment of technology could fundamentally transform the future of 
rural and inner city America.

  We have to make a decision on whether or not rural and inner city 
communities are going to have the same opportunities as their wealthier 
urban and suburban counterparts. I, along with many of my colleagues, 
believe they should and must. The Broadband Internet Access Act of 2003 
would address this disparity.
  The Act would give companies the incentive to build current 
generation broadband facilities in rural areas by using a very targeted 
tax credit. It would offer any company that invests in broadband 
facilities in rural or inner city areas a tax credit equal to ten 
percent of their investments over the next 5 years. This tax credit 
will help fight the growing disparity in technology that I just 
described. The credit is also restricted to investments needed for 
high-speed broadband telecommunications services. This means that only 
powerful broadband services are covered. Companies cannot claim that 
inferior services qualify for the credit. Only facilities that can 
download data at a rate of speed of 1.0 megabytes per second, and 
upload data at 180 kilobytes per second qualify. These speeds will 
allow the broadest possible number of technologies to be eligible for 
the credit.

[[Page S5359]]

  In addition, the bill provides a 20 percent tax credit for companies 
that invest in next generation broadband services. These powerful new 
services that can deliver data capacities of 22 megabytes per second 
download and 5 megabytes per second upload will be the infrastructure 
the economy requires as the digital economy expands. We need to reward 
the companies who have the foresight to invest in these next generation 
broadband services--they will benefit the whole country. These limited 
credits will provide the market the ability to affordably and 
profitably serve rural and inner city communities.
  The Broadband Internet Access Act of 2003 is part of the solution to 
the critically important digital divide problem. Rural Americans and 
Americans living in inner cities must have the chance to participate in 
the technological revolution that shows no signs of abating. 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 text of the bill was ordered to be 
printed in the Record, as follows:

                                 S. 905

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

     SECTION 1. BROADBAND INTERNET ACCESS TAX 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 INTERNET ACCESS 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 providing current generation 
     broadband services to qualified 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 providing next generation 
     broadband services to qualified 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 provided 
     through such equipment to qualified subscribers, or
       ``(B) next generation broadband services are provided 
     through such equipment to qualified subscribers.
       ``(2) Limitation.--
       ``(A) In general.--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 December 31, 2002.
       ``(B) Sale-leasebacks.--For purposes of subparagraph (A), 
     if property--
       ``(i) is originally placed in service after December 31, 
     2002, 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) 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 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 the number of 
     potential qualified subscribers 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 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 and underserved 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) 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 1,000,000 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 (or its equivalent when the data rate is 
     measured before being compressed for transmission) and at 
     least 5,000,000 bits per second from the subscriber (or its 
     equivalent as so measured).
       ``(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) 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 wireless 
     transmission of energy through radio or light waves.
       ``(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 any--
       ``(A) cable operator,
       ``(B) commercial mobile service carrier,
       ``(C) open video system operator,
       ``(D) satellite carrier,
       ``(E) telecommunications carrier, or
       ``(F) other wireless carrier,

     providing current generation broadband services or next 
     generation broadband services to subscribers through such 
     qualified equipment.
       ``(12) Provision of services.--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) Qualified equipment.--
       ``(A) In general.--The term `qualified equipment' means 
     equipment which provides current generation broadband 
     services or next generation broadband services--

[[Page S5360]]

       ``(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 credit 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) 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, 2002, and before January 
     1, 2008.
       ``(B) Certain satellite expenditures excluded.--Such term 
     shall not include any expenditure with respect to the 
     launching of any satellite equipment.
       ``(C) Leased equipment.--Such term shall include so much of 
     the purchase price paid by the lessor of 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 subparagraph (A).
       ``(15) Qualified subscriber.--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 underserved area, or
       ``(ii) any residential subscriber residing in a dwelling 
     located in a rural area or underserved 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 underserved area, or
       ``(ii) any residential subscriber.
       ``(16) Residential subscriber.--The term `residential 
     subscriber' means any individual who purchases broadband 
     services which are delivered to such individual's dwelling.
       ``(17) 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.
       ``(18) Rural subscriber.--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.
       ``(19) 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 distribution of signals, and owning or 
     leasing a capacity or service on a satellite in order to 
     provide such distribution.
       ``(20) Saturated market.--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 credit is allowed under subsection 
     (a)(1).
       ``(21) Subscriber.--The term `subscriber' means any person 
     who purchases current generation broadband services or next 
     generation broadband services.
       ``(22) 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 any commercial mobile service 
     carrier.
       ``(23) 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.
       ``(24) 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.
       ``(25) Underserved subscriber.--The term `underserved 
     subscriber' means any 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) 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:
       ``(4) the broadband Internet access 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 the sale of property subject to a lease 
     described in section 48A(c)(2)(B), 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 
     and was treated as the owner of the property subject to such 
     lease.''.
       (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:

``Sec. 48A. Broadband internet access credit.''.

       (e) Designation of Census Tracts.--
       (1) In general.--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 (17) and (24) of section 
     48A(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) Saturated market.--
       (A) In general.--For purposes of designating and publishing 
     those census tracts meeting the criteria described in 
     subsection (e)(20) of such section 48A--
       (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 submitted and the 
     applicable providers not later than 30 days after the last 
     date such submissions are allowed under clause (i).

[[Page S5361]]

       (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).
       (C) Authority to disregard false submissions.--In addition 
     to imposing any other applicable penalties, the Secretary of 
     the Treasury shall have the discretion to disregard any form 
     described in subparagraph (A)(i) on which a provider 
     knowingly submitted false information.
       (f) Other 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 Internet access 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.
       (g) Effective Date.--The amendments made by this section 
     shall apply to expenditures incurred after December 31, 2002.
                                 ______