[Congressional Record (Bound Edition), Volume 147 (2001), Part 1]
[Extensions of Remarks]
[Pages 1014-1015]
[From the U.S. Government Publishing Office, www.gpo.gov]



                     BROADBAND INTERNET ACCESS ACT

                                 ______
                                 

                           HON. PHIL ENGLISH

                            of pennsylvania

                    in the house of representatives

                       Tuesday, January 30, 2001

  Mr. ENGLISH. Mr. Speaker, today I am reintroducing the Broadband 
Internet Access Act, which is a bipartisan bill to encourage the spread 
of high-speed Internet technology in rural and low-income communities.
  Much in the role that canals played at the turn of the 19th century 
and the railroad played later in the century, the Internet is the 
critical infrastructure of our age. Communities without access will 
suffer as jobs and investment moves to connected communities. People in 
the rural or low-income communities are excluded from the personal and 
economic benefits of a high-speed information flow--a digital divide. 
The Broadband Internet Access Act of 2001 addresses the disparity in 
the availability of high-speed Internet access, also known as broadband 
services, in the United States.
  Underserved communities--typically rural and low-income areas--are 
lagging seriously behind. The digital divide compromises the enormous 
gains that could be achieved by the Internet economy. The Internet is a 
valuable tool and every American should have the opportunity to get up 
to speed on the information superhighway.
  I am submitting a technical explanation of the bill that is designed 
to stimulate the growth of high-speed Internet services.

                  Broadband Internet Access Tax Credit

                       (New Sec. 48A of the Code)


                              Present Law

       Present law does not provide a credit for investments in 
     telecommunications infrastructure.


                        Explanation of Provision

       The bill provides a credit equal to 10 percent of the 
     qualified expenditures incurred by the taxpayer with respect 
     to qualified equipment with which ``current generation'' 
     broadband services are delivered to subscribers in rural and 
     underserved areas. In addition, the bill provides a credit 
     equal to 20 percent of the qualified expenditures incurred by 
     the taxpayer with respect to qualified equipment with which 
     ``next generation'' broadband services are delivered to 
     subscribers in rural areas, underserved areas, and to 
     residential subscribers.
       Current generation broadband services is defined as the 
     transmission of signals at a rate of at least 1.5 million 
     bits per second to the subscriber and at a rate of at least 
     200,000 bits per second from the subscriber. Next generation 
     broadband services is defined as the transmission of signals 
     at a rate of at least 22 million bits per second to the 
     subscriber and at a rate of at least 5 million bits per 
     second from the subscriber. Taxpayers will be permitted to 
     substantiate their satisfaction of the required transmission 
     rates through statistically significant test data 
     demonstrating satisfaction of the required transmission 
     rates, by providing evidence that all relevant subscribers 
     were provided with a written guarantee that the required 
     transmission rates would be satisfied, or through any other 
     reasonable method. For this purpose, the fact that certain 
     subscribers are not able to access such services at the 
     required transmission rates due to limitations in equipment 
     outside of the control of the provider, or in equipment other 
     than qualified equipment, shall not be taken into account.
       A rural area is any census tract which is not within 10 
     miles of any incorporated or census designated place with a 
     population of more than 25,000 and which is not within a 
     county with a population density of more than 500 people per 
     square mile. An underserved area is any census tract which is 
     located in an


                         Qualified Expenditures

       Qualified expenditures are those amounts otherwise 
     chargeable to the capital account with respect to the 
     purchase and installation of qualified equipment for which 
     depreciation is allowable under section 168. Qualified 
     expenditures are those that are incurred by the taxpayer 
     after December 31, 2001, and before January 1, 2006.
       The expenditures are taken into account for purposes of 
     claiming the credit in the first taxable year in which 
     broadband service is delivered to at least 10 percent of the 
     specified type of subscribers which the qualified equipment 
     is capable of serving in an area in which the provider has 
     legal or contractual area access rights or obligations. For 
     this purpose, it is intended that the subscribers which the 
     equipment is capable of serving will be determined by the 
     least capable link in the system. For example, if a system 
     has a packet switch capable of serving 10,000 subscribers, 
     followed by a digital subscriber line access multiplexer 
     (``DSLAM'') capable of serving only 2,000 subscribers, then 
     the area which the equipment is capable of serving is the 
     area served by the 2,000 DSLAM lines.
       Although the credit only applies with respect to qualified 
     expenditures incurred during specified periods, the fact that 
     the expenditures are not taken into account until a later 
     period will not affect the taxpayer's eligibility for the 
     credit. For example, if a taxpayer incurs qualified 
     expenditures with respect to equipment providing next 
     generation broadband services in 2004, but the taxpayer does 
     not satisfy the 10 percent subscription threshold until 2005, 
     the taxpayer will be eligible for the credit in 2005 
     (assuming the other requirements of the bill are satisfied). 
     To substantiate their satisfaction of the 10 percent 
     subscription threshold, taxpayers will be required to provide 
     such information as is required by the Secretary, which may 
     include relevant customer data or evidence of independent 
     certification.

[[Page 1015]]

       In the case of a taxpayer that incurs expenditures for 
     equipment capable of serving both subscribers in qualifying 
     areas and other areas, qualified expenditures are determined 
     by multiplying otherwise qualified expenditures by the ratio 
     of the number of potential qualifying subscribers to all 
     potential subscribers the qualified equipment would be 
     capable of serving, as determined by the least capable link 
     in the system. Taxpayers may use any reasonable method to 
     determine the relevant total potential subscriber population, 
     based on the most recently published census data. In 
     addition, for purposes of substantiating the total potential 
     subscriber population which equipment is capable of serving, 
     taxpayers will be required to provide such information as is 
     required by the Secretary, which may include manufacturer's 
     equipment ratings or evidence of independent certification.


                          Qualified equipment

       Qualified equipment must be capable of providing broadband 
     services at any time to each subscriber who is utilizing such 
     services. It is intended that this standard would be 
     satisfied if a subscriber utilizing broadband services 
     through the equipment is able to receive the specified 
     transmission rates in at least 99 out of 100 attempts.
       In the case of a telecommunications carrier, qualified 
     equipment is equipment that extends from the last point of 
     switching to the outside of the building in which the 
     subscriber is located. In the case of a commercial mobile 
     service carrier, qualified equipment is equipment that 
     extends from the customer side of a mobile telephone 
     switching office to a transmission/reception antenna 
     (including the antenna) of the subscriber. In the case of a 
     cable operator or open video system operator, qualified 
     equipment is equipment that extends from the customer side of 
     the headend to the outside of the building in which the 
     subscriber is located. In the case of a satellite carrier or 
     other wireless carrier (other than a telecommunications 
     carrier), qualified equipment is equipment that extends from 
     a transmission/reception antenna (including the antenna) to a 
     transmission/reception antenna on the outside of the building 
     used by the subscriber. In addition, any packet switching 
     equipment deployed in connection with other qualified 
     equipment is qualified equipment, regardless of location, 
     provided that it is the last such equipment in a series as 
     part of transmission of a signal to a subscriber or the first 
     in a series in the transmission of a signal from a 
     subscriber. Finally, multiplexing and demultiplexing 
     equipment and other equipment making associated applications 
     deployed in connection with other qualified equipment is 
     qualified equipment only if it is located between qualified 
     packet switching equipment and the subscriber's premises.
       Although a taxpayer must incur the expenditures directly in 
     order to qualify for the credit, the taxpayer may provide the 
     requisite broadband services either directly or indirectly. 
     For example, if a partnership constructs qualified equipment 
     or otherwise incurs qualified expenditures, but the requisite 
     services are provided by one or more of its partners, the 
     partnership will be eligible for the credit (assuming the 
     other requirements of the bill are satisfied). It is 
     anticipated that the Secretary will issue regulations or 
     other published guidance demonstrating how the requirements 
     of the bill are satisfied in such situations.


                             Effective date

       The provision is effective for expenditures incurred after 
     December 31, 2001.

     

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