S 2698 IS
106th CONGRESS
2d Session
S. 2698
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 SENATE OF THE UNITED STATES
June 8, 2000
Mr. MOYNIHAN (for himself, Mr. KERRY, Mr. ROCKEFELLER, Ms. SNOWE, Mr. ALLARD,
Mr. BAUCUS, Mr. BREAUX, Mr. BROWNBACK, Mr. BRYAN, Mr. BUNNING, Mr. BURNS, Mr.
DASCHLE, Mr. DURBIN, Mr. HOLLINGS, Mr. HUTCHINSON, Mr. JOHNSON, Mr. KENNEDY, Mr.
KERREY, Ms. LANDRIEU, Mrs. LINCOLN, Ms. MIKULSKI, Mr. REID, Mr. ROBB, Mr.
ROBERTS, Mr. SCHUMER, Mr. THURMOND, Mr. ENZI, Mrs. BOXER, and Mr. DEWINE)
introduced the following bill; which was read twice and referred to the
Committee on Finance
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 2000'.
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 the on-going 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 offering
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 offering 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 current generation broadband services or next generation broadband
services are offered by the taxpayer through such equipment to
subscribers.
`(2) OFFER OF SERVICES- For purposes of paragraph (1), the offer 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 taxpayer.
`(d) SPECIAL ALLOCATION RULES-
`(1) CURRENT GENERATION BROADBAND SERVICES- For purposes of determining
the current generation broadband credit under subsection (a)(1), 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, and
`(B) the denominator of which is the total potential subscriber
population of the area which the equipment is capable of serving.
`(2) NEXT GENERATION BROADBAND SERVICES- For purposes of determining the
next generation broadband credit under subsection (a)(2), 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, and
`(B) the denominator of which is the total potential subscriber
population of the area which the equipment is capable of serving.
`(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) 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 10,000,000 bits
per second from the subscriber.
`(6) NONRESIDENTIAL SUBSCRIBER- The term `nonresidential subscriber'
means a person or entity who purchases broadband services which are
delivered to the permanent place of business of such person or entity.
`(7) 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).
`(8) 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.
`(9) PACKET SWITCHING- The term `packet switching' means controlling or
routing the path of a digitized transmission signal which is assembled into
packets or cells.
`(10) 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), 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) on the outside of the unit, building, dwelling, or office 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 it 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.
`(11) QUALIFIED EXPENDITURE-
`(A) IN GENERAL- The term `qualified expenditure' means any amount
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.
`(B) CERTAIN SATELLITE EXPENDITURES EXCLUDED- Such term shall not
include any expenditure with respect to the launching of any satellite
equipment.
`(12) RESIDENTIAL SUBSCRIBER- The term `residential subscriber' means an
individual who purchases broadband services which are delivered to such
individual's dwelling.
`(A) IN GENERAL- 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.
`(B) RURAL AREA- The term `rural area' means any census tract
which--
`(i) is not within 10 miles of any incorporated or census designated
place containing more than 25,000 people, and
`(ii) is not within a county or county equivalent which has an
overall population density of more than 500 people per square mile of
land.
`(14) 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.
`(15) SUBSCRIBER- The term `subscriber' means a person who purchases
current generation broadband services or next generation broadband
services.
`(16) 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.
`(17) 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.
`(18) UNDERSERVED SUBSCRIBER-
`(A) IN GENERAL- 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.
`(B) UNDERSERVED AREA- The term `underserved area' means any census
tract--
`(i) the poverty level of which is at least 30 percent (based on the
most recent census data),
`(ii) the median family income of which does not
exceed--
`(I) in the case of a census tract located in a metropolitan
statistical area, 70 percent of the greater of the metropolitan area
median family income or the statewide median family income,
and
`(II) in the case of a census tract located in a nonmetropolitan
statistical area, 70 percent of the nonmetropolitan statewide median
family income, or
`(iii) which is located in an empowerment zone or enterprise
community designated under section 1391.
`(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 (13)(B) and
(18)(B) of subsection (e), and such tracts shall remain so designated for the
period ending with the termination date described in subsection (g).
`(g) TERMINATION- This section shall not apply to expenditures incurred
after December 31, 2005.'
(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.'
(1) IN GENERAL- Except as provided in paragraph (2), the amendments made
by this section shall apply to expenditures incurred after December 31,
2000.
(2) SPECIAL RULE- The amendments made by subsection (c) shall apply to
amounts received after December 31, 2000.
SEC. 4. REGULATORY MATTERS.
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 section 3) or otherwise subverting the purpose of this Act.
SEC. 5. STUDY AND REPORT.
(a) SENSE OF CONGRESS- It is the sense of Congress that in order to
maintain competitive neutrality, the credit allowed under section 48A of the
Internal Revenue Code of 1986 (as added by section 3) should be administered
in such a manner so as to ensure that each class of carrier receives the same
level of financial incentive to deploy current generation broadband services
and next generation broadband services.
(b) STUDY AND REPORT- The Secretary of the Treasury shall, within 180 days
after the effective date of section 3, study the impact of the credit allowed
under section 48A of the Internal Revenue Code of 1986 (as added by section 3)
on the relative competitiveness of potential classes of carriers of current
generation broadband services and next generation broadband services, and
shall report to Congress the findings of such study, together with any
legislative or regulatory proposals determined to be necessary to ensure that
the purposes of such credit can be furthered without impacting competitive
neutrality among such classes of carriers.
END