HR 267 IH
107th CONGRESS
1st Session
H. R. 267
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 HOUSE OF REPRESENTATIVES
January 30, 2001
Mr. ENGLISH (for himself, Mr. MATSUI, Mr. HAYES, Mr. CONYERS, Mr. TANNER, Mr.
SHERWOOD, Mr. HEFLEY, Mr. EHRLICH, Ms. ESHOO, Mr. MCINNIS, Ms. DUNN, Mr.
WATKINS, Mr. SAXTON, Mr. MEEKS of New York, Mr. HASTINGS of Washington, Mr.
SMITH of Washington, Mr. RADANOVICH, Mr. THOMAS M. DAVIS of Virginia, Mr. MOORE,
Mr. SMITH of Texas, Ms. GRANGER, Mr. DOOLEY of California, Mr. BAIRD, Mr. POMBO,
Mr. FOLEY, Mr. BALLENGER, Mr. MCDERMOTT, Mr. THORNBERRY, Mr. SHIMKUS, Mr. ALLEN,
Mr. HINOJOSA, Mr. SHOWS, Mr. LAMPSON, Mr. DREIER, Mr. ISTOOK, Mr. BAKER, Mr.
BURR of North Carolina, Mrs. MEEK of Florida, Mr. ISRAEL, Mr. OWENS, Ms. CAPITO,
Mr. GOODLATTE, Mr. HAYWORTH, Mr. FORD, Mr. BLAGOJEVICH, Mrs. JONES of Ohio, Mr.
GOODE, Mr. DICKS, Mr. WICKER, Mr. BALDACCI, Mr. THOMPSON of Mississippi, Mr.
GIBBONS, Ms. JACKSON-LEE of Texas, Mr. PETERSON of Pennsylvania, and Mr.
HINCHEY) introduced the following bill; which was referred to the Committee on
Ways and Means
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 2001'.
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 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
delivering 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 delivering 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--
`(A) current generation broadband services are delivered through such
equipment to rural subscribers or underserved subscribers, or
`(B) next generation broadband services are delivered through such
equipment to rural subscribers, underserved subscribers, or any other
residential subscribers.
`(2) DELIVERY OF SERVICES- For purposes of paragraph (1), the delivery
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
provider.
`(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 delivered, 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 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
delivered, 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 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
1,500,000 bits per second to the subscriber and at least 200,000 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 a 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 radio transmission of energy.
`(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--
`(B) a commercial mobile service carrier,
`(C) an open video system operator, or
`(D) a satellite carrier, telecommunications carrier, or other
wireless carrier,
providing current generation broadband services or next generation
broadband services to subscribers through such qualified equipment.
`(12) 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) 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.
`(13) 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, 2001, and before January 1,
2006.
`(B) CERTAIN SATELLITE EXPENDITURES EXCLUDED- Such term shall not
include any expenditure with respect to the launching of any satellite
equipment.
`(14) RESIDENTIAL SUBSCRIBER- The term `residential subscriber' means an
individual who purchases broadband services which are delivered to such
individual's dwelling.
`(15) 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.
`(16) RURAL SUBSCRIBER- 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.
`(17) 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.
`(18) SUBSCRIBER- The term `subscriber' means a person who purchases
current generation broadband services or next generation broadband
services.
`(19) 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.
`(20) 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.
`(21) 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.
`(22) UNDERSERVED SUBSCRIBER- 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.
`(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 (15) and (21)
of subsection (e).'.
(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) 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 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.
Until the Secretary prescribes such regulations, taxpayers may base such
determinations on any reasonable method that is consistent with the purposes
of section 48A of such Code.
(1) IN GENERAL- Except as provided in paragraph (2), the amendments made
by this section shall apply to expenditures incurred after December 31,
2001.
(2) SPECIAL RULE- The amendments made by subsection (c) shall apply to
amounts received after December 31, 2001.
END