Senate scaling back broadband tax credits in stimulus package

The Senate last week fine-tuned language in its proposed economic stimulus package, cutting $1.5 billion from the $9 billion proposed for broadband buildouts and fine-tuning language to tighten up tax credits for buildouts. 

Under the original language, Verizon, for example, might have gotten a $1.6 billion tax break from a 20 percent tax credit for any investment in 100 Mbps broadband service to any home.

Sen. Jay Rockefeller, D-W.Va., was the original proponent of the $9 billion broadband investment and proposed an amendment to significantly tighten the rules and increase the amount of tax credit. The new plan would only offer credits for broadband services to rural and unserved areas, with a 40 percent credit for 100 Mbps or better service and 30 percent for slower service of at least 5 Mbps. Wireless data services allowing downloads of 6 Mbps or better also get the 40 percent credit and 30 percent if they manage at least 3 Mbps.

Tax credits for Internet service to low-income areas have been eliminated too, primarily because some operators were already planning on bringing broadband services to low-income neighborhoods. Senators didn't want to offer a tax break for investments these operators had already planning on making.

Details on open access and which federal agencies will distribute the money are still being debated. And the Senate version of the stimulus package will have to be reconciled with the House version, which calls for $6 billion, including $1 billion for wireless, to go to broadband deployments.

For more:
- see the WSJ (sub. req.)

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