Senate looks to scale back wireless tax credits for broadband

The Senate is considering scaling back tax credits for wireless companies to deliver broadband access to rural areas, as it looks to make the rules for delivering access stricter while increasing the size of the actual tax credits.

The new amendments being proposed to the Senate version of the economic stimulus bill by Sen. Jay Rockefeller, D-W.Va., would alter rules Rockefeller himself had put forward earlier. The new rules would only offer credits for broadband service to rural areas and places where there is no broadband access at all. The tax credit would be 40 percent for service that is 100 Mbps downlink per second or better and 30 percent for slower service that is at least 5 Mbps downlink. There would be no tax breaks for providing service to underserved, or low-income areas.  

The amendment also focuses specifically on wireless data speeds and would allow wireless data service that provide download speeds of a minimum of 6 Mbps to qualify for the 40 percent credit and wireless service of 3 Mbps or more to qualify for the 30 percent credit. The Rockefeller amendments do not include open access provisions.

The tax credits could be a potential boon for Verizon and AT&T, as well as Sprint Nextel and T-Mobile USA, which have been angling for broadband stimulus incentives, and have specifically lobbied for tax credits. The tax credit policy is a different strategy from that of the House, where grants have been provided for wireless broadband access. The two versions would have to be reconciled in conference.

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