Fight nears over Senate tax incentives for broadband

The compromise Senate stimulus package that emerged over the weekend reduces funding for grants encouraging broadband deployment, particularly to rural areas, from $9 billion to $7.1 billion, putting the figure closer to the $6 billion approved by the House. But should the Senate approve the package Tuesday, it will set up a conference battle over the Senate's broadband-specific tax incentives that are absent from the House version.

The compromise spearheaded by Sens. Ben Nelson, D-Neb., and Susan Collins, R-Maine, includes an amendment authored by Senate Commerce Chairman John (Jay) Rockefeller that recalibrates tax incentives for telecommunications companies that build high-speed Internet networks. The Rockefeller proposal provides a 10 percent tax credit for investments in current broadband technology to underserved areas, a 20 percent credit for deployments to unserved locations and a 20 percent credit for building next-generation technology in both types of regions.

An industry source said the amendment might be modified to feature a 30 percent tax credit for investments in current technology and a 40 percent credit for constructing advanced infrastructure featuring faster speeds and more bandwidth. The amendment would replace proposed tax credits that place less emphasis on reaching unserved and underserved areas.

The House bill's grant provision has been worrisome to major telecom carriers because it comes with regulatory strings. Broadband grant money would be conditioned on abiding by the FCC's principles governing unfettered access to the Internet, known as network neutrality, and adherence to open access, an ambiguous term to be defined by the commission. Industry sources are unsure what lawmakers meant by open access, though the terminology has referred to enabling any device or software to operate on a carrier's network. The Senate compromise, viewed by the telecom industry as less onerous, states that grants are conditioned on nondiscriminatory Internet access and network interconnection privileges for competing telecom carriers.

In one area of agreement, both chambers have set aside an additional $650 million to bolster Commerce Department and FCC preparations for the nation's troubled transition to digital television signals. Money would largely help the department clear its backlog of requests for coupons for equipment enabling older TV sets to get digital signals, although some funds may be directed to support FCC call centers to answer questions about the transition. That is set to be postponed from Feb. 17 to June 12 under a bill President Obama is expected to sign.