To qualify for the tax credits, the projects of a “qualified broadband provider” must meet minimum download speeds of 50 Mbps for upgrades of existing infrastructure or 10 Mbps for new projects in unserved territories.

U.S. Senator Kay Bailey Hutchinson (R-Texas), Ranking Member on the Senate Commerce, Science, and Transportation Committee, recently introduced Senate Bill 1447, the “Connecting America Act of 2009,” which includes legislation designed to boost investment in broadband service in unserved and underserved markets.

Overview

As introduced, the new legislation would provide limited-duration tax credits on infrastructure investments that improve broadband service speed or availability by a minimum percentage or beyond a minimum speed. It would also permit government entities to issue tax-credit bonds to fund investments in broadband infrastructure.

In order to qualify for the tax credits, the projects of a “qualified broadband provider” must meet minimum download speeds of 50 megabits per second (Mbps) for upgrades of existing infrastructure or 10 Mbps for new projects in unserved territories. A “qualified investment” generally includes projects that increase existing service speeds by greater than 50 percent of existing service speeds (to a minimum of 50 Mbps), improve service speeds to advertised maximums of greater than 50 Mbps downstream or make broadband service of at least 10 Mbps available downstream to an unserved area.

A “qualified broadband provider” is defined as any cable operator, commercial mobile service carrier, open video system operator, satellite carrier, telecommunications carrier or other wireless carrier offering broadband service to subscribers through qualified equipment.

The most significant tax credits would go to service providers delivering at least 10 Mbps to unserved areas. The amount of the applicable tax credit varies according to the increase in service speed or availability, ranging from 15 percent to 30 percent of the qualified investment. The bill would allow certain struggling businesses making broadband investments to transfer the tax credits to a limited category of businesses that includes equipment manufacturers and service providers that assist in the development of infrastructure.

The bill would also change the structure of federal broadband oversight by establishing an Office of National Broadband Strategy. The office would be tasked with reporting on the effectiveness of the various government-funding programs, and with assisting those broadband providers receiving funds under various enumerated grant programs that serve to spread broadband access to unserved and underserved areas. The legislation would also streamline the local zoning approval process for modifications of existing wireless towers.