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Hutchison bill seeks tax credits, bonds for broadband

By Kenneth Corbin on July 14, 2009 6:30 PM

After Congress set aside $7.2 billion for broadband projects in the stimulus package, Internet advocates heralded the bill as a welcome first step for bringing the country's digital communications infrastructure up to speed. But only a first step.

Count among those Kay Bailey Hutchison, the Ranking Republican on the Senate Commerce Committee, who this morning introduced the Connecting America Act of 2009, a bill that would create tax credits and a bond program to encourage private and community investment in broadband networks.

Much like the first tranche of the stimulus money, Hutchison's bill favors development in areas where broadband service is slowest or nonexistent.

One section of the tax incentives, for instance, offers a 15 percent credit for qualified investments that increase service speeds by 50 percent, and a 30 percent credit for projects that deliver networks with at least 10 Mbps downstream speeds to unserved areas.

Net neutrality advocates are likely to take issue with the bond program in Hutchison's bill, designed to spur community investment in new broadband projects.

In the section laying out the eligibility for the bonds, the bill reads:

"All broadband providers shall be eligible to bid for a contract ... regardless of the technology used to deliver the broadband service, and selection and receipt of available project proceeds may not be conditioned on adoption of open access or non-discrimination principles."

Open access and non-discrimination requirements were made conditions of the broadband grants included in the stimulus bill, which Hutchison voted against, as did all but three Republicans.

The broadband provisions in that bill weren't especially controversial -- given the remaining $780 billion that went to other projects castigated as non-job-creating earmarks, pork and all the rest of it.

But the broadband provisions were the subject of a separate markup session in the House Energy and Commerce Committee. Some conservative voices in the debate argued that tax incentives would trickle into the economy faster than direct grants or loans, which can get bogged down in the red tape of the application process.

In addition to the tax credits and bonds, Hutchison's bill would create an Office of National Broadband Strategy within the National Telecommunications and Information Administration, a division of the Commerce Department.

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