Broadband Legislation: A Tough Sell

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Telecommunications trade groups were thrilled in mid-May, when the Senate passed a massive tax-cut package that included incentives for companies to deploy high-speed Internet services in rural and underserved areas.

By Washington standards, the broadband provision was rather small. It would have expired after one year, and its $219 million price tag represented barely half of 1% of the overall $350 billion tax-cut package.

Meager or not, industry groups were thrilled that the provision — which consisted of a 50% "expensing" allowance for deploying current-generation broadband and a 100% allowance for launching next-generation technology — was inserted as an amendment to the tax bill, without objection.

Not for long

"The result of this legislation will be a new broadband infrastructure that will serve this country for decades to come," Telecommunications Industry Association president Matthew Flanigan said in one of several typically celebratory industry statements. "It is yet another necessary piece of the puzzle that will help get the telecom sector out of its current recession."

Five days later, though, the trade groups and lobbyists had stopped smiling.

Republican leaders had cut the broadband provision, sponsored by Sen. Conrad Burns (R-Mont.), from the final version of the tax bill, as they tried to reduce the package's cost.

This wasn't the first time that a broadband-related provision had been tucked into a bigger tax or spending package, only to be removed later by congressional leaders.

In late 2001, a similar item was included in early versions of an economic-stimulus package, but not in the final version that became law.

"It is one of those amendments that always comes up," Sen. Jay Rockefeller (D-W.Va.) said of the Burns provision. "Everybody knows it should get done, and it never seems to."

While Burns's amendment was one of several stripped at the last moment by House and Senate negotiators, some lawmakers and lobbyists saw its removal as part of a broader problem that the broadband industry faces in its quest for help from the federal government.

Broad support

To be sure, most lawmakers agree that high-speed Internet should be universally available. The idea of using the tax code to encourage broadband deployment also seems to enjoy bipartisan support.

Sometimes that support translates into legislative results. The 2002 farm bill, for example, included a program to loan money and guarantee loans for broadband projects in rural areas.

American Cable Association president Matt Polka said the farm bill's loan program reflects "a recognition and a desire from a number of lawmakers to see this issue to the finish line, and to a large part they're being successful."

But while a few other loan programs have been enacted in recent years, Polka said there are "not enough of them, quite frankly," to cover the extensive capital costs that would be required to launch broadband service throughout rural America.

To some industry and congressional officials, the repeated disappearance of broadband initiatives in tax-and-spending bills seems to be part of the same problem.

They say that despite the generally broad support, some key policymakers aren't onboard the broadband bandwagon.

A chief culprit, lobbyists said, is Rep. Bill Thomas, the California Republican who chairs the tax-writing House Ways and Means Committee. Thomas reportedly demanded this spring that the broadband provision be knocked out of the tax-cut bill.

"Obviously we have to do a better education job with him on the benefits," said a lobbyist for a major cable-manufacturer that was one of the most aggressive backers of the Burns provision.

"Thomas is certainly the guy you have to influence," said Grant Seiffert, vice president for global policy at the Telecommunications Industry Association. "There are certain priorities that the chairman has, and this is not one of them — yet."

Part of the problem is that Thomas and other House leaders are apparently reluctant to use tax policy to encourage certain behavior from specific industries, especially the technology and telecommunications sectors, some congressional aides say.

"They look at it and see broadband and they think it's issue-specific or one-industry-specific," said Jarrod Thompson, a telecommunications aide to Burns. "They just think, 'This is for telecom companies, and we don't want anything industry-specific in there,' and they take it out."

Several lobbyists and congressional aides point out, however, that Thomas has been acting largely on behalf of the White House when he pares down tax-and-spending packages.

"It's all about finding the right vehicle around here, and at this point, the House and the White House didn't want anything that wasn't in the president's original package," Thompson said.

Said Seiffert: "Their excuse right now is to keep the president's package clean. It's been our experience that the administration wants to focus on broad-based initiatives, rather than targeting specific industries, except for the airline folks."

Some lobbyists and industry officials said they needed to "educate" White House and Bush administration officials, as much as House leaders like Thomas. While the administration has embraced the concept of universally available broadband, they said, officials haven't seemed willing to take industry-supported stands on broadband policy.

"I think it's a goal of the administration, but I just think when you consider all the other things going on, it's a matter of priorities," said Veronica O'Connell, director of congressional affairs for the Consumer Electronics Association.

Road map needed

"One of the problems that we have is that we don't have a national broadband policy," she said. "We don't have a road map to go by, other than the ultimate goal of universal broadband deployment."

O'Connell said the administration should announce a goal of making broadband universally available within a certain time frame, perhaps five years. That would make it easier to convince congressional leaders to pay more attention to broadband-related issues, she said.

States News Service

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