Congress Gets Into Broadband Act

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Lawmakers are creating tax credits and loans to encourage telecommunications companies to deploy high-speed Internet services in low-income and rural communities.

A bill introduced last week by Sens. John Kerry (D-Mass.) and Orrin Hatch (R-Utah) urges states to use tax incentives to reward developers that provide broadband infrastructure in affordable housing complexes for low-income people.

States currently award federal Low-Income Housing Tax Credits to developers based on factors such as the number of poor people who will benefit from a new housing complex. Under the Kerry-Hatch bill, state housing agencies also would consider whether an apartment complex has high-speed Internet access.

Less than 30 percent of households with incomes below $35,000 have Internet access, according to the bill's proponents, which include telecommunications companies and advocates for the poor. They say the legislation would give developers a financial incentive to wire apartment complexes being built in low-income communities.

"This bill will help low-income families gain access to the new technologies and services that are driving today's modern economy, and it will do so at very minimal cost to developers," Kerry said.

Developers will "need to buy the equipment from us," said Grant Seiffert, vice president of the Telecommunications Industry Association, which supports the legislation. "The industry is looking for sales anywhere, whether they're through tax code issues or in sales that they haven't had."

In another attempt to boost the availability of broadband, the federal farm bill, signed May 13 by President Bush, includes several hundred million dollars in loans to encourage companies to launch broadband in rural communities.

The provision, authored by Rep. Jerry Moran (R-Kan.), authorizes $100 million over six years for loans in areas with up to 25,000 residents. The legislation also allots $20 million annually through fiscal year 2005 and $10 million each for 2006 and 2007.

Lawmakers said the Secretary of Agriculture is likely to disburse between $750 million and $1 billion in loans annually because the same funds can be loaned repeatedly once they are repaid.

Cable industry officials endorsed the loans, which are technology-neutral and can go to cable, satellite and telephone companies and other broadband providers.

"This loan program will go a long way toward filling in the broadband gaps and making sure all Americans will have access to broadband," AT&T vice president Peter Jacoby said.

Congress is considering other proposals to reward the deployment of high-speed Internet services.

Not everyone welcomed the federal involvement.

National Cable & Telecommunications Association spokesman Marc Smith said they were unnecessary. The industry already has spent about $60 billion to provide 70 percent of the country with broadband, with coverage expected to reach 90 percent by the end of the year, he said.

"We have a philosophical preference for the marketplace," Smith said. "We get nervous when the government decides it wants to get involved in something we've invested billions of dollars in."

Citizens Against Government Waste, a Washington-based advocacy group, called the tax credits and loans "inappropriate" uses of taxpayer dollars.

States News Service

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