Moynihan Offers Digital-Divide Tax Credit

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Washington-Sen. Daniel Patrick Moynihan (D-N.Y.) is sponsoring a bill that would provide tax credits to companies that serve poor and rural communities with zippy Internet access, marking another move in Congress to address the so-called digital divide.

At least six other bills are pending in Congress that partly mirror the bill (S. 2696), that Moynihan introduced June 8 with bipartisan support. The most popular bill to date is a local phone-industry-deregulation measure sponsored by Reps. Billy Tauzin (R-La.) and John Dingell (D-Mich.).

Under Moynihan's bill, companies would be eligible for tax credits by deploying broadband technologies in defined poor and rural communities. The extent of the credits would depend on the speed of the service, with a maximum 20 percent credit granted to providers of 22 megabits per second downstream and 10 mbps upstream.

Moynihan's bill is intended to close the gap between Americans in wealthy cities and suburbs who obtain commercial broadband Internet service and the millions of Americans who are dependent on much slower dial-up services due to economic and geographic constraints.

"The first, regular sustained commercial telephone services were offered in 1876, but it took more than 90 years to make the service available to 90 percent of residences in the United States," Moynihan said in a prepared statement. "It would be deplorable if it takes even half as long to bring existing broadband technology to the same number of Americans."

To spur companies to act quickly, the bill would provide credits until 2005. Cable, phone, satellite and wireless companies would all be eligible for the tax breaks. No price tag for the credits was detailed in the bill.

Moynihan, the ranking Democrat on the Senate Finance Committee, lined up a number of Senate Republicans as supporters, including Olympia Snowe (Maine), Sam Brownback (Kansas), Conrad Burns (Montana) and Pat Roberts (Kansas).

Moynihan's bill is similar to a bill (S. 2321) previously introduced by Snowe and Sen. Jay Rockefeller (D-W.Va.), which would target rural areas, but not urban areas, with broadband-tax credits of 10 percent and 20 percent, depending on the data-transmission speed.

Another bill (S. 2307), sponsored by Sen. Byron Dorgan (D-N.D.), would provide $3 billion in low-interest loans to broadband providers willing to serve cities and towns with 20,000 people or fewer.

The Tauzin-Dingell bill, which has more than 200 House co-sponsors, would not provide tax credits or loans. Instead, it aims to close the digital divide by allowing the four Baby Bell phone giants to transport Internet traffic long distance before they have opened their voice networks to competitors.

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