I 

108TH CONGRESS 

1ST SESSION H. R. 267

To amend the Internal Revenue Code of 1986 to provide an incentive to 

ensure that all Americans gain timely and equitable access to the Internet 

over current and future generations of broadband capability. 

IN THE HOUSE OF REPRESENTATIVES 

JANUARY 8, 2003

Mr. ENGLISH introduced the following bill; which was referred to the 

Committee on Ways and Means 

A BILL

To amend the Internal Revenue Code of 1986 to provide 

an incentive to ensure that all Americans gain timely 

and equitable access to the Internet over current and 

future generations of broadband capability.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Broadband Internet 

5 Access Act of 2003’’. 

6 SEC. 2. FINDINGS AND PURPOSE. 

7 (a) FINDINGS.—The Congress finds the following: 
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1 (1) The Internet has been the single greatest 

2 contributor to the unprecedented economic expansion 

3 experienced by the United States over the last 8 

4 years. 

5 (2) Increasing the speed that Americans can ac6 cess the Internet is necessary to ensure the contin7 ued expansion. 

8 (3) Today, most residential Internet users, es9 pecially those located in low income and rural areas, 

10 are extremely limited in the type of information they 

11 can send and receive over the Internet because their 

12 means of access is limited to ‘‘narrowband’’ commu13 nications media, typically conventional phone lines at 

14 a maximum speed of 56,000 bits per second. 

15 (4) Similarly, small businesses in low income 

16 and rural areas are also deprived of full information 

17 access because of their dependence on narrowband 

18 facilities. 

19 (5) By contrast, many residential users located 

20 in higher income urban and suburban areas and 

21 urban business users can access the Internet from a 

22 variety of carriers at current generation broadband 

23 speeds in excess of 1,500,000 bits per second, giving 

24 them a choice among carriers and high-speed access 

25 to a wide array of audio and data applications. 
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1 (6) The result is a growing disparity in the 

2 speed of access to the Internet and the opportunities 

3 it creates between subscribers located in low income 

4 and rural areas and subscribers located in higher in5 come urban and suburban areas. 

6 (7) At the same time, experts project that, 

7 under current financial and regulatory conditions, 

8 the facilities needed to transmit next generation 

9 broadband services over the Internet to residential 

10 users at speeds in excess of 10,000,000 bits per sec11 ond will not be as ubiquitously available as is tele12 phone service until sometime between the years 2030 

13 and 2040. 

14 (8) Experts also believe that, under current fi15 nancial and regulatory conditions, the disparity in 

16 access will be exacerbated with the deployment of 

17 next generation broadband capability. 

18 (9) The disparity in current broadband access 

19 to the Internet, the slow pace of deployment of next 

20 generation broadband capability, and the projected 

21 disparity in access to such capability will likely prove 

22 detrimental to economic expansion. 

23 (10) It is, therefore, appropriate for Congress 

24 to take action to narrow the current and future dis25 parity in the level of broadband access to the Inter-
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1 net, and to accelerate deployment of next generation 

2 broadband capability. 

3 (b) PURPOSE.—The purpose of this Act is to accel4 erate deployment of current generation broadband access 

5 to the Internet for users located in certain low income and 

6 rural areas and to accelerate deployment of next genera7 tion broadband access for all Americans. 

8 SEC. 3. BROADBAND CREDIT. 

9 (a) IN GENERAL.—Subpart E of part IV of chapter 

10 1 of the Internal Revenue Code of 1986 (relating to rules 

11 for computing investment credit) is amended by inserting 

12 after section 48 the following new section: 

13 ‘‘SEC. 48A. BROADBAND CREDIT. 

14 ‘‘(a) GENERAL RULE.—For purposes of section 46, 

15 the broadband credit for any taxable year is the sum of—

16 ‘‘(1) the current generation broadband credit, 

17 plus 

18 ‘‘(2) the next generation broadband credit. 

19 ‘‘(b) CURRENT GENERATION BROADBAND CREDIT; 

20 NEXT GENERATION BROADBAND CREDIT.—For purposes 

21 of this section—

22 ‘‘(1) CURRENT GENERATION BROADBAND

23 CREDIT.—The current generation broadband credit 

24 for any taxable year is equal to 10 percent of the 

25 qualified expenditures incurred with respect to quali-
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1 fied equipment delivering current generation 

2 broadband services to rural subscribers or under3 served subscribers and taken into account with re4 spect to such taxable year. 

5 ‘‘(2) NEXT GENERATION BROADBAND CRED6 IT.—The next generation broadband credit for any 

7 taxable year is equal to 20 percent of the qualified 

8 expenditures incurred with respect to qualified 

9 equipment delivering next generation broadband 

10 services to all rural subscribers, all underserved sub11 scribers, or any other residential subscribers and 

12 taken into account with respect to such taxable year. 

13 ‘‘(c) WHEN EXPENDITURES TAKEN INTO AC14 COUNT.—For purposes of this section—

15 ‘‘(1) IN GENERAL.—Qualified expenditures with 

16 respect to qualified equipment shall be taken into ac17 count with respect to the first taxable year in 

18 which—

19 ‘‘(A) current generation broadband services 

20 are delivered through such equipment to rural 

21 subscribers or underserved subscribers, or

22 ‘‘(B) next generation broadband services 

23 are delivered through such equipment to rural 

24 subscribers, underserved subscribers, or any 

25 other residential subscribers. 
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1 ‘‘(2) DELIVERY OF SERVICES.—For purposes of 

2 paragraph (1), the delivery of current generation 

3 broadband services or next generation broadband 

4 services through qualified equipment occurs when 

5 such class of service is purchased by and provided 

6 to at least 10 percent of the subscribers described in 

7 subsection (b) which such equipment is capable of 

8 serving through the legal or contractual area access 

9 rights or obligations of the provider. 

10 ‘‘(d) SPECIAL ALLOCATION RULES.—

11 ‘‘(1) CURRENT GENERATION BROADBAND SERV12 ICES.—For purposes of determining the current gen13 eration broadband credit under subsection (a)(1) 

14 with respect to qualified equipment through which 

15 current generation broadband services are delivered, 

16 if the qualified equipment is capable of serving both 

17 the subscribers described under subsection (b)(1) 

18 and other subscribers, the qualified expenditures 

19 shall be multiplied by a fraction—

20 ‘‘(A) the numerator of which is the sum of 

21 the total potential subscriber populations within 

22 the rural areas and the underserved areas 

23 which the equipment is capable of serving with 

24 current generation broadband services, and 
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1 ‘‘(B) the denominator of which is the total 

2 potential subscriber population of the area 

3 which the equipment is capable of serving with 

4 current generation broadband services. 

5 ‘‘(2) NEXT GENERATION BROADBAND SERV6 ICES.—For purposes of determining the next genera7 tion broadband credit under subsection (a)(2) with 

8 respect to qualified equipment through which next 

9 generation broadband services are delivered, if the 

10 qualified equipment is capable of serving both the 

11 subscribers described under subsection (b)(2) and 

12 other subscribers, the qualified expenditures shall be 

13 multiplied by a fraction—

14 ‘‘(A) the numerator of which is the sum 

15 of—

16 ‘‘(i) the total potential subscriber pop17 ulations within the rural areas and under18 served areas, plus 

19 ‘‘(ii) the total potential subscriber 

20 population of the area consisting only of 

21 residential subscribers not described in 

22 clause (i), 

23 which the equipment is capable of serving with 

24 next generation broadband services, and 
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1 ‘‘(B) the denominator of which is the total 

2 potential subscriber population of the area 

3 which the equipment is capable of serving with 

4 next generation broadband services. 

5 ‘‘(e) DEFINITIONS.—For purposes of this section—

6 ‘‘(1) ANTENNA.—The term ‘antenna’ means 

7 any device used to transmit or receive signals 

8 through the electromagnetic spectrum, including sat9 ellite equipment. 

10 ‘‘(2) CABLE OPERATOR.—The term ‘cable oper11 ator’ has the meaning given such term by section 

12 602(5) of the Communications Act of 1934 (47 

13 U.S.C. 522(5)). 

14 ‘‘(3) COMMERCIAL MOBILE SERVICE CAR15 RIER.—The term ‘commercial mobile service carrier’ 

16 means any person authorized to provide commercial 

17 mobile radio service as defined in section 20.3 of 

18 title 47, Code of Federal Regulations. 

19 ‘‘(4) CURRENT GENERATION BROADBAND SERV20 ICE.—The term ‘current generation broadband serv21 ice’ means the transmission of signals at a rate of 

22 at least 1,500,000 bits per second to the subscriber 

23 and at least 200,000 bits per second from the sub24 scriber. 
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1 ‘‘(5) MULTIPLEXING OR DEMULTIPLEXING.—

2 The term ‘multiplexing’ means the transmission of 2 

3 or more signals over a single channel, and the term 

4 ‘demultiplexing’ means the separation of 2 or more 

5 signals previously combined by compatible multi6 plexing equipment. 

7 ‘‘(6) NEXT GENERATION BROADBAND SERV8 ICE.—The term ‘next generation broadband service’ 

9 means the transmission of signals at a rate of at 

10 least 22,000,000 bits per second to the subscriber 

11 and at least 5,000,000 bits per second from the sub12 scriber. 

13 ‘‘(7) NONRESIDENTIAL SUBSCRIBER.—The 

14 term ‘nonresidential subscriber’ means a person who 

15 purchases broadband services which are delivered to 

16 the permanent place of business of such person. 

17 ‘‘(8) OPEN VIDEO SYSTEM OPERATOR.—The 

18 term ‘open video system operator’ means any person 

19 authorized to provide service under section 653 of 

20 the Communications Act of 1934 (47 U.S.C. 573). 

21 ‘‘(9) OTHER WIRELESS CARRIER.—The term 

22 ‘other wireless carrier’ means any person (other than 

23 a telecommunications carrier, commercial mobile

24 service carrier, cable operator, open video system op25 erator, or satellite carrier) providing current genera-
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1 tion broadband services or next generation 

2 broadband service to subscribers through the radio 

3 transmission of energy. 

4 ‘‘(10) PACKET SWITCHING.—The term ‘packet 

5 switching’ means controlling or routing the path of 

6 a digitized transmission signal which is assembled 

7 into packets or cells. 

8 ‘‘(11) PROVIDER.—The term ‘provider’ means, 

9 with respect to any qualified equipment—

10 ‘‘(A) a cable operator, 

11 ‘‘(B) a commercial mobile service carrier, 

12 ‘‘(C) an open video system operator, or 

13 ‘‘(D) a satellite carrier, telecommunications 

14 carrier, or other wireless carrier, 

15 providing current generation broadband services or 

16 next generation broadband services to subscribers 

17 through such qualified equipment. 

18 ‘‘(12) QUALIFIED EQUIPMENT.—

19 ‘‘(A) IN GENERAL.—The term ‘qualified 

20 equipment’ means equipment capable of pro21 viding current generation broadband services or 

22 next generation broadband services at any time 

23 to each subscriber who is utilizing such services.

24 ‘‘(B) ONLY CERTAIN INVESTMENT TAKEN

25 INTO ACCOUNT.—Except as provided in sub-
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1 paragraph (C) or (D), equipment shall be taken 

2 into account under subparagraph (A) only to 

3 the extent it—

4 ‘‘(i) extends from the last point of 

5 switching to the outside of the unit, build6 ing, dwelling, or office owned or leased by 

7 a subscriber in the case of a telecommuni8 cations carrier, 

9 ‘‘(ii) extends from the customer side 

10 of the mobile telephone switching office to 

11 a transmission/receive antenna (including 

12 such antenna) owned or leased by a sub13 scriber in the case of a commercial mobile 

14 service carrier, 

15 ‘‘(iii) extends from the customer side 

16 of the headend to the outside of the unit, 

17 building, dwelling, or office owned or 

18 leased by a subscriber in the case of a 

19 cable operator or open video system oper20 ator, or 

21 ‘‘(iv) extends from a transmission/re22 ceive antenna (including such antenna) 

23 which transmits and receives signals to or 

24 from multiple subscribers to a trans25 mission/receive antenna (including such 
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1 antenna) on the outside of the unit, build2 ing, dwelling, or office owned or leased by

3 a subscriber in the case of a satellite car4 rier or other wireless carrier, unless such 

5 other wireless carrier is also a tele6 communications carrier. 

7 ‘‘(C) PACKET SWITCHING EQUIPMENT.—

8 Packet switching equipment, regardless of loca9 tion, shall be taken into account under subpara10 graph (A) only if it is deployed in connection 

11 with equipment described in subparagraph (B) 

12 and is uniquely designed to perform the func13 tion of packet switching for current generation 

14 broadband services or next generation 

15 broadband services, but only if such packet 

16 switching is the last in a series of such func17 tions performed in the transmission of a signal 

18 to a subscriber or the first in a series of such 

19 functions performed in the transmission of a 

20 signal from a subscriber. 

21 ‘‘(D) MULTIPLEXING AND

22 DEMULTIPLEXING EQUIPMENT.—Multiplexing 

23 and demultiplexing equipment shall be taken 

24 into account under subparagraph (A) only to 

25 the extent it is deployed in connection with 
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1 equipment described in subparagraph (B) and 

2 is uniquely designed to perform the function of 

3 multiplexing and demultiplexing packets or cells 

4 of data and making associated application 

5 adaptions, but only if such multiplexing or 

6 demultiplexing equipment is located between 

7 packet switching equipment described in sub8 paragraph (C) and the subscriber’s premises. 

9 ‘‘(13) QUALIFIED EXPENDITURE.—

10 ‘‘(A) IN GENERAL.—The term ‘qualified 

11 expenditure’ means any amount—

12 ‘‘(i) chargeable to capital account with 

13 respect to the purchase and installation of 

14 qualified equipment (including any up15 grades thereto) for which depreciation is 

16 allowable under section 168, and 

17 ‘‘(ii) incurred after December 31, 

18 2003, and before January 1, 2009. 

19 ‘‘(B) CERTAIN SATELLITE EXPENDITURES

20 EXCLUDED.—Such term shall not include any 

21 expenditure with respect to the launching of 

22 any satellite equipment. 

23 ‘‘(14) RESIDENTIAL SUBSCRIBER.—The term 

24 ‘residential subscriber’ means an individual who pur-
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1 chases broadband services which are delivered to 

2 such individual’s dwelling. 

3 ‘‘(15) RURAL AREA.—The term ‘rural area’ 

4 means any census tract which—

5 ‘‘(A) is not within 10 miles of any incor6 porated or census designated place containing 

7 more than 25,000 people, and 

8 ‘‘(B) is not within a county or county 

9 equivalent which has an overall population den10 sity of more than 500 people per square mile of 

11 land. 

12 ‘‘(16) RURAL SUBSCRIBER.—The term ‘rural 

13 subscriber’ means a residential subscriber residing in 

14 a dwelling located in a rural area or nonresidential 

15 subscriber maintaining a permanent place of busi16 ness located in a rural area. 

17 ‘‘(17) SATELLITE CARRIER.—The term ‘sat18 ellite carrier’ means any person using the facilities 

19 of a satellite or satellite service licensed by the Fed20 eral Communications Commission and operating in 

21 the Fixed-Satellite Service under part 25 of title 47 

22 of the Code of Federal Regulations or the Direct 

23 Broadcast Satellite Service under part 100 of title

24 47 of such Code to establish and operate a channel 

25 of communications for point-to-multipoint distribu-
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1 tion of signals, and owning or leasing a capacity or 

2 service on a satellite in order to provide such point3 to-multipoint distribution. 

4 ‘‘(18) SUBSCRIBER.—The term ‘subscriber’ 

5 means a person who purchases current generation 

6 broadband services or next generation broadband 

7 services. 

8 ‘‘(19) TELECOMMUNICATIONS CARRIER.—The 

9 term ‘telecommunications carrier’ has the meaning 

10 given such term by section 3(44) of the Communica11 tions Act of 1934 (47 U.S.C. 153 (44)), but—

12 ‘‘(A) includes all members of an affiliated 

13 group of which a telecommunications carrier is 

14 a member, and 

15 ‘‘(B) does not include a commercial mobile 

16 service carrier. 

17 ‘‘(20) TOTAL POTENTIAL SUBSCRIBER POPU18 LATION.—The term ‘total potential subscriber popu19 lation’ means, with respect to any area and based on 

20 the most recent census data, the total number of po21 tential residential subscribers residing in dwellings 

22 located in such area and potential nonresidential

23 subscribers maintaining permanent places of busi24 ness located in such area. 
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1 ‘‘(21) UNDERSERVED AREA.—The term ‘under2 served area’ means any census tract which is located 

3 in—

4 ‘‘(A) an empowerment zone or enterprise 

5 community designated under section 1391, 

6 ‘‘(B) the District of Columbia Enterprise 

7 Zone established under section 1400, 

8 ‘‘(C) a renewal community designated 

9 under section 1400E, or 

10 ‘‘(D) a low-income community designated 

11 under section 45D. 

12 ‘‘(22) UNDERSERVED SUBSCRIBER.—The term 

13 ‘underserved subscriber’ means a residential sub14 scriber residing in a dwelling located in an under15 served area or nonresidential subscriber maintaining 

16 a permanent place of business located in an under17 served area. 

18 ‘‘(f) DESIGNATION OF CENSUS TRACTS.—The Sec19 retary shall, not later than 90 days after the date of the 

20 enactment of this section, designate and publish those cen21 sus tracts meeting the criteria described in paragraphs 

22 (15) and (21) of subsection (e).’’. 

23 (b) CREDIT TO BE PART OF INVESTMENT CREDIT.—

24 Section 46 of the Internal Revenue Code of 1986 (relating 

25 to the amount of investment credit) is amended by striking 
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1 ‘‘and’’ at the end of paragraph (2), by striking the period 

2 at the end of paragraph (3) and inserting ‘‘, and’’, and 

3 by adding at the end the following new paragraph:

4 ‘‘(4) the broadband credit.’’

5 (c) SPECIAL RULE FOR MUTUAL OR COOPERATIVE

6 TELEPHONE COMPANIES.—Section 501(c)(12)(B) of the 

7 Internal Revenue Code of 1986 (relating to list of exempt 

8 organizations) is amended by striking ‘‘or’’ at the end of 

9 clause (iii), by striking the period at the end of clause (iv) 

10 and inserting ‘‘, or’’, and by adding at the end the fol11 lowing new clause: 

12 ‘‘(v) from sources not described in 

13 subparagraph (A), but only to the extent 

14 such income does not in any year exceed 

15 an amount equal to the credit for qualified 

16 expenditures which would be determined 

17 under section 48A for such year if the mu18 tual or cooperative telephone company was 

19 not exempt from taxation.’’ 

20 (d) CONFORMING AMENDMENT.—The table of sec21 tions for subpart E of part IV of subchapter A of chapter 

22 1 of the Internal Revenue Code of 1986 is amended by 

23 inserting after the item relating to section 48 the following 

24 new item:

‘‘Sec. 48A. Broadband credit.’’

25 (e) REGULATORY MATTERS.—
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1 (1) PROHIBITION.—No Federal or State agency 

2 or instrumentality shall adopt regulations or rate3 making procedures that would have the effect of 

4 confiscating any credit or portion thereof allowed 

5 under section 48A of the Internal Revenue Code of 

6 1986 (as added by this section) or otherwise sub7 verting the purpose of this section. 

8 (2) TREASURY REGULATORY AUTHORITY.—It is 

9 the intent of Congress in providing the broadband 

10 credit under section 48A of the Internal Revenue 

11 Code of 1986 (as added by this section) to provide 

12 incentives for the purchase, installation, and connec13 tion of equipment and facilities offering expanded 

14 broadband access to the Internet for users in certain 

15 low income and rural areas of the United States, as 

16 well as to residential users nationwide, in a manner 

17 that maintains competitive neutrality among the var18 ious classes of providers of broadband services. Ac19 cordingly, the Secretary of the Treasury shall pre20 scribe such regulations as may be necessary or ap21 propriate to carry out the purposes of section 48A 

22 of such Code, including—

23 (A) regulations to determine how and when 

24 a taxpayer that incurs qualified expenditures 
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1 satisfies the requirements of section 48A of 

2 such Code to provide broadband services, and 

3 (B) regulations describing the information, 

4 records, and data taxpayers are required to pro5 vide the Secretary to substantiate compliance 

6 with the requirements of section 48A of such 

7 Code. 

8 Until the Secretary prescribes such regulations, tax9 payers may base such determinations on any reason10 able method that is consistent with the purposes of 

11 section 48A of such Code. 

12 (f) EFFECTIVE DATES.—

13 (1) IN GENERAL.—Except as provided in para14 graph (2), the amendments made by this section 

15 shall apply to expenditures incurred after December 

16 31, 2003. 

17 (2) SPECIAL RULE.—The amendments made by 

18 subsection (c) shall apply to amounts received after 

19 December 31, 2003.

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