which the equipment is capable of serving with 
next generation broadband services. 
‘‘(e) DEFINITIONS.—For purposes of this section— 
‘‘(1) ANTENNA.—The term ‘antenna’ means 
any device used to transmit or receive signals 
through the electromagnetic spectrum, including sat-
ellite equipment. 
‘‘(2) CABLE OPERATOR.—The term ‘cable oper-
ator’ has the meaning given such term by section 
602(5) of the Communications Act of 1934 (47 
U.S.C. 522(5)). 
‘‘(3) COMMERCIAL
MOBILE
SERVICE
CAR-
RIER.—The term ‘commercial mobile service carrier’ 
means any person authorized to provide commercial 
mobile radio service as defined in section 20.3 of 
title 47, Code of Federal Regulations. 
‘‘(4) CURRENT GENERATION BROADBAND SERV-
ICE.—The term ‘current generation broadband serv-
ice’ means the transmission of signals at a rate of 
at least 5,000,000 bits per second to the subscriber 
and at least 1,000,000 bits per second from the sub-
scriber. 
‘‘(5) MULTIPLEXING
OR
DEMULTIPLEXING.— 
The term ‘multiplexing’ means the transmission of 2 
or more signals over a single channel, and the term 
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‘demultiplexing’ means the separation of 2 or more 
signals previously combined by compatible multi-
plexing equipment. 
‘‘(6) NEXT
GENERATION
BROADBAND
SERV-
ICE.—The term ‘next generation broadband service’ 
means the transmission of signals at a rate of at 
least 50,000,000 bits per second to the subscriber 
and at least 10,000,000 bits per second from the 
subscriber. 
‘‘(7) 
NONRESIDENTIAL
SUBSCRIBER.—The 
term ‘nonresidential subscriber’ means any person 
who purchases broadband services which are deliv-
ered to the permanent place of business of such per-
son. 
‘‘(8) OPEN
VIDEO
SYSTEM
OPERATOR.—The 
term ‘open video system operator’ means any person 
authorized to provide service under section 653 of 
the Communications Act of 1934 (47 U.S.C. 573). 
‘‘(9) OTHER
WIRELESS
CARRIER.—The term 
‘other wireless carrier’ means any person (other than 
a telecommunications carrier, commercial mobile 
service carrier, cable operator, open video system op-
erator, or satellite carrier) providing current genera-
tion 
broadband 
services 
or 
next 
generation 
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broadband service to subscribers through the radio 
transmission of energy. 
‘‘(10) PACKET SWITCHING.—The term ‘packet 
switching’ means controlling or routing the path of 
any digitized transmission signal which is assembled 
into packets or cells. 
‘‘(11) PROVIDER.—The term ‘provider’ means, 
with respect to any qualified equipment— 
‘‘(A) a cable operator, 
‘‘(B) a commercial mobile service carrier, 
‘‘(C) an open video system operator, 
‘‘(D) a satellite carrier, 
‘‘(E) a telecommunications carrier, or 
‘‘(F) any other wireless carrier, 
providing current generation broadband services or 
next generation broadband services to subscribers 
through such qualified equipment. 
‘‘(12) PROVISION
OF
SERVICES.—A provider 
shall be treated as providing services to 1 or more 
subscribers if— 
‘‘(A) such a subscriber has been passed by 
the provider’s equipment and can be connected 
to such equipment for a standard connection 
fee, 
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‘‘(B) the provider is physically able to de-
liver current generation broadband services or 
next generation broadband services, as applica-
ble, to such a subscriber without making more 
than an insignificant investment with respect to 
such subscriber, 
‘‘(C) the provider has made reasonable ef-
forts to make such subscribers aware of the 
availability of such services, 
‘‘(D) such services have been purchased by 
1 or more such subscribers, and 
‘‘(E) such services are made available to 
such subscribers at average prices comparable 
to those at which the provider makes available 
similar services in any areas in which the pro-
vider makes available such services. 
‘‘(13) QUALIFIED EQUIPMENT.— 
‘‘(A) IN
GENERAL.—The term ‘qualified 
equipment’ means equipment which provides 
current generation broadband services or next 
generation broadband services— 
‘‘(i) at least a majority of the time 
during periods of maximum demand to 
each subscriber who is utilizing such serv-
ices, and 
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‘‘(ii) in a manner substantially the 
same as such services are provided by the 
provider to subscribers through equipment 
with respect to which no deduction is al-
lowed under subsection (a)(1). 
‘‘(B) ONLY CERTAIN INVESTMENT TAKEN 
INTO
ACCOUNT.—Except as provided in sub-
paragraph (C) or (D), equipment shall be taken 
into account under subparagraph (A) only to 
the extent it— 
‘‘(i) extends from the last point of 
switching to the outside of the unit, build-
ing, dwelling, or office owned or leased by 
a subscriber in the case of a telecommuni-
cations carrier, 
‘‘(ii) extends from the customer side 
of the mobile telephone switching office to 
a transmission/receive antenna (including 
such antenna) owned or leased by a sub-
scriber in the case of a commercial mobile 
service carrier, 
‘‘(iii) extends from the customer side 
of the headend to the outside of the unit, 
building, dwelling, or office owned or 
leased by a subscriber in the case of a 
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cable operator or open video system oper-
ator, or 
‘‘(iv) extends from a transmission/re-
ceive antenna (including such antenna) 
which transmits and receives signals to or 
from multiple subscribers, to a trans-
mission/receive antenna (including such 
antenna) on the outside of the unit, build-
ing, dwelling, or office owned or leased by 
a subscriber in the case of a satellite car-
rier or other wireless carrier, unless such 
other wireless carrier is also a tele-
communications carrier. 
‘‘(C) PACKET
SWITCHING
EQUIPMENT.— 
Packet switching equipment, regardless of loca-
tion, shall be taken into account under subpara-
graph (A) only if it is deployed in connection 
with equipment described in subparagraph (B) 
and is uniquely designed to perform the func-
tion of packet switching for current generation 
broadband 
services 
or 
next 
generation 
broadband services, but only if such packet 
switching is the last in a series of such func-
tions performed in the transmission of a signal 
to a subscriber or the first in a series of such 
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functions performed in the transmission of a 
signal from a subscriber. 
‘‘(D) 
MULTIPLEXING
AND 
DEMULTIPLEXING
EQUIPMENT.—Multiplexing 
and demultiplexing equipment shall be taken 
into account under subparagraph (A) only to 
the extent it is deployed in connection with 
equipment described in subparagraph (B) and 
is uniquely designed to perform the function of 
multiplexing and demultiplexing packets or cells 
of data and making associated application 
adaptions, but only if such multiplexing or 
demultiplexing equipment is located between 
packet switching equipment described in sub-
paragraph (C) and the subscriber’s premises. 
‘‘(14) QUALIFIED
SUBSCRIBER.—The term 
‘qualified subscriber’ means— 
‘‘(A) with respect to the provision of cur-
rent generation broadband services— 
‘‘(i) any nonresidential subscriber 
maintaining a permanent place of business 
in a rural area or underserved area, or 
‘‘(ii) any residential subscriber resid-
ing in a dwelling located in a rural area or 
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underserved area which is not a saturated 
market, and 
‘‘(B) with respect to the provision of next 
generation broadband services— 
‘‘(i) any nonresidential subscriber 
maintaining a permanent place of business 
in a rural area or underserved area, or 
‘‘(ii) any residential subscriber. 
‘‘(15) RESIDENTIAL
SUBSCRIBER.—The term 
‘residential subscriber’ means any individual who 
purchases broadband services which are delivered to 
such individual’s dwelling. 
‘‘(16) RURAL
AREA.—The term ‘rural area’ 
means any census tract which— 
‘‘(A) is not within 10 miles of any incor-
porated or census designated place containing 
more than 25,000 people, and 
‘‘(B) is not within a county or county 
equivalent which has an overall population den-
sity of more than 500 people per square mile of 
land. 
‘‘(17) RURAL
SUBSCRIBER.—The term ‘rural 
subscriber’ means any residential subscriber residing 
in a dwelling located in a rural area or nonresiden-
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tial subscriber maintaining a permanent place of 
business located in a rural area. 
‘‘(18) SATELLITE
CARRIER.—The term ‘sat-
ellite carrier’ means any person using the facilities 
of a satellite or satellite service licensed by the Fed-
eral Communications Commission and operating in 
the Fixed-Satellite Service under part 25 of title 47 
of the Code of Federal Regulations or the Direct 
Broadcast Satellite Service under part 100 of title 
47 of such Code to establish and operate a channel 
of communications for distribution of signals, and 
owning or leasing a capacity or service on a satellite 
in order to provide such point-to-multipoint distribu-
tion. 
‘‘(19) SATURATED MARKET.—The term ‘satu-
rated market’ means any census tract in which, as 
of the date of the enactment of this section— 
‘‘(A) current generation broadband services 
have been provided by a single provider to 85 
percent or more of the total number of potential 
residential subscribers residing in dwellings lo-
cated within such census tract, and 
‘‘(B) such services can be utilized— 
‘‘(i) at least a majority of the time 
during periods of maximum demand by 
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each such subscriber who is utilizing such 
services, and 
‘‘(ii) in a manner substantially the 
same as such services are provided by the 
provider to subscribers through equipment 
with respect to which no deduction is al-
lowed under subsection (a)(1). 
‘‘(20) SUBSCRIBER.—The term ‘subscriber’ 
means any person who purchases current generation 
broadband services or next generation broadband 
services. 
‘‘(21) TELECOMMUNICATIONS
CARRIER.—The 
term ‘telecommunications carrier’ has the meaning 
given such term by section 3(44) of the Communica-
tions Act of 1934 (47 U.S.C. 153(44)), but— 
‘‘(A) includes all members of an affiliated 
group of which a telecommunications carrier is 
a member, and 
‘‘(B) does not include a commercial mobile 
service carrier. 
‘‘(22) TOTAL
POTENTIAL
SUBSCRIBER
POPU-
LATION.—The term ‘total potential subscriber popu-
lation’ means, with respect to any area and based on 
the most recent census data, the total number of po-
tential residential subscribers residing in dwellings 
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located in such area and potential nonresidential 
subscribers maintaining permanent places of busi-
ness located in such area. 
‘‘(23) UNDERSERVED AREA.—The term ‘under-
served area’ means— 
‘‘(A) any census tract which is located in— 
‘‘(i) an empowerment zone or enter-
prise community designated under section 
1391, or 
‘‘(ii) the District of Columbia Enter-
prise Zone established under section 1400, 
or 
‘‘(B) any census tract— 
‘‘(i) the poverty level of which is at 
least 30 percent (based on the most recent 
census data), and 
‘‘(ii) the median family income of 
which does not exceed— 
‘‘(I) in the case of a census tract 
located in a metropolitan statistical 
area, 70 percent of the greater of the 
metropolitan area median family in-
come or the statewide median family 
income, and 
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‘‘(II) in the case of a census tract 
located in a nonmetropolitan statis-
tical area, 70 percent of the non-
metropolitan statewide median family 
income. 
‘‘(24) UNDERSERVED SUBSCRIBER.—The term 
‘underserved subscriber’ means any residential sub-
scriber residing in a dwelling located in an under-
served area or nonresidential subscriber maintaining 
a permanent place of business located in an under-
served area. 
‘‘(f) SPECIAL RULES.— 
‘‘(1) PROPERTY USED OUTSIDE THE UNITED 
STATES, ETC., NOT
QUALIFIED.—No expenditures 
shall be taken into account under subsection (a)(1) 
with respect to the portion of the cost of any prop-
erty referred to in section 50(b) or with respect to 
the portion of the cost of any property specified in 
an election under section 179. 
‘‘(2) BASIS REDUCTION.— 
‘‘(A) IN GENERAL.—For purposes of this 
title, the basis of any property shall be reduced 
by the portion of the cost of such property 
taken into account under subsection (a)(1). 
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‘‘(B) ORDINARY
INCOME
RECAPTURE.— 
For purposes of section 1245, the amount of 
the deduction allowable under subsection (a)(1) 
with respect to any property which is of a char-
acter subject to the allowance for depreciation 
shall be treated as a deduction allowed for de-
preciation under section 167. 
‘‘(3) COORDINATION
WITH
SECTION 38.—No 
credit shall be allowed under section 38 with respect 
to any amount for which a deduction is allowed 
under subsection (a)(1).’’. 
(b) SPECIAL RULE FOR MUTUAL OR COOPERATIVE 
TELEPHONE COMPANIES.—Section 512(b) of the Internal 
Revenue Code of 1986 (relating to modifications) is 
amended by adding at the end the following new para-
graph: 
‘‘(20) SPECIAL RULE FOR MUTUAL OR COOPER-
ATIVE TELEPHONE COMPANIES.—A mutual or coop-
erative telephone company which for the taxable year 
satisfies the requirements of section 501(c)(12)(A) 
may elect to reduce its unrelated business taxable in-
come for such year, if any, by an amount that does 
not exceed the qualified broadband expenditures 
which would be taken into account under section 
191 for such year by such company if such company 
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was not exempt from taxation. Any amount which is 
allowed as a deduction under this paragraph shall 
not be allowed as a deduction under section 191 and 
the basis of any property to which this paragraph 
applies 
shall 
be 
reduced 
under 
section 
1016(a)(38).’’. 
(c) CONFORMING AMENDMENTS.— 
(1) Section 263(a)(1) of the Internal Revenue 
Code of 1986 (relating to capital expenditures) is 
amended by striking ‘‘or’’ at the end of subpara-
graph (J), by striking the period at the end of sub-
paragraph (K) and inserting ‘‘, or’’, and by adding 
at the end the following new subparagraph: 
‘‘(L) expenditures for which a deduction is 
allowed under section 191.’’. 
(2) Section 1016(a) of such Code is amended 
by striking ‘‘and’’ at the end of paragraph (36), by 
striking the period at the end of paragraph (37) and 
inserting ‘‘, and’’, and by adding at the end the fol-
lowing new paragraph: 
‘‘(38) to the extent provided in section 
191(f)(2).’’. 
(3) The table of sections for part VI of sub-
chapter A of chapter 1 of such Code is amended by 
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inserting after the item relating to section 190 the 
following new item: 
‘‘Sec. 191. Broadband expenditures.’’. 
(d) DESIGNATION OF CENSUS TRACTS.— 
(1) IN GENERAL.—The Secretary of the Treas-
ury shall, not later than 90 days after the date of 
the enactment of this Act, designate and publish 
those census tracts meeting the criteria described in 
paragraphs (16), (22), and (23) of section 191(e) of 
the Internal Revenue Code of 1986 (as added by 
this section). In making such designations, the Sec-
retary of the Treasury shall consult with such other 
departments and agencies as the Secretary deter-
mines appropriate. 
(2) SATURATED MARKET.— 
(A) IN GENERAL.—For purposes of desig-
nating and publishing those census tracts meet-
ing the criteria described in subsection (e)(19) 
of such section 191— 
(i) the Secretary of the Treasury shall 
prescribe not later than 30 days after the 
date of the enactment of this Act the form 
upon which any provider which takes the 
position that it meets such criteria with re-
spect to any census tract shall submit a 
list of such census tracts (and any other 
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information required by the Secretary) not 
later than 60 days after the date of the 
publication of such form, and 
(ii) the Secretary of the Treasury 
shall publish an aggregate list of such cen-
sus tracts and the applicable providers not 
later than 30 days after the last date such 
submissions are allowed under clause (i). 
(B) NO SUBSEQUENT LISTS REQUIRED.— 
The Secretary of the Treasury shall not be re-
quired to publish any list of census tracts meet-
ing such criteria subsequent to the list de-
scribed in subparagraph (A)(ii). 
(e) OTHER REGULATORY MATTERS.— 
(1) PROHIBITION.—No Federal or State agency 
or instrumentality shall adopt regulations or rate-
making procedures that would have the effect of 
eliminating or reducing any deduction or portion 
thereof allowed under section 191 of the Internal 
Revenue Code of 1986 (as added by this section) or 
otherwise subverting the purpose of this section. 
(2) TREASURY REGULATORY AUTHORITY.—It is 
the intent of Congress in providing the election to 
deduct qualified broadband expenditures under sec-
tion 191 of the Internal Revenue Code of 1986 (as 
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added by this section) to provide incentives for the 
purchase, installation, and connection of equipment 
and facilities offering expanded broadband access to 
the Internet for users in certain low income and 
rural areas of the United States, as well as to resi-
dential users nationwide, in a manner that main-
tains competitive neutrality among the various class-
es of providers of broadband services. Accordingly, 
the Secretary of the Treasury shall prescribe such 
regulations as may be necessary or appropriate to 
carry out the purposes of section 191 of such Code, 
including— 
(A) regulations to determine how and when 
a taxpayer that incurs qualified broadband ex-
penditures satisfies the requirements of section 
191 of such Code to provide broadband serv-
ices, and 
(B) regulations describing the information, 
records, and data taxpayers are required to pro-
vide the Secretary to substantiate compliance 
with the requirements of section 191 of such 
Code. 
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(f) EFFECTIVE DATE.—The amendments made by 
this section shall apply to expenditures incurred after the 
date of the enactment of this Act. 
Æ 
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