‘‘(i) is located on or within a central
switching office, cable hub, head end, or
other similar network gateway or delivery
point,
‘‘(ii) extends from the subscriber side
of the point or points described in (B)(i) to
the outside of the unit, building, dwelling,
or office owned or leased by a subscriber,
or
‘‘(iii) is located on the outside of the
unit, building, dwelling, or office owned or
leased by a subscriber.
‘‘(9) RURAL
AREA.—The term ‘rural area’
means any census tract—
‘‘(A) which is not within 10 miles of any
incorporated or census designated place con-
taining more than 25,000 people and is not
within a county or county equivalent which has
an overall population density of more than 500
people per square mile of land,
‘‘(B) that is designated as a rural enter-
prise community or rural empowerment zone by
the Secretary of Agriculture pursuant to section
1391, or
‘‘(C) that is designated by Congress as a
rural area for purposes of this section.
‘‘(10) RURAL
SUBSCRIBER.—The term ‘rural
subscriber’ means a residential subscriber residing in
a dwelling located in a rural area or nonresidential
subscriber maintaining a permanent place of busi-
ness located in a rural area.
‘‘(11) 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 point-to-multipoint distribu-
tion of signals, and owning or leasing a capacity or
service on a satellite in order to provide such point-
to-multipoint distribution.
‘‘(12) SUBSCRIBER.—The term ‘subscriber’
means a person who purchases current generation
broadband service from a taxpayer.
‘‘(13) 
TAXPAYER.—The 
term 
‘taxpayer’
means—
‘‘(A) a cable operator,
‘‘(B) a commercial mobile service carrier,
‘‘(C) an open video system operator, or
‘‘(D) a satellite carrier, telecommunications
carrier, or other wireless carrier.
‘‘(14) 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.
‘‘(15) URBAN
AREA.—The term ‘urban area’
means any census tract—
‘‘(A) the poverty level of which is at least
30% (based on the most recent census data),
‘‘(B) the median family income of which
does not exceed—
‘‘(i) in the case of a census tract lo-
cated in a metropolitan statistical area, 70
percent of the greater of the metropolitan
area median family income or the state-
wide median family income, or
‘‘(ii) in the case of a census tract lo-
cated in a nonmetropolitan statistical area,
70% of the nonmetropolitan statewide me-
dian family income,
‘‘(C) that is designated as an urban enter-
prise community or urban empowerment zone
by the Secretary of Housing and Urban Devel-
opment pursuant to section 1391,
‘‘(D) that represents the District of Co-
lumbia Enterprise Zone established under sec-
tion 1400,
‘‘(E) that is designated as a renewal com-
munity pursuant to section 1400E,
‘‘(F) that is designated as a low-income
community pursuant to section 45D, or
‘‘(G) that is designated by Congress as an
urban area for purposes of this section.
‘‘(16) URBAN SUBSCRIBER.—The term ‘urban
subscriber’ means a residential subscriber residing in
a dwelling located in an urban area or nonresidential
subscriber maintaining a permanent place of busi-
ness located in an urban area.
‘‘(d) DESIGNATION OF CENSUS TRACTS.—The Sec-
retary shall, not later than 90 days after the date of the
enactment of this section, designate and publish those cen-
sus tracts meeting the criteria described in paragraphs (9)
and (15) of subsection (c).’’
(b) CLERICAL AMENDMENT.—The table of sections
for part VI of subchapter B of chapter 1 of such Code
is amended by inserting after the item relating to section
179A the following new item:
‘‘Sec. 179B. Deduction for broadband telecommunications equip-
ment.’’
(c) REGULATORY MATTERS.—
(1) PROHIBITION.—No Federal or State agency
or instrumentality shall adopt regulations or rate-
making procedures that would have the effect of
confiscating any expense or portion thereof allowed
under section 179B of the Internal Revenue Code of
1986 (as added by this section) or otherwise sub-
verting the purpose of this section.
(2) TREASURY REGULATORY AUTHORITY.—It is
the intent of Congress in providing the expense
under section 179B of the Internal Revenue Code of
1986 (as 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
rural and urban areas of the United States in a
manner that maintains competitive neutrality among
the various classes of providers of broadband serv-
ices. Accordingly, the Secretary of the Treasury shall
prescribe such regulations as may be necessary or
appropriate to carry out the purposes of section
179B of such Code, including—
(A) regulations to determine how and when
a taxpayer that incurs qualified expenditures
satisfies the requirements of section 179B of
such Code to provide broadband services, 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 179B of such
Code.
Until the Secretary prescribes such regulations, tax-
payers may base such determinations on any reason-
able method that is consistent with the purposes of
section 179B of such Code.
(d) EFFECTIVE DATE.—The amendments made by
this section shall apply to expenditures incurred after De-
cember 31, 2001.
SEC. 5. BROADBAND CREDIT.
(a) IN GENERAL.—Subpart E of part IV of chapter
1 of the Internal Revenue Code of 1986 (relating to rules
for computing investment credit) is amended by inserting
after section 48 the following new section:
602(5) of the Communications Act of 1934 (47
U.S.C. 522(5)).
‘‘(2) 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.
‘‘(3) COST.—
‘‘(A) IN GENERAL.—The term ‘cost’ means
any amount that may otherwise be chargeable
to a capital account with respect to the pur-
chase, upgrade, maintenance, or installation of
qualified equipment, that is incurred after De-
cember 31, 2001 and before January 1, 2007.
‘‘(B) CERTAIN SATELLITE EXPENDITURES
EXCLUDED.—The term ‘cost’ shall not include
any expenditure with respect to the launching
or insuring of any satellite equipment.
‘‘(4) NEXT
GENERATION
BROADBAND
SERV-
ICE.—The term ‘next generation broadband service’
means the transmission of signals at a rate of at
least 22,000,000 bits per second to the subscriber
and at least 5,000,000 bits per second from the sub-
scriber.
‘‘(5) 
NONRESIDENTIAL
SUBSCRIBER.—The
term ‘nonresidential subscriber’ means a subscriber
who purchases next generation broadband service
which are delivered to the permanent place of busi-
ness of such subscriber.
‘‘(6) 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).
‘‘(7) 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 to subscribers through the
radio transmission of energy.
‘‘(8) QUALIFIED EQUIPMENT.—
‘‘(A) IN
GENERAL.—The term ‘qualified
equipment’ means equipment capable of pro-
viding next generation broadband service to
each subscriber who is utilizing such service.
‘‘(B) ONLY CERTAIN EQUIPMENT TAKEN
INTO ACCOUNT.—Qualified equipment shall be
taken into account under subparagraph (A)
only to the extent it—
‘‘(i) is located on or within a central
switching office, cable hub, head end, or
other similar network gateway or delivery
point,
‘‘(ii) extends from the subscriber side
of the point or points described in (B)(i) to
the outside of the unit, building, dwelling,
or office owned or leased by a subscriber,
or
‘‘(iii) is located on the outside of the
unit, building, dwelling, or office owned or
leased by a subscriber.
‘‘(9) RURAL
AREA.—The term ‘rural area’
means any census tract—
‘‘(A) which is not within 10 miles of any
incorporated or census designated place con-
taining more than 25,000 people and is not
within a county or county equivalent which has
an overall population density of more than 500
people per square mile of land,
‘‘(B) that is designated as a rural enter-
prise community or rural empowerment zone by
the Secretary of Agriculture pursuant to section
1391, or
‘‘(C) that is designated by Congress as a
rural area for purposes of this section.
‘‘(10) RURAL
SUBSCRIBER.—The term ‘rural
subscriber’ means a residential subscriber residing in
a dwelling located in a rural area or nonresidential
subscriber maintaining a permanent place of busi-
ness located in a rural area.
‘‘(11) 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 point-to-multipoint distribu-
tion of signals, and owning or leasing a capacity or
service on a satellite in order to provide such point-
to-multipoint distribution.
‘‘(12) SUBSCRIBER.—The term ‘subscriber’
means a person who purchases next generation
broadband service from a taxpayer.
‘‘(13) 
TAXPAYER.—The 
term 
‘taxpayer’
means—
‘‘(A) a cable operator,
‘‘(B) a commercial mobile service carrier,
‘‘(C) an open video system operator, or
‘‘(D) a satellite carrier, telecommunications
carrier, or other wireless carrier.
‘‘(14) 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.
‘‘(15) 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
located in such area and potential nonresidential
subscribers maintaining permanent places of busi-
ness located in such area.
‘‘(16) URBAN
AREA.—The term ‘urban area’
means any census tract—
‘‘(A) the poverty level of which is at least
30% (based on the most recent census data),
‘‘(B) the median family income of which
does not exceed—
‘‘(i) in the case of a census tract lo-
cated in a metropolitan statistical area, 70
percent of the greater of the metropolitan
area median family income or the state-
wide median family income, or
‘‘(ii) in the case of a census tract lo-
cated in a nonmetropolitan statistical area,
70% of the nonmetropolitan statewide me-
dian family income,
‘‘(C) that is designated as an urban enter-
prise community or urban empowerment zone
by the Secretary of Housing and Urban Devel-
opment pursuant to section 1391,
‘‘(D) that represents the District of Co-
lumbia Enterprise Zone established under sec-
tion 1400,
‘‘(E) that is designated as a renewal com-
munity pursuant to section 1400E,
‘‘(F) that is designated as a low-income
community pursuant to section 45D, or
‘‘(G) that is designated by Congress as an
urban area for purposes of this section.
‘‘(17) URBAN SUBSCRIBER.—The term ‘urban
subscriber’ means a residential subscriber residing in
a dwelling located in an urban area or nonresidential
subscriber maintaining a permanent place of busi-
ness located in an urban area.
‘‘(d) DESIGNATION OF CENSUS TRACTS.—The Sec-
retary shall, not later than 90 days after the date of the
enactment of this section, designate and publish those cen-
sus tracts meeting the criteria described in paragraphs (9)
and (16) of subsection (c).’’
(b) CREDIT TO BE PART OF INVESTMENT CREDIT.—
Section 46 of the Internal Revenue Code of 1986 (relating
to the amount of investment credit) is amended by striking
‘‘and’’ at the end of paragraph (2), by striking the period
at the end of paragraph (3) and inserting ‘‘, and’’, and
by adding at the end the following new paragraph:
‘‘(4) the broadband credit.’’
(c) SPECIAL RULE FOR MUTUAL OR COOPERATIVE
TELEPHONE COMPANIES.—Section 501(c)(12)(B) of the
Internal Revenue Code of 1986 (relating to list of exempt
organizations) is amended by striking ‘‘or’’ at the end of
clause (iii), by striking the period at the end of clause (iv)
and inserting ‘‘, or’’, and by adding at the end the fol-
lowing new clause:
‘‘(v) from sources not described in subparagraph (A),
but only to the extent such income does not in any year
exceed an amount equal to the credit for qualified expendi-
tures which would be determined under section 48A for
such year if the mutual or cooperative telephone company
was not exempt from taxation.’’
(d) CONFORMING AMENDMENT.—The table of sec-
tions for subpart E of part IV of subchapter A of chapter
1 of the Internal Revenue Code of 1986 is amended by
inserting after the item relating to section 48 the following
new item:
‘‘Sec. 48A. Broadband credit.’’
(e) REGULATORY MATTERS.—
(1) PROHIBITION.—No Federal or State agency
or instrumentality shall adopt regulations or rate-
making procedures that would have the effect of
confiscating any credit or portion thereof allowed
under section 48A of the Internal Revenue Code of
1986 (as added by this section) or otherwise sub-
verting the purpose of this section.
(2) TREASURY REGULATORY AUTHORITY.—It is
the intent of Congress in providing the broadband
credit under section 48A of the Internal Revenue
Code of 1986 (as added by this section) to provide
incentives for the purchase, installation, and connec-
tion of equipment and facilities offering expanded
broadband access to the Internet for users in certain
low income and rural areas of the United States in
a manner that maintains competitive neutrality
among the various classes 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
48A of such Code, including—
(A) regulations to determine how and when
a taxpayer that incurs qualified expenditures
satisfies the requirements of section 48A of
such Code to provide broadband services, 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 48A of such
Code.
Until the Secretary prescribes such regulations, taxpayers
may base such determinations on any reasonable method
that is consistent with the purposes of section 48A of such
Code.
(f) EFFECTIVE DATES.—
(1) IN GENERAL.—Except as provided in para-
graph (2), the amendments made by this section
shall apply to expenditures incurred after December
31, 2001.
(2) SPECIAL RULE.—The amendments made by
subsection (c) shall apply to amounts received after
December 31, 2001.
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