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.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Broadband Internet 
Access Act of 2003’’. 
SEC. 2. FINDINGS AND PURPOSE. 
(a) FINDINGS.—The Congress finds the following:
(1) The Internet has been the single greatest 
contributor to the unprecedented economic expansion 
experienced by the United States over the last 8 
years. 
(2) Increasing the speed that Americans can ac-
cess the Internet is necessary to ensure the contin-
ued expansion. 
(3) Today, most residential Internet users, es-
pecially those located in low income and rural areas, 
are extremely limited in the type of information they 
can send and receive over the Internet because their 
means of access is limited to ‘‘narrowband’’ commu-
nications media, typically conventional phone lines at 
a maximum speed of 56,000 bits per second. 
(4) Similarly, small businesses in low income 
and rural areas are also deprived of full information 
access because of their dependence on narrowband 
facilities. 
(5) By contrast, many residential users located 
in higher income urban and suburban areas and 
urban business users can access the Internet from a 
variety of carriers at current generation broadband 
speeds in excess of 1,500,000 bits per second, giving 
them a choice among carriers and high-speed access 
to a wide array of audio and data applications.
fied 
equipment 
delivering 
current 
generation 
broadband services to rural subscribers or under-
served subscribers and taken into account with re-
spect to such taxable year. 
‘‘(2) NEXT
GENERATION
BROADBAND
CRED-
IT.—The next generation broadband credit for any 
taxable year is equal to 20 percent of the qualified 
expenditures incurred with respect to qualified 
equipment delivering next generation broadband 
services to all rural subscribers, all underserved sub-
scribers, or any other residential subscribers and 
taken into account with respect to such taxable year. 
‘‘(c) WHEN
EXPENDITURES
TAKEN
INTO
AC-
COUNT.—For purposes of this section—
‘‘(1) IN GENERAL.—Qualified expenditures with 
respect to qualified equipment shall be taken into ac-
count with respect to the first taxable year in 
which—
‘‘(A) current generation broadband services 
are delivered through such equipment to rural 
subscribers or underserved subscribers, or
‘‘(B) next generation broadband services 
are delivered through such equipment to rural 
subscribers, underserved subscribers, or any 
other residential subscribers.
‘‘(2) DELIVERY OF SERVICES.—For purposes of 
paragraph (1), the delivery of current generation 
broadband services or next generation broadband 
services through qualified equipment occurs when 
such class of service is purchased by and provided 
to at least 10 percent of the subscribers described in 
subsection (b) which such equipment is capable of 
serving through the legal or contractual area access 
rights or obligations of the provider. 
‘‘(d) SPECIAL ALLOCATION RULES.—
‘‘(1) CURRENT GENERATION BROADBAND SERV-
ICES.—For purposes of determining the current gen-
eration broadband credit under subsection (a)(1) 
with respect to qualified equipment through which 
current generation broadband services are delivered, 
if the qualified equipment is capable of serving both 
the subscribers described under subsection (b)(1) 
and other subscribers, the qualified expenditures 
shall be multiplied by a fraction—
‘‘(A) the numerator of which is the sum of 
the total potential subscriber populations within 
the rural areas and the underserved areas 
which the equipment is capable of serving with 
current generation broadband services, and
‘‘(B) the denominator of which is the total 
potential subscriber population of the area 
which the equipment is capable of serving with 
current generation broadband services. 
‘‘(2) NEXT
GENERATION
BROADBAND
SERV-
ICES.—For purposes of determining the next genera-
tion broadband credit under subsection (a)(2) with 
respect to qualified equipment through which next 
generation broadband services are delivered, if the 
qualified equipment is capable of serving both the 
subscribers described under subsection (b)(2) and 
other subscribers, the qualified expenditures shall be 
multiplied by a fraction—
‘‘(A) the numerator of which is the sum 
of—
‘‘(i) the total potential subscriber pop-
ulations within the rural areas and under-
served areas, plus 
‘‘(ii) the total potential subscriber 
population of the area consisting only of 
residential subscribers not described in 
clause (i), 
which the equipment is capable of serving with 
next generation broadband services, and
‘‘(B) the denominator of which is the total 
potential subscriber population of the area 
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 1,500,000 bits per second to the subscriber 
and at least 200,000 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 
‘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 22,000,000 bits per second to the subscriber 
and at least 5,000,000 bits per second from the sub-
scriber. 
‘‘(7) 
NONRESIDENTIAL
SUBSCRIBER.—The 
term ‘nonresidential subscriber’ means a person who 
purchases broadband services which are delivered to 
the permanent place of business of such person. 
‘‘(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 
broadband service to subscribers through the radio 
transmission of energy. 
‘‘(10) PACKET SWITCHING.—The term ‘packet 
switching’ means controlling or routing the path of 
a 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, or 
‘‘(D) a satellite carrier, telecommunications 
carrier, or other wireless carrier, 
providing current generation broadband services or 
next generation broadband services to subscribers 
through such qualified equipment. 
‘‘(12) QUALIFIED EQUIPMENT.—
‘‘(A) IN
GENERAL.—The term ‘qualified 
equipment’ means equipment capable of pro-
viding current generation broadband services or 
next generation broadband services at any time 
to each subscriber who is utilizing such services.
‘‘(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 
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 
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. 
‘‘(13) QUALIFIED EXPENDITURE.—
‘‘(A) IN
GENERAL.—The term ‘qualified 
expenditure’ means any amount—
‘‘(i) chargeable to capital account with 
respect to the purchase and installation of 
qualified equipment (including any up-
grades thereto) for which depreciation is 
allowable under section 168, and 
‘‘(ii) incurred after December 31, 
2003, and before January 1, 2009. 
‘‘(B) CERTAIN SATELLITE EXPENDITURES 
EXCLUDED.—Such term shall not include any 
expenditure with respect to the launching of 
any satellite equipment. 
‘‘(14) RESIDENTIAL
SUBSCRIBER.—The term 
‘residential subscriber’ means an individual who pur-
chases broadband services which are delivered to 
such individual’s dwelling. 
‘‘(15) 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. 
‘‘(16) 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. 
‘‘(17) 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. 
‘‘(18) SUBSCRIBER.—The term ‘subscriber’ 
means a person who purchases current generation 
broadband services or next generation broadband 
services. 
‘‘(19) 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. 
‘‘(20) 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.
‘‘(21) UNDERSERVED AREA.—The term ‘under-
served area’ means any census tract which is located 
in—
‘‘(A) an empowerment zone or enterprise 
community designated under section 1391, 
‘‘(B) the District of Columbia Enterprise 
Zone established under section 1400, 
‘‘(C) a renewal community designated 
under section 1400E, or 
‘‘(D) a low-income community designated 
under section 45D. 
‘‘(22) UNDERSERVED SUBSCRIBER.—The term 
‘underserved subscriber’ means a 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) 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 
(15) and (21) of subsection (e).’’. 
(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 
expenditures which would be determined 
under section 48A for such year if the mu-
tual 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, as 
well as to residential users nationwide, in a manner 
that maintains competitive neutrality among the var-
ious classes of providers of broadband services. Ac-
cordingly, the Secretary of the Treasury shall pre-
scribe such regulations as may be necessary or ap-
propriate 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, tax-
payers may base such determinations on any reason-
able 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, 2003. 
(2) SPECIAL RULE.—The amendments made by 
subsection (c) shall apply to amounts received after 
December 31, 2003.
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