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,
2001, and before January 1, 2006.
‘‘(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