U.S. Senate Reduces Broadband Tax Breaks

Broadband Tax Incentives lowered for Next-Gen High-Speed Networks


One of the proposals in the new economic stimulus package moving through democrats and republicans is building next-generation broadband infrastructure for all corners of the country particularly those that still use slow dial-up methods.

In addition to getting your daily dose of YouTube over high-speed fiber networks, Congress is hopeful that these newly built networks will create many jobs and directly spur lots of new economic activity.

But, as with any spending these days critics are wide awake posing such questions such as how many people will actually sign up for these new services and will these investments really create jobs and revenue.

A recent survey by Pew Internet & American Life has found that 57 percent of Americans subscribe to high speed internet at home while only 9 percent rely on slow dial-up - 25 percent don’t use the Internet at all.

As Congress debates the new stimulus package analysts believe that broadband infrastructure will get anywhere from $6 to $9 billion to fund wireless and land-based networks mainly for rural areas. Some estimate that a $10 billion infusion would create as many as 490,000 jobs mainly in workers needed to lay fiber cables, network specialists, engineers and company workers. Furthermore, advocates of the plan say that people that sign up for the new service are likely to shop online and purchase services. High speed access also serves to external business such as retailers and social networking simply because more people have access and can leverage those services.

Senators are currently trying to cut the size of the stimulus package by $1.5 billion but that would still leave around $7.5 billion for broadband spending.

The bill proposes a tax credit for companies investing in “next-generation broadband” which is defined as speed of at least 100 megabits per second. Verizon is currently the leader in fiber optic high-speed access with FiOS service of up to 50 megabits per second. Verizon plans to have FiOS installed in over six million homes over the next two years and will be able to offer 100 megabit speeds as well.

Now, the Senate is imposing tighter regulations on the proposed broadband package but will increase the amount of tax credits. The new bill would offer tax credits for rural areas and places that have no Internet whatsoever. The credit would be 40 percent for 100 megabit service and 30 percent for service that is at least 5 megabits per second.

The Senate is currently working on finalizing the details on the proposed $900 billion economic stimulus package.

The proposed broadband stimulus is certainly one that will propel businesses and consumers into the 21st century and could do wonders for the economy in much the same way the U.S. highway system and the electrical grid did many years ago. The Internet has become a part of everyday life for millions of American’s everyday and innovation will only progress as technology takes precedence.

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