BROADBAND TAX CREDIT BILL RETURNS, ONLY SLIGHTLY CHANGED

“We just got started too late last year,” Rockefeller aide Paul Margie said. Moynihan didn’t introduce his bill until June 8 last year and never got hearing, just last-min. campaign to drum up support that won 58 co-sponsors. Margie said he expected more co-sponsors “by the end of the week” and said he was very optimistic about Senate passage this year. Meanwhile, Reps. English (R-Pa.) and Matsui (D-Cal.), who sponsored House version last year, will introduce bill identical to Rockefeller’s when House returns Jan. 30, English spokeswoman told us. House passage is considered more difficult than in Senate, which is much more focused on rural issues. Still, English-Matsui bill last year drew 114 co-sponsors, and spokeswoman said English hoped to get most of those back and “get new support.”

In slight modification, bill now offers 20% “next-generation” credit for networks delivering data at 22 Mbps to consumer and 5 Mbps upstream. Latter figure was 10 Mbps in last year’s version, leading satellite and wireless companies to complain that they never would be able to meet those marks. “We sat down with a lot of people with different industries and tried to make the bill as neutral as possible,” Margie said. Bill still offers 10% credit for current-generation high-speed services, defined as 1.5 Mbps downstream, 200 kbps on return path. Eligible areas still include rural and urban zones, with latter’s definition slightly changed to reflect New Markets bill language now codified in law.

Satellite officials said it wasn’t yet clear whether changes met their concerns. In addition to speed requirements, they also were worried about provision that remains in this year’s version that would require 10% of potential subscribers in any area to take service for provider to be eligible. That’s troublesome for satellite providers, whose business model typically is to serve lower percentage over larger area. “Do you have to get 10% of all of rural America to sign up?” asked one satellite lobbyist. “If the federal government is providing tax credits, it’s very important that it not favor one industry over another.”

Bill has been referred to Finance Committee, where Rockefeller is 2nd ranking Democrat. Ranking Democrat Baucus (Mont.) is initial co-sponsor, as are Committee newcomers Sens. Snowe (R-Me.) and Kerry (D-Mass.). Snowe and Kerry are familiar with broadband issues from Commerce Committee, Margie said, and “their being on Finance really helps us a lot.” Another key new co-sponsor is Judiciary Committee Chmn. Hatch (R-Utah), who also is 2nd ranking Republican on Finance. Last year, no Republicans on Finance Committee signed on. We're told that’s because they were watching for position of then Chmn. Roth (R-Del.), who didn’t endorsed bill until belatedly.

Still unknown is stance of new Chmn. Grassley (R-Ia.). “We're hopeful” that Grassley will look favorably on bill, Margie said. With most of telecom industry pushing for it, bill’s main opposition is other tax cut and spending proposals. Last year, Congressional Budget Office scored its expense at about $1.5 billion over 5 years, and Margie said he didn’t expect this year’s scoring to come in much higher.

Rockefeller also is pushing to include tax credits in budget process. In Mon. letter to President Bush, he asked that Administration support broadband tax credits in its upcoming budget proposal. Rockefeller called his bill “truly a bipartisan measure” and said it was “crucial… that we act quickly” since other countries “are moving aggressively to surpass the United States in broadband infrastructure.”