Studies Urge Broadband Incentives in Stimulus Bill
Broadband incentives in the stimulus bill should include tax credits, bonds and funding of the mapping law (S-1492) that Congress passed last year, telecom groups told Congress Tuesday. Nearly 200,000 jobs could be created, adding $100 billion to the economy if Congress approves issuing private tax-credit bonds for broadband buildout, the Fiber-to-the- Home Council said. The council analyzed four tax credit and expensing proposals, concluding that each would “create substantial net benefits to the U.S. economy,” a consultant’s study said. It estimated a gain of just over 254,000 jobs if all proposals were adopted.
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The tax credit bond proposal, advocated by Democratic Rep. Anna Eshoo of California in October, would have the biggest and most immediate effect on the economy, said an analysis by the economic consulting firm Empiris. The proposal would allow issuers to sell bonds at a zero coupon rate. Bondholders would receive tax credits equal to the amount they would have received in interest had the bonds been sold without the tax credit. Private bodies could borrow up to $10 billion using tax-credit bonds each of the next three years for investments in U.S. services proving 100 Mbps downstream and 20 Mbps upstream, Empiris said.
A separate bond proposal would allow public and private bodies to form investment partnerships. Empiris studied a proposal that would allow public agencies up to $1 billion in tax credit bonds each of the next three years for service 100 Mbps downstream and 20 Mbps upstream. Because public projects typically take longer than private ones, the study projected that investment wouldn’t begin until 2010. The proposal calls for the bonds to be used only to finance projects approved by state governments or utility commissions.
Expensing proposals would allow companies to deduct the full amount of an investment, rather than spreading out the deduction under a depreciation schedule. Under consideration is a plan that would allow 100 percent expensing over the next three years for services providing 100 Mbps downstream and 20 Mbps upstream. A separate proposal would allow a 50 percent expensing of investments providing 5 Mbps downstream and 1 Mbps upstream to rural and underserved areas in the U.S. Empiris estimated that these proposals could produce up to $6 billion in new investment, adding $18 billion to the nation’s gross domestic product over the next three years and creating 37,000 net new jobs.
“This study provide evidence that promoting” higher- bandwidth networks will “give the maximum boost to employment and immediate economic growth,” said FTTH Council President Joe Savage.
The Information Technology and Innovation Foundation also has discussed broadband incentive proposals with the transition team. The group spent a month studying an economic model on the relationship of jobs to investment. It concluded in a report to be released Wednesday that a stimulus package that spurs $10 billion of investment in broadband network infrastructure will lead to creation of nearly 500,000 jobs.
A separate study estimates a gain of about 200,000 jobs by allowing rural recipients of high-cost universal service funding to get grants to build 25 Mbps networks, said a white paper produced for the Organization for the Promotion and Advancement of Small Telecommunications Companies. Recipients would be required to install fiber lines and network electronics, the paper said. “We believe this can be achieved at a cost of less than $28 billion,” it said. The plan presents a “’shovel ready’ approach to job creation and infrastructure development,” OPASTCO President John Rose said in letters sent Tuesday to Congress.
The National Association of Regulatory Utility Commissioners urged Congress to provide funding for the broadband mapping law (S-1492) it passed last year. The law that passed included no appropriations. But earlier versions of the bill called for about $240 million over five years in grant money to develop detailed surveys of where broadband services are offered and how many providers are available.
State commissions “have the expertise and incentive to direct infrastructure funding to communities that need it most,” NARUC officials said in letters Wednesday to Congress. Several states have started programs to collect data, the letter said, and if Congress provides money, the number would increase.