House OKs Billions for Broadband - Page 2

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Sens. John Rockefeller, D-W.V., and Olympia Snowe, R-Maine, brought forward a measure to give ISPs a 10 percent tax credit for wireline deployments of current-generation speeds (defined as 5 megabits, or Mbps, downstream and 1 Mbps up), and a 20 percent tax credit for next-generation build-outs, which would be set at 100 Mbps downstream and 20 Mbps up. For wireless service, the next-generation threshold would be set at 3 Mbps and 768 Kbps up.

The Rockefeller-Snowe amendment passed into the Senate's draft legislation, which makes the broadband portion of the two versions of the bill fundamentally different.

Of course, the House and Senate will have to reach a consensus before the American Recovery and Reinvestment Act heads to the president's desk.

After an accounting review of the House bill, the Congressional Budget Office brought the original cost of $825 billion down to $816 billion. Then Democrats introduced and passed a $3 billion amendment for mass transit projects in yesterday's floor debate, bringing the total to $819 billion.

The Senate version now stands at more than $900 billion.

Likely, the final version of the broadband stimulus will include both the grants that Republicans oppose and the tax credits they have been calling for, according to Rebecca Arbogast, an analyst with Stifel Nicolaus.

"The compromise could end up being some package that includes the two, giving some greater tax incentives along the lines of what Sen. Rockefeller proposed," Arbogast told InternetNews.com.

She noted that the tax cuts are lower than what some telcos had been hoping for, but that providers such as AT&T (NYSE: T) and Verizon (NYSE: VZ) would still stand to benefit.

Among other points that the two chambers will have to reconcile are how the broadband funding is administered, and what conditions are attached. The House bill splits the funding between a division of the Commerce Department and the Rural Utilities Service, a branch of the Department of Agriculture. Under the Senate bill, all the money is allocated to the National Telecommunication and Information Administration in the Commerce Department.

Both bills contain provisions following the spirit of Net neutrality, but they use different wording. The House bill insists that providers offer "open access" to their networks. The Senate version calls for "nondiscrimination and network interconnection."

The openness provisions have drawn praise from long-time champions of Net neutrality, such as the media-reform group Free Press.

"The open Internet is a proven economic engine," said Ben Scott, policy director at Free Press. "The openness conditions passed by the House and included in the Senate bill are a positive step forward and signal that Congress is committed to promoting the open Internet."

After a bitter day of carping at the substantial Democratic majority, House Republicans are ending their week in frustration.

But the compromise with the Senate, where the bill's provisions are still at committee level, offers a ray of hope for Republicans, who complained that they had been essentially frozen out of the legislative process.

"When it gets to the Senate, we all understand there will be changes," said Jack Kingston, R-Ga.