S.Amdt. 510

SA 510. Mr. ROCKEFELLER submitted an amendment intended to be
proposed to amendment SA 98 proposed by Mr. Inouye (for himself and Mr.
Baucus) to the bill H.R. 1, making supplemental appropriations for job
preservation and creation, infrastructure investment, energy efficiency
and science, assistance to the unemployed, and State and local fiscal
stabilization, for fiscal year ending September 30, 2009, and for other
purposes; which was ordered to lie on the table; as follows:

Beginning on 491, line 15, strike all through page 512,
line 11, and insert the following:

PART VIII--BROADBAND INCENTIVES

SEC. 1271. BROADBAND INTERNET ACCESS TAX CREDIT.

(a) In General.--Subpart E of part IV of chapter 1
(relating to rules for computing investment credit), as
amended by this Act, is amended by inserting after section
48C the following new section:

``SEC. 48D. BROADBAND INTERNET ACCESS CREDIT.

``(a) General Rule.--For purposes of section 46, the
broadband credit for any taxable year is the sum of--
``(1) the current generation broadband credit, plus
``(2) the next generation broadband credit.
``(b) Current Generation Broadband Credit; Next Generation
Broadband Credit.--For purposes of this section--
``(1) Current generation broadband credit.--The current
generation broadband credit for any taxable year is equal to
30 percent of the qualified broadband expenditures incurred
with respect to qualified equipment providing current
generation broadband services to qualified subscribers and
taken into account with respect to such taxable year.
``(2) Next generation broadband credit.--The next
generation broadband credit for any taxable year is equal to
40 percent of the qualified broadband expenditures incurred
with respect to qualified equipment providing next generation
broadband services to qualified subscribers and taken into
account with respect to such taxable year.
``(c) When Expenditures Taken Into Account.--For purposes
of this section--
``(1) In general.--Qualified broadband expenditures with
respect to qualified equipment shall be taken into account
with respect to the first taxable year in which--
``(A) current generation broadband services are provided
through such equipment to qualified subscribers, or
``(B) next generation broadband services are provided
through such equipment to qualified subscribers.
``(2) Limitation.--
``(A) In general.--Qualified broadband expenditures shall
be taken into account under paragraph (1) only with respect
to qualified equipment--
``(i) the original use of which commences with the
taxpayer, and
``(ii) which is placed in service, after December 31, 2008,
and before January 1, 2011.
``(B) Sale-leasebacks.--For purposes of subparagraph (A),
if property--
``(i) is originally placed in service after December 31,
2008, by any person, and
``(ii) sold and leased back by such person within 3 months
after the date such property was originally placed in
service,
such property shall be treated as originally placed in
service not earlier than the date on which such property is
used under the leaseback referred to in clause (ii).
``(d) Special Allocation Rules.--
``(1) Current generation broadband services.--For purposes
of determining the current generation broadband credit under
subsection (a)(1) with respect to qualified equipment through
which current generation broadband services are provided, if
the qualified equipment is capable of serving both qualified
subscribers and other subscribers, the qualified broadband
expenditures shall be multiplied by a fraction--
``(A) the numerator of which is the sum of the number of
potential qualified subscribers

[[Page S1763]]

which the equipment is capable of serving with current
generation broadband services, and
``(B) the denominator of which is the total potential
subscriber population of the area which the equipment is
capable of serving with current generation broadband
services.
``(2) Next generation broadband services.--For purposes of
determining the next generation broadband credit under
subsection (a)(2) with respect to qualified equipment through
which next generation broadband services are provided, if the
qualified equipment is capable of serving both qualified
subscribers and other subscribers, the qualified broadband
expenditures shall be multiplied by a fraction--
``(A) the numerator of which is the sum of the number of
potential qualified subscribers which the equipment is
capable of serving with next generation broadband services,
and
``(B) the denominator of which is the total potential
subscriber population of the area which the equipment is
capable of serving with next generation broadband services.
``(3) Total potential subscriber population.--For purposes
of this subsection, the term `total potential subscriber
population' means, with respect to any area and based on the
most recent census data, the total number of potential
subscribers located in such area.
``(e) Provision of Services.--A provider shall be treated
as providing services to 1 or more subscribers if--
``(1) such a subscriber has been passed by the provider's
equipment and can be connected to such equipment for a
standard connection fee,
``(2) the provider is physically able to deliver current
generation broadband services or next generation broadband
services, as applicable, to such a subscriber without making
more than an insignificant investment with respect to such
subscriber,
``(3) the provider has made reasonable efforts to make such
subscribers aware of the availability of such services,
``(4) such services have been purchased by 1 or more such
subscribers, and
``(5) such services are made available to such subscribers
at average prices comparable to those at which the provider
makes available similar services in any areas in which the
provider makes available such services.
``(f) Definitions.--For purposes of this section--
``(1) Antenna.--The term `antenna' means any device used to
transmit or receive signals through the electromagnetic
spectrum, including satellite equipment.
``(2) Cable operator.--The term `cable operator' has the
meaning given such term by section 602(5) of the
Communications Act of 1934 (47 U.S.C. 522(5)).
``(3) Commercial mobile service carrier.--The term
`commercial mobile service carrier' means any person
authorized to provide commercial mobile radio service as
defined in section 20.3 of title 47, Code of Federal
Regulations.
``(4) Current generation broadband service.--The term
`current generation broadband service' means the transmission
of signals at a rate of at least 5,000,000 bits per second to
the subscriber and at least 1,000,000 bits per second from
the subscriber (at least 3,000,000 bits per second to the
subscriber and at least 768,000 bits per second from the
subscriber in the case of service through radio transmission
of energy).
``(5) Next generation broadband service.--The term `next
generation broadband service' means the transmission of
signals at a rate of at least 100,000,000 bits per second to
the subscriber (or its equivalent when the data rate is
measured before being compressed for transmission) and at
least 20,000,000 bits per second from the subscriber (or its
equivalent as so measured) (at least 6,000,000 bits per
second to the subscriber (or its equivalent as so measured)
and at least 2,000,000 bits per second from the subscriber
(or its equivalent as so measured) in the case of service
through radio transmission of energy).
``(6) 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).
``(7) 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 operator, or satellite carrier) providing
current generation broadband services or next generation
broadband service to subscribers through the radio
transmission of energy.
``(8) Provider.--The term `provider' means, with respect to
any qualified equipment any--
``(A) cable operator,
``(B) commercial mobile service carrier,
``(C) open video system operator,
``(D) satellite carrier,
``(E) telecommunications carrier, or
``(F) other wireless carrier,
providing current generation broadband services or next
generation broadband services to subscribers through such
qualified equipment.
``(9) Qualified equipment.--
``(A) In general.--The term `qualified equipment' means
property with respect to which depreciation (or amortization
in lieu of depreciation) is allowable and which provides
current generation broadband services or next generation
broadband services--
``(i) at least a majority of the time during periods of
maximum demand to each subscriber who is utilizing such
services, and
``(ii) in a manner substantially the same as such services
are provided by the provider to subscribers through equipment
with respect to which no credit is allowed under subsection
(a)(1).
``(B) Only certain investment taken into account.--Except
as provided in subparagraph (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, building, dwelling, or office owned or
leased by a subscriber in the case of a telecommunications
carrier or broadband-over-powerline operator,
``(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 subscriber 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 operator, or
``(iv) extends from a transmission/receive antenna
(including such antenna) which transmits and receives signals
to or from multiple subscribers, to a transmission/receive
antenna (including such antenna) on the outside of the unit,
building, dwelling, or office owned or leased by a subscriber
in the case of a satellite carrier or other wireless carrier,
unless such other wireless carrier is also a
telecommunications carrier.
``(C) Packet switching equipment.--Packet switching
equipment, regardless of location, shall be taken into
account under subparagraph (A) only if it is deployed in
connection with equipment described in subparagraph (B) and
is uniquely designed to perform the function 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 functions 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 subparagraph
(C) and the subscriber's premises.
``(E) Other definitions.--For purposes of this paragraph--
``(i) Packet switching.--The term `packet switching' means
controlling or routing the path of a digitized transmission
signal which is assembled into packets or cells.
``(ii) 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 multiplexing equipment.
``(10) Qualified broadband expenditure.--
``(A) In general.--The term `qualified broadband
expenditure' means any amount--
``(i) chargeable to capital account with respect to the
purchase and installation of qualified equipment (including
any upgrades thereto) for which depreciation is allowable
under section 168, and
``(ii) incurred after December 31, 2008, and before January
1, 2011.
``(B) Certain satellite expenditures excluded.--Such term
shall not include any expenditure with respect to the
launching of any satellite equipment.
``(C) Leased equipment.--Such term shall include so much of
the purchase price paid by the lessor of equipment subject to
a lease described in subsection (c)(2)(B) as is attributable
to expenditures incurred by the lessee which would otherwise
be described in subparagraph (A).
``(11) Qualified subscriber.--
``(A) In general.--The term `qualified subscriber' means a
subscriber with respect to the provision of current
generation broadband services or next generation broadband
services provided in a rural area or an unserved area.
``(B) Other definitions.--For purposes of this paragraph--
``(i) Rural area.--The term `rural area' means any census
tract which--

``(I) is not within 10 miles of any incorporated or census
designated place containing more than 25,000 people, and
``(II) is not within a county or county equivalent which
has an overall population density of more than 500 people per
square mile of land.

``(ii) Unserved area.--The term `unserved area' means any
census tract in which no current generation broadband
services are provided, as certified by the State in which
such tract is located not later than September 30, 2009.
``(12) Satellite carrier.--The term `satellite carrier'
means any person using the facilities of a satellite or
satellite service licensed by the Federal Communications
Commission and operating in the Fixed-Satellite Service under
part 25 of title 47 of the Code

[[Page S1764]]

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 distribution of
signals, and owning or leasing a capacity or service on a
satellite in order to provide such point-to-multipoint
distribution.
``(13) Subscriber.--The term `subscriber' means any person
who purchases current generation broadband services or next
generation broadband services.
``(14) Telecommunications carrier.--The term
`telecommunications carrier' has the meaning given such term
by section 3(44) of the Communications 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 any commercial mobile service
carrier.''.
(b) Credit to Be Part of Investment Credit.--Section 46
(relating to the amount of investment credit), as amended by
this Act, is amended by striking ``and'' at the end of
paragraph (4), by striking the period at the end of paragraph
(5) and inserting ``, and'', and by adding at the end the
following:
``(6) the broadband Internet access credit.''
(c) Special Rule for Mutual or Cooperative Telephone
Companies.--Section 501(c)(12)(B) (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
following new clause:
``(v) from the sale of property subject to a lease
described in section 48D(c)(2)(B), but only to the extent
such income does not in any year exceed an amount equal to
the credit for qualified broadband expenditures which would
be determined under section 48D for such year if the mutual
or cooperative telephone company was not exempt from taxation
and was treated as the owner of the property subject to such
lease.''.
(d) Conforming Amendments.--
(1) Section 49(a)(1)(C), as amended by this Act, is amended
by striking ``and'' at the end of clause (iv), by striking
the period at the end of clause (v) and inserting ``, and'',
and by adding after clause (v) the following new clause:
``(vi) the portion of the basis of any qualified equipment
attributable to qualified broadband expenditures under
section 48D.''.
(2) The table of sections for subpart E of part IV of
subchapter A of chapter 1, as amended by this Act, is amended
by inserting after the item relating to section 48C the
following:

``Sec. 48D. Broadband internet access credit''.

(e) Designation of Census Tracts.--The Secretary of the
Treasury shall, not later than 90 days after the date of the
enactment of this Act, designate and publish those census
tracts meeting the criteria described in subsections (d)(2),
(f)(B)(i), and (f)(B)(ii) of section 48D of the Internal
Revenue Code of 1986 (as added by this section). In making
such designations, the Secretary of the Treasury shall
consult with such other departments and agencies as the
Secretary determines appropriate.
(f) Other Regulatory Matters.--
(1) Prohibition.--No Federal or State agency or
instrumentality shall adopt regulations or ratemaking
procedures that would have the effect of eliminating or
reducing any credit or portion thereof allowed under section
48D of the Internal Revenue Code of 1986 (as added by this
section) or otherwise subverting the purpose of this section.
(2) Treasury regulatory authority.--It is the intent of
Congress in providing the broadband Internet access credit
under section 48D of the Internal Revenue Code of 1986 (as
added by this section) to provide incentives for the
purchase, installation, and connection 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 well as to residential users nationwide, in a
manner that maintains competitive neutrality among the
various classes of providers of broadband services.
Accordingly, the Secretary of the Treasury shall prescribe
such regulations as may be necessary or appropriate to carry
out the purposes of section 48D of such Code, including--
(A) regulations to determine how and when a taxpayer that
incurs qualified broadband expenditures satisfies the
requirements of section 48D of such Code to provide broadband
services, and
(B) regulations describing the information, records, and
data taxpayers are required to provide the Secretary to
substantiate compliance with the requirements of section 48D
of such Code.
(g) Effective Date.--The amendments made by this section
shall apply to expenditures incurred after December 31, 2008.
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