Looks like Verizon isn’t going to get the $1.6 billion tax breaks initially reported after the Senate decided to cut the budget for the proposed broadband stimulus package by $1.5 billion.
Senator John D. Rockefeller IV, chairman of the Senate Commerce Committee, has introduced amendments to the initial bill which had proposed $9 billion to be channelled to broadband deployment.
These developments dampened the chances of Verizon, currently the leader in fiber optic high-speed access with FiOS service of up to 50 megabits per second, to secure its expected $1.6 billion tax breaks.
The legislation, otherwise called the broadband stimulus bill, proposes hefty tax incentives to companies offering a speed of at least 100 megabits for second and up, otherwise known as the “next-generation broadband.” The cable industry is hoping to get tax breaks for 50 megabits per second.
The Senate has decided to impose stricter regulations on the proposed stimulus package and increase tax credits. The tax credit for internet providers was upped from 20 percent to 40 percent for providing 100 megabit service.
The amendment also increased to 30 percent the proposed 10 percent tax credit for at least 5 megabits per second speed for rural or “unserved” areas, mainly defined as low-income neighborhoods.
Rockefeller’s amendment also allows internet companies providing a speed of 6 megabits per second or more to be in the running for 40 percent tax credit, while those that provide 3 megabits per second or more shall qualify for the 30 percent credit.
Despite the West Virginia Democrat’s proposed amendments to the bill, it will still give impetus to Verizon to step up its game and get FiOS delivered to more homes as the new bill still leaves up to $7.5 billion for broadband spending. The company plans to deploy FiOS in over six million homes, including low-income areas in New York, Philadelphia and Washington, DC, by 2011 and could offer service at 100 Mbps.
It has been estimated that pouring the much needed funding to broadband infrastructure would create at least some 250,000 to 300,000 jobs and spur lots of new economic activity. The broadband expansion would need more workers to lay fiber cables, engineers and network specialists. Heightened online shopping and social networking are also seen to get a boost from the move.
The Senate is expected to complete voting on the bill this week. Before it could be forwarded to President Barack Obama for signing, the approved bill still needs to be reconciled with the House version which allocates $6 billion for broadband deployment.
While the move was welcomed by internet users fed up with slow dial-up access, it divided the nation as to whether or not broadband connection would justify such a huge funding.
Pew Internet Internet & American Life recently released a survey which revealed that many Americans don’t want broadband, and that a considerable number of people don’t have access to computers or smartphones.
Still another concern is that how many people would actually sign up for broadband and if these investments will trigger the creation of more jobs and revenue.
The bill drew fire for seemingly favoring Verizon as most companies, including AT&T, are not yet equipped with the technology to provide 100 megabits per second. Also, the bill was seen as unnecessarily giving huge companies like Verizon an enormous tax break for expansion they would have done on their own.