The Senate stimulus bill contains funding and tax credits that aimed at encouraging extension of broadband to rural and underserved urban communities. But the New York Times notes that a four-word addition in the bill may divert credits from rural regions to areas that are already well-served with broadband, a change that appears to benefit Verizon.
The bill gives companies a 20 percent tax credit on investments on “current-generation” broadband (serve with speeds of at least 5 megabits per second). “Next-generation broadband” (100 megabits) also receives a 20 percent tax credit for unserved, low-income and rural areas. But a new section defines a “qualified subscriber” for this credit as “any nonresidential subscriber maintaining a permanent place of business in a rural, underserved, or unserved area, or any residential subscriber.”
So the credit now goes to the extension of next-generation service to “any residential subscriber” — rural, suburban, urban! Verizon has the most fiber optic cables and is best able to roll out this service. The company already plans to add 3 million more customers this year and another 3 million in 2010, a $4 billion investment that will qualify for $800 million a year in tax credits with no change in the company’s plans.