U.S. legislators tackle the 'digital divide'

March 1, 2001


Members of the U.S. Senate and House of Representatives are prepared to "fast track" legislation that would accelerate the deployment of fiber-based solutions for broadband. A bill, entitled the Broadband Internet Access Act of 2000, was proposed to the 106th Congress prior to its adjournment last December and is expected to make its way through the 107th Congress as part of the Bush Administration's proposed tax legislation.

The Broadband Internet Access Act provides a two-tiered, five-year tax credit for service providers. First, it offers a 10% tax credit for the deployment of current-generation 1.5-Mbit/sec service to rural and low-income areas. Secondly, it allows a 20% credit for the deployment of next-generation 22-Mbit/sec service to rural, low-income, and otherwise underserved residential areas.

The bill is designed to spur vigorous competition among service providers to penetrate markets that may be overlooked in favor of demographics that would generate higher revenues. Providers that deploy the required bandwidths to targeted areas, achieving a 10% market penetration, qualify for the tax credit.

The purpose of the tax credits, as stated within the title of the proposed legislation, is "to provide an incentive to ensure that all Americans gain timely and equitable access to the Internet over current and future generation of broadband capability." Fiber enthusiasts are hopeful this government-endorsed technology push will eventually lead to faster deployment of fiber-optic technologies and applications.

Bipartisan support of the measure by both houses in Congress has bolstered optimism among the bill's supporters. (However, some concerns may remain; see the "Regulation & Policy" column in September 2000, page 20.) Former U.S. Sen. Daniel Patrick Moynihan (New York) and Sen. John Kerry (Massachusetts) introduced the Broadband Internet Access Act of 2000 last June. As well as garnering the support of at least 59 Senate co-sponsors and 115 co-sponsors in the House of Representatives, it also has support from the Americans for the Digital Bridge (ADB), an organization whose members include several major telecommunications entities such as Lucent Technologies, Alcatel, Corning Inc., Optical Solutions Inc., and the Telecommunications Industry Association (TIA).

The biggest question now is "What happens next-and when?" At press time, the situation is still fluid as a new administration takes the reigns in Washington, DC. The possibility of the Broadband Internet Access Act of 2000 becoming law will be driven by the events on Capitol Hill, particularly those surrounding President Bush's budget proposal and the new tax bill.

"All the major tax legislation that was generated by the 106th Congress, with the exception of one or two small bills, was either vetoed or never made it out of Congress," says Tim Regan, senior vice president of Corning Inc. "We are pretty confident-very confident-that the Senate and the House will introduce this bill on the opening day of the 107th Congress. There are efforts underway by the Americans for the Digital Bridge to get co-sponsors on the bill for its original introduction. So we anticipate we'll have a bill and a bill number from the Senate and the House that we can deal with."

The ADB views this legislation as an opportunity to eliminate the "digital divide"-underserved communities, mainly rural and poor urban areas across the country, that are being left behind as telecommunications technologies improve. The problem intensifies for next-generation Internet technologies because existing copper infrastructures simply cannot support many emerging applications. The ADB believes that although rapid deployment of newer network technologies is likely in areas of high-population density, rural and underserved areas will be left behind without intervention.

With the new legislation, however, things eventually get even better for optical-networking companies, say supporters, although Regan points out that the "current generation" of the proposed tax-cut legislation doesn't necessarily drive fiber.

"It's defined as 1.5 million bits downstream and 200 kbits/sec upstream," says Regan. "So the first section of the bill is designed to get ADSL [asymmetric digital subscriber line], cable modems, MMDS [multipoint multidirectional distribution system], and similar capability to the underserved areas. The second part of the bill is designed to accelerate the deployment of technology. This provision gives carriers a 20% tax credit to deploy next-generation capability to any residential customer, regardless of where they are.

"With respect to the current generation, it will get capability to customers more quickly. But with respect to next generation, my expectation is that it will become a driver for technology. The speeds are so high, the only way one could do this is to move beyond ADSL and cable modems. I can't tell you definitively what to expect specifically for fiber-optic technologies, but you can certainly see what the trend is," adds Regan.

Other fiber-optic platform companies, like Optical Solutions, make less effort to hide their optimism for the bill's impact on the optical space. The potential is huge for breaking down the cost disparities between fiber and copper infrastructure through the proposed tax incentives, the company feels.

"From our perspective, we believe this bill is very positive in an optical technology sense," says Doug Wrede, director of business development at Optical Solutions. "Over the last year and a half, independent telephone companies have traditionally dealt in the rural to semi-rural areas where fiber tends to prove in very well, relative to DSL and HFC [hybrid fiber/coax] technology, due to demographics and geography. With the type of tax credit being talked about in terms of this bill, it really starts to extend us closer into the suburbs or outer regions of the metro areas as well as in the metro itself. This is really the kind of thing that drives the overall cost and technology choice between traditional broadband infrastructures and fiber. In short, it drives toward a better economic position for fiber."

Besides closing the digital divide between heavily populated and rural demographic areas, the ADB organization focuses on other key issues for support of this legislature. First, the group cites the inadequacy of existing phone lines and infrastructure currently used by nearly all residences and small businesses for Internet access. New broadband infrastructure, using more advance technologies, including fiber-optic technology, must be deployed to accommodate emerging high-bandwidth applications.

Next, there is the issue of keeping abreast of international competition in the deployment of next-generation technology. Several countries, including Japan, Sweden, Singapore, and Canada, have already committed to universal deployment of the latest and greatest in terms of speed and capacity for tomorrow's applications. The ADB insists the United States cannot "rest on its laurels" without running the risk of other countries surpassing its telecommunications capabilities.

"This legislation is about the next evolution of the Internet," says Matthew Flanigan, president of the TIA. "And it's TIA members that are designing and building the broadband technologies that will make the 'worldwide wait' a thing of the past. These technologies are going to be deployed around the world, but the question is, will they be in this country? If we don't begin to bring broadband access to the people of the United States in a meaningful way now, generations of our citizens will lose out in education, health care, and business opportunities."

Finally, rapid deployment of new technology is usually dependent on competition. The Broadband Internet Act of 2000 is designed to spur competition, get new players in the game, and create a competitive fever to provide next-generation, high-tech services to large and small customers alike.

The act has many regional supporters, each with an interest in furthering the reach of Internet access for everyone within a particular geography. In Alaska, U.S. Sen. Pete Kelly supports the proposed legislation in a state where population varies from dense to sparse.

"Encouraging industry to reach out to rural communities and provide high-speed Internet services like those available in more urban communities can only benefit a state like ours," says Kelly. "It is easy to understand how extending broadband Internet access can shorten the distance between Alaskans in the areas of healthcare, education, public safety, and economic development."

As elements of the U.S. government push for legislation that provides equal Internet access for rural areas of the country, the Rural Utility Service (RUS) announced a new loan program that streamlines the approval process for telecommunications providers.

The purpose of the program is to finance construction and installation of broadband telecom services in rural America. Former President Clinton and Congress had made $100 million in treasury-rate loan funds available through a one-year pilot program.

Through the RUS loan program, carriers are encouraged to provide broadband services where they may otherwise not exist. It will provide loan funds, on an expedited basis, to communities up to 20,000 people to enable rural customers to reach a more level playing field in terms of availability of the same quality and range of telecom services already available in urban and suburban communities.

RUS-approved equipment will be deployed to underserved areas more quickly through a streamlined loan-application process. These loan funds are available now, and applications will be processed and approved on a first-come, first-served basis throughout fiscal year 2001 until the appropriation has been fully utilized.

The theme is becoming a common one: The U.S. government is being asked to close the "digital divide" between rural and urban residential and business customers with financial assistance via the RUS loan program and bipartisan support of legislation designed to support tax breaks-all in the name of wider deployment of broadband technologies.

-Robert Pease

Alliance for Public Technology
American Association of People with Disabilities
American Electronic Association
American Farm Bureau
American Telemedicine Association
Arizona Consumers Council
The Broadband Co.
City of Bardwell, KY
Columbia Consumer Education Council
Consumer Alliance of the Southeast
Corning Inc.
Council of Chief State School Officers
Delaware Chamber of Commerce
Electronic Industries Alliance
Floyd County Network Group
Georgetown University Medical Center
Sheriff Billy Mac Gore, Pittsboro, MS
Global Systems Inc.
Mayor James Hutcherson, Indianola, MS
Information Technology Industry Council
Michael A. Kem, County Clerk, Christian County, KY
Rep. Allen Kemplen, Alaskan State Legislature
Kidz Online
Leadership Conference on Civil Rights
League of United Latin American Citizens
Libraries for the Future
The Loveland Group
Lucent Technologies
Metropolitan Area Advisory Committee (San Diego)
Microtek Internet Services
State Sen. Paul Muegge (Tonkawa, OK)
National Association of Development Organizations
National Association of Commissions for Women
National Association of the Deaf
National Corn Growers Association
National Hispanic Council on Aging
National Trust of the Development of African American Men
Oklahoma Municipal League
Telecommunications for the Deaf
Telecommunications Industry Association
United Home Owners Association
United States Distance Learning Association
Universal Service Alliance
World Institute of Disability
-and other concerned individuals