http://bits.blogs.nytimes.com/2009/02/09/big-verizon-tax-break-still-in-senate-stimulus-bill/
A provision that could provide a huge tax break to Verizon is still in the latest draft of the economic-stimulus bill that is expected to pass the Senate on Tuesday.
That tax break may have been an unintended effect of how the bill was worded. Senator John D. Rockefeller IV, the West Virginia Democrat who is the chairman of the Senate Commerce Committee, proposed a change to the bill last week that would have given bigger credits to a smaller number of projects, thus cutting out most of the windfall for Verizon. But this amendment has not been incorporated into the final version of the Senate plan, which is being debated Monday. (Read the whole bill here and the broadband tax provisions here.)
According to several staff members, Mr. Rockefeller still hopes to have the changes made in the conference committee, which will work out the differences between the Senate and the House versions, later this week.
What happens in the conference committee is quite difficult to predict. Congressional leaders are hoping to reconcile the very different provisions of these massive bills by the end of the week in order to have a bill for president Obama to sign on Monday. (Congress is scheduled for a recess next week.)
The House version of the Stimulus bill had no tax breaks at all for deploying broadband service. That means that the ultimate bill could well include the Senate’s tax original credit plan, Mr. Rockefeller’s substitute plan, no tax credit at all, or some other hybrid written very quickly by the conference committee.
These tax breaks are separate from the grants meant to subsidize broadband service in rural and underserved areas. The House allocated $6 billion for these grants. Initially, the Senate increased that sum to $9 billion, but that figure was cut to $7 billion in the frenzy to reach a compromise between the Democrats and three Republican senators. (The latest Senate version of the grant language is here.)
While the grants are more likely to be used by medium and smaller communications companies, the tax breaks might well be of benefit to larger telephone and cable companies. Indeed, as written, the current version of the Senate bill will give a credit equal to 20 percent of the cost of constructing internet service of at least 100 megabits per second to any home in the country. None of the Internet providers in the United States offer service that fast, but Verizon’s FiOS service is seen as the technology most able to reach that speed the soonest. As Verizon is expected to spend $6 billion over the next two years deploying FiOS, some analysts have said it could stand to reap $1 billion or more in tax credits.
The amendment proposed by Mr. Rockefeller, would limit tax credits to service for rural areas and places with no broadband service at all. It would offer credits of 30 percent for current speeds and 40 percent for very high speeds.
Verizon insists it has not been lobbying to get this or any other tax break in the stimulus bill. Like other phone and cable companies, Verizon has wanted to appear that it isn’t looking for a government bailout. But things aren’t exactly so clear. The Communications Workers of America, which represents telephone workers, has been aggressively encouraging spending for broadband construction in the stimulus bill. And pretty much all of the telecommunications companies say that if there is going to be money spread around, they want their fair share of it. And for AT&T and the cable companies, that means encouraging Congress to lower the speed requirements for the best subsidies.
