Legislation Proposal: Assignable tax credits for building gigabit broadband

After seeing SJR18, it makes it obvious that some kind of broadband bill is likely to come to fruition next session. While the current session isn’t even over, legislators can start submitting new bills on May 13 for the 2015 session. If we get in early, we could have a shot at influencing the debate for good. A local broadband expert clued me in on something he’s been working on at the federal level, and I think it would work at the state level: an assignable tax credit for building gigabit broadband.

Tax credits are nothing new when it comes to incentivizing broadband construction, but they often come with such weak conditions that they amount to nothing more than discounts on a system that’s barely a marginal improvement over what we already have. Without strong conditions, we end up with situations like the $300B+ scandal that is the Telecommunications Act of 1996. We can’t afford to flush tax money down the drain like that.

Here’s how we fix it. The first condition should be that tax credits will only be available for a service that delivers 1Gbps or better symmetric connections. This ensures that we aren’t dropping money on last-gen ADSL2+ or DOCSIS 3.0 systems. There should be an additional tax credit if the retail price is less than the average selling price for a current broadband connection. Based on data from SpeedTest.net (average download speed of 26.42Mbps at a cost of $3.62/Mbps), this would require gigabit service to be sold for under $95.64 per month including below-the-line fees. Finally, an additional tax credit should be offered if the infrastructure offers the choice of two or more retail service providers. This would encourage real competition rather than simply shuffling the deck on who the incumbent providers are.

This creates a very level playing field for all providers. If Comcast is serious about using the upcoming DOCSIS 3.1 standard to deliver gigabit service, they could get the tax credit. If CenturyLink is serious about building gigabit FTTH, they could get the tax credit. If Google is serious about expanding to Salt Lake City, they could get the tax credit. If Macquarie is serious about expanding UTOPIA across the entire state… well, you get the idea. Setting serious standards is what makes these tax credits actually worth something.

So what does this “assignable” bit mean and why does it matter? It means that the tax credit is applicable to the individuals served by the network, but the entity actually building the network would be eligible to claim it on your behalf and pass it on to you. This means consumers don’t have to front the money and get reimbursed, but rather companies with the money to invest will do it for you. That makes it much more likely that the infrastructure will actually get built.

Right now, I need to find a legislator willing to sponsor this kind of bill. You can help me find one. Write to your members of the House and Senate summarizing this proposal and copy me on it. We may have a shot at turning the tide for good in 2015.