January 2009

• A new provision might give Verizon $1.6 billion in credits in the next two years to bring fast Internet connections to rural and low-income areas*. The House bill that passed Wednesday will provide $6 billion in grants to broadband projects. The latest Senate bill increases those grants to $9 billion says The WSJ.
• Here is the breakdown of tax cuts: Companies would get a 20% tax credit on investments made on broadband speeds of at least 5 megabits per second for unserved areas and a 10% cut for investment in low-income and rural areas.
• Providing unserved, rural, low-income areas with speeds of at least 100 megabits per second gets a 20 percent credit. Currently Verizon FiOS is one of the only ISP’s with speeds at or above 100 megabits per second, and here is why they will cash in.  It’s all in the small print. The bill says “A qualified subscriber, with respect to next generation broadband services, means any nonresidential subscriber maintaining a permanent place of business in a rural, undeserved, or unserved area, or any residential subscriber.
• ”or any residential subscriber”–means that Verizon will get a tax cut for continuing to build out their FiOS network, which they are already currently doing. AT&T and the smaller phone companies don’t have technology that meets the 100 meg-bit-per-second threshold and Comcast is just beginning to roll out their new technology to meet the qualifications. According to analysts, Verizon is planning to spend $4 billion a year to continue building out FiOS, meaning they would get an annual tex credit of $800 million. The tax credits are in place to encourage the company to accelerate its plans and run FiOS past more homes over the next two years. How much did Verizon have to pay senator Rockefeller of West Virginia to include those last 4 words in the bill?
• What’s not included in the bill is that along with the tax credits to build the infrastructure, is an incentive to create more jobs with the additions or cut prices. Verizon, who cut 2700 jobs the day after Thanksgiving, and has cut 15,000 jobs since 2003 is receiving nothing but free money for this initiative. What’s worse is that the Senate proposal also would not require any recipients of the credits to abide by network neutrality. Verzion is already getting grants to help build out the 700 mhz wireless spectrum they won the auction for last year, and on top of that they had another record year, beating analysts projections by a landmark in the down economy. Remove the last 4 words from the bill, require them to create more jobs and lower prices, and then you have got yourself a potentially legitimate infrastructure grant. Other than that, this is ridiculous.

What Do You Think? Fill In The Blank In The Comments Section:

I Think This Deal Is (A) __________

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