Monday, February 16, 2009

Tax credit for expanding broadband in the rural area

In general I am FOR the broadband for the rural areas. However, I think the requirements for defining Broadband in the stimulus package are too ambitious, particularly for a short term plan. Based on the Bloomberg report, the stimulus plan called for a 10 percent tax credit for carriers that build out broadband networks in rural and underserved areas, providing download speeds of at least 5 megabits per second and upload speeds of at least 1 megabit per second. Carriers would have qualified for a 20 percent tax credit if they expanded broadband service with download speeds of at least 100 megabits and upload speeds of at least 20 megabits per second. I live in San Diego. I think of my neighborhood as suburban as it is 20 minutes away from downtown San Diego. But I guess it could qualify as urban area. I have U-verse service from AT&T and on the description of my account I have 3.0 Mega bits per seconds for down stream and 1.0 Mega bits per second for upstream. God knows how much bandwidth I really have but these are my nominal maximum values. I use a wireless router for having wireless internet access in my house. The wireless router transform the U-verse signal to WiFi which has maximum bandwidth of 1.0 Mega bit second for the downlink. Occasionally I experience slowness in my connection. However, I am happy with the service overall. That's why I think 5 mega bits per second for rural areas is too ambitious for a short term plan. Based on what I am hearing in the media the purpose of the stimulus plan is to jolt the economy in the short term!

5 comments:

  1. I loved your basic but eye-opening analysis. I would like to know how the rate limits found their way to the stimulus package. How was the new administration mis-lead, even though they generally seem to be collecting technical data from the right people.

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  2. maybe they goal is to find an excuse to give more tax cuts to those carriers?

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  3. Thanks for your comments Leili joon! I think it a fair point. I'll try to find out more information.

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  4. The Stimulus is intended to have short term effects. The assumption is that there is nothing that money can do in the long term - ie. it has only short term effects. That is why the bill is termed stimulative and it's goals are to stimulate only... However, you can say that the Administration is faced with a hard problem of turning the economic downturn around. I get the feeling that the Stimulus package was being used as an avenue to include some long term projects whose nature are not stimulative but are expected to provide companies with revenue and allow jobs to remain intact while the government tries to turn around the economy.

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  5. I am not sure what the government gets out of ensuring broadband access to the populus. I mean, television and telephone are what people need to hear news and communicate. What would broaband access mean to the farming areas? This is a question worth answering? Why is the government pursing this? I am sure there is good reason..i am curious

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