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Tax Credits Endorsed for High-Speed Internet



Friday, November 30, 2001 

THE ASSOCIATED PRESS



    WASHINGTON -- A federal research panel recommended Thursday tax credits and grants be given to spur deployment of high-speed Internet services, particularly in rural areas.

    The report, by the National Research Council, says the value of broadband Internet access for educational and economic uses is worth federal help, even when telecommunications companies have difficulty justifying the expense.

    Tax credits . . . may provide incentives for what is ultimately uneconomic activity, the report states. The council said rural areas should be targeted.

    A bill moving through Congress calls for a tax credit of 10 percent to 20 percent to companies that provide broadband access to rural areas. The bill, sponsored by Sen. Jay Rockefeller, D-W.Va., has 32 co-sponsors.

    Adam Thierer, of the libertarian Cato Institute, said the tax credits are corporate welfare for large communications companies and may also bring unwanted regulation of the Internet.

    There is a very serious risk that we could be politicizing a very dynamic and thus far unregulated sector, Thierer said. It would be best to just leave the Internet alone and be patient.

    It is unclear whether the proposed tax credit would be enough to encourage companies to expand their networks to areas with fewer potential customers.

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