ALEC Urges Congress to Consider Tax Incentives for Broadband Investment.

WASHINGTON -- The American Legislative Exchange Council (ALEC) expresses concerns that the dispersal of grants for broadband infrastructure contained in Congressional stimulus legislation could erode marketplace competition. Instead, ALEC believes that any such legislation should encourage investment in broadband networks and ensure consumer choice. ALEC urges Congress to carefully consider alternative measures that will give private service providers financial incentives to accelerate investment in broadband.

The U.S. House version of the American Recovery & Reinvestment Act of 2009 allocates nearly two billion dollars of federal taxpayer money for infrastructure build-out grants to private broadband service providers or to state and local governments that provide broadband services. The Senate is working out details on a companion bill.

"ALEC opposes any grant program that discriminates against competing providers of the same services," said Seth Cooper, ALEC's Telecommunications & Information Technology Task Force Director. "When government becomes a direct competitor in the marketplace, there is a danger that it will use its official tax and regulatory powers to unfairly gain an upper-hand in the market. This undermines consumer choice."

Rather than provide grants with burdensome strings to public and private broadband service providers using taxpayer funds, the Congress should consider alternatives. For instance, tax incentives or accelerated depreciation schedules would likely encourage broadband providers to increase investments in their own broadband infrastructure.

"Right now, ALEC particularly encourages the Senate to consider adopting or extending tax incentives that encourage accelerated private investment in broadband infrastructure. Increased private investment is the best hope for rapid economic stimulus," added Cooper.

ALEC's Resolution Supporting Pro Consumer Public Policy for Voice, Video, and Data Services (2005) declares that "Government policies should encourage the private sector to provide competitive choices for voice, video and data." In addition, ALEC's Municipal Telecommunications Private Industry Safeguards Act (2002) opposes discrimination by state and local government providers of broadband services against competing providers of the same services.

ALEC takes no overall position on economic stimulus legislation in Congress. But it does maintain that government should encourage the private sector to provide competitive choices to consumers.

The American Legislative Exchange Council is the nation's largest individual membership organization of state legislators, dedicated to advancing the Jeffersonian principles of free markets, limited government, federalism, and individual liberty.