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Bush Illo
Kerry Illo

President Bush and Sen. John Kerry agree that affordable, high-speed Internet access is crucial to the United States' ability to compete with other countries and create jobs. They disagree on how to get there.

Kerry's plan is to provide tax incentives to businesses that deliver broadband to underserved rural and inner-city areas. A ubiquitous broadband network can increase the U.S. economy by $500 billion a year and create 1.2 million high-wage jobs, he said in a speech last month at San Jose State University. The basic impediment to broadband growth has been the large capital costs required to extend the infrastructure to new locations.

Bush wants the market to determine where broadband is offered and how much it costs. Still, his goal is for broadband Internet access to be "available in every corner of America by the year 2007," he said in a speech last month. Key to his plan is making permanent the 6-year-old moratorium on Internet-access taxes that expired in November and hasn't been renewed.

Such taxes already have slowed adoption of broadband services and led to U.S. jobs going overseas where Internet access costs are lower, claims David McClure, president of the U.S. Internet Industry Association, a trade group that represents Internet service providers, Web-hosting companies, E-mail service providers, and other Internet companies. The association, which hasn't endorsed a presidential candidate, favors a permanent moratorium on Internet-access taxes and would like to see Kerry provide "a little stronger statement" against them, McClure says. Kerry has said he favors a four-year extension of the moratorium.

In his recent speech, Bush also applauded the Federal Communications Commission's decision to let telecommunications companies charge competitors for use of fiber-optic broadband lines. This decision creates "incentives for communications companies to build out their fiber-optic broadband lines to more homes," he said. The president also issued in April an executive memorandum to reduce the regulatory red tape for laying fiber-optic cables and putting up transmission towers on federal lands.

At stake could be the country's security, Bush said. Broadband could be used to deliver information to those who are responsible for guarding borders, plants, and equipment by using software that "enables a camera to distinguish the difference between a squirrel and a bomb," he said.

There's bipartisan consensus that broadband access should be expanded, says David McIntosh, a former Republican congressman from Indiana and partner with law firm Mayer, Brown, Rowe & Maw LLP's government practice. "Broadband changes the nature of information management," he says. "The imagined and even unimagined uses of technology require support from broadband."

Under Kerry's plan, a 10% tax credit would be provided for expenditures on new equipment that's used to provide current-generation broadband services to rural and underserved areas. The plan would provide a 20% tax credit for investment in next-generation networks in rural, underserved, and residential areas. Kerry also proposed equipping emergency responders with broadband connections by the end of 2006. Both candidates cite health care as a particularly promising application for broadband. In his speech last month, Kerry said that telemedicine allowed a Virginia cardiologist 75 miles from a hospital to view an ultrasound image and diagnose a congenital heart defect that required immediate medication, saving a child's life.

Illustrations by Hanoch Piven

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