Congress eyes rural broadband tax credits

MANILA (April 11) — Congress may have to concede financial incentives in order to spur broadband service providers to invest in high-speed Internet access infrastructure in the countryside, Catanduanes Rep. Joseph Santiago, chairman of the House information and communications technology committee, said.

“Three out of four Filipinos live in the rural areas. Connecting them to the world via broadband is absolutely imperative to build up our whole economy,” said Santiago, former chief of the National Telecommunications Commission.

Santiago said Congress is duty-bound to extend equal opportunity for all Filipinos to improve their lives through the benefits of broadband and other new technologies.

“Reliable broadband access offers a lot of fresh opportunities to rural communities — for small enterprises to grow and create jobs, for homes and schools to boost learning, for farmers to reach all potential markets and share new methods, even for ordinary people to simply communicate or obtain helpful information,” he said.

For instance, Santiago said a migrant worker would not have any incentives to invest in a personal computer at home if his small town still does not have dependable broadband access.

“With broadband access, the worker would be motivated to get a PC for his family here, since this would enable them to communicate cost-effectively via chat, email or calls over the Internet on Skype, check the crediting of a remittance to a local bank account, pay bills online, and so on,” he said.

Santiago said Congress may have to find ways to drive service providers to expand vital broadband infrastructure in rural zones that still do not have any access at all.

“One option is to offer tax credits to new investments. Another is to grant extra subsidies to local governments that support private broadband infrastructure deployment in their areas,” he pointed out.

In the US, Santiago noted that investments in current-generation broadband infrastructure in areas with zero existing access are entitled to a 20 percent tax credit. “They also have a 10 percent tax credit for similar investments in underserved areas,” he said.

The total number of Filipinos subscribing to broadband services soared by 67 per cent in 2008, reaching more than 1.3 million.

However, Santiago said subscribers are still concentrated in highly urbanized cities. He said telecommunication service providers that offer current-generation broadband connections have been disinclined to invest in potentially less profitable rural areas.

Government previously sought to build a $329-million national broadband network. Meant to provide high-speed Internet connectivity to all agencies all the way down to be village level, the project has since been abandoned due to allegations of official corruption.

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