WASHINGTON-Wireless carriers whose networks were severely damaged or destroyed by hurricanes Katrina and Rita have the opportunity to take advantage of federal tax breaks, including a bonus depreciation that many believe will help wireless players rebuild and upgrade their networks in the Gulf Coast region.
Since the bill passed in the final rush of congressional activity, most of the wireless industry is still studying exactly how each carrier could benefit from it.
“We are still studying the impact of this legislation on Cingular Wireless L.L.C., but we commend Congress for its action to encourage reinvestment in the areas affected by the hurricanes,” said Rochelle Cohen, Cingular spokeswoman.
Verizon Wireless saw the benefits immediately. “Since the immediate aftermath of Hurricane Katrina, Verizon Wireless has always said it would rebuild its network in the region and that our employees would have jobs there. That hasn’t changed,” said Debi Lewis, Verizon Wireless spokeswoman. “The Katrina tax bill, however, will help us accelerate the rebuilding we already had planned because of the accelerated depreciation schedules and help us with employee retention because of those provisions, but as I said, it just helps us speed up things that were already in the works.”
The Gulf Opportunity Zone Act should provide an estimated $8 billion in tax breaks.
BellSouth Corp., the minority parent of Cingular, was a major backer of the bill. The tax credits should offset the more than $500 million in damages BellSouth suffered in the storms, according to Washington Analysis, a Wall Street research firm focused on policy.
In other tax-related action, local governments have come out against a set of bills meant to streamline state taxes, including those imposed on telecommunications.
“Local governments strongly support working with Congress and the telecommunications industry to simplify telecommunications taxes so that all providers can operate efficiently within local jurisdictions,” said James Hunt, president of the National League of Cities and a councilman from Clarksburg, W.Va. “However, we cannot allow telecommunications companies to dig up city streets and disrupt the lives of our constituents-and their customers-without just compensation for their actions.”
The telecom industry recently lost a tax battle when Congress decided not to extend research and development tax breaks. RCR
