20160826Decision Memo.pdf

TO:
FROM:
DATE:
DECISION MEMORANDUM
COMMISSIONER KJELLANDER
COMMISSIONER RAPER
COMMISSIONER ANDERSON
COMMISSION SECRETARY
LEGAL
WORKING FILE
GRACE SEAMAN
AUGUST 24, 2016
RE: CENTURYTEL OF THE GEM STATE, INC. DBA CENTURYLINK'S 2015
BROADBAND EQUIPMENT TAX CREDIT APPLICATION; CASE NO.
CGS-T-16-02.
BACKGROUND
In 2001, House Bill 377 was enacted authorizing income tax credit for the installation of
qualifying broadband infrastructure in Idaho. Idaho Code§ 63-30?9B(3)(a)(ii). In particular,
Section 63-30291 allows a taxpayer to receive an investment tax credit for eligible broadband
equipment installed during a calendar year.
"Qualified broadband equipment" is defined as those network facilities capable of
transmitting signals at a rate of at least 200,000 bits per seconds (bps) to a subscriber and at least
125,000 bps from a subscriber. Idaho Code§ 63-30291(3)(b). If the equipment is installed by a
telecommunications carrier, it must also be "necessary to the provision of broadband services
and an integral part of a broadband network." Idaho Code § 63-30291(3)(b)(i). To be eligible
for the tax credit, the taxpayer must obtain from the Commission an Order confirming that the
installed equipment meets the statutory definition of qualified broadband equipment. Procedural
Order No. 28784 and Idaho Code§ 63-30291(4). Once the Commission has determined the
installed equipment is eligible for the broadband equipment tax credit, an order along with the
original Application is forwarded to the Idaho Tax Commission.
THE APPLICATION
On August 8, 2016, CenturyTel of the Gem State, Inc. dba Century Link ("Century Link"
or "Company") filed an Application seeking Commission approval of equipment for the
DECISION MEMORANDUM 1 AUGUST 24, 2016
broadband tax credit for calendar year 2015. CenturyLink states in the Application that it
installed equipment associated with various forms of DSL-based broadband services using a mix
of fiber and metallic cable transport in the Bruneau, Grandview and Richfield exchanges. The
Company provided the following details.
Transmission Rates Investment Retirements Net Investment2
256 Kbps-20Mbps 67% $51,921 ($3,503) $48,418
STAFF REVIEW AND RECOMMENDATION
Staff has reviewed the list of proposed broadband equipment submitted by Century Link
and believes the itemized expenses qualifies for the investment tax credit pursuant to Procedural
Order No. 28784 and Idaho Code § 63-30291(3 )(b ). Staff also believes that the expenditures
identified by the Company, a telecommunications provider, were for equipment that is
"necessary for the provision of broadband services and an integral part of a broadband network."
Staff, therefore, recommends that the Commission issue an Order confirming the equipment is
qualified broadband equipment and forward the approving Order along with a copy of the
original Application to the Idaho Tax Commission.
COMMISSION DECISION
Does the Commission wish to issue an Order confirming the equipment identified in Case
No. CGS-T-16-02 is qualified broadband equipment as defined in Idaho Code§ 63-30291(3)(b)
and forward it to the Idaho Tax Commission?
Udmcmos/cg.s·l· l 6·02
1 The percentage of living units (street addresses) where the Company might send a bill and where wireline plant is
nearby. This figure represents the % of working qualified living units where DSL-based service could be
provisioned in a short timeframe.
2 Investment (451,921) minus Idaho Broadband Retirements ($3,503).
DECISION MEMORANDUM 2 AUGUST 24, 2016