20170317Decision Memo.pdf

RE:
DECISION MEMORANDUM
TO:COMMISSIONER KJELLANDER
COMMISSIONER RAPER
COMMISSIONER ANDERSON
COMMISSION SECRETARY
LEGAL
WORKING FILE
FROM: GRACE SEAMAN
DATE: MARCH 15,2017
COLUMBINE TELEPHONE COMPANY, INC'S APPLICATION FOR
THE BROADBAT\D EQT.ITPMENT TAX CREDTT FOR YEARS 2012-20t5;
cAsE NO. COL-T-16-01.
BACKGROUND
In 2001, House Bill 377 was enacted authorizing income tax credit for the installation of
quali$ing broadband infrastructure in ldaho. Idaho Cade $ 63-30298(3XaXii). In particular,
Section 63-30291allows 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 signats at a rate of at least 200,000 bits per seconds (bps) to a subscriber and at least
125,000 bps from a subscriber. Idoho Code $ 63-30291(3)(b). If the equipment is installed by a
telecommunications carrier, it must also be "necessaxy to the provision of broadband services
and an integral part of a broadband network." Idaho Code $ 63-3029(3XbXi). 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 ldaho Code $ 53-30291(4). Once the Comrnission 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 December 21, 2016, Columbine Telephone Company, Inc. ("Columbine" or
o'Company") filed an Application seeking Commission approval of equipment for the broadband
equipment ta"x credit for calendar years 2012,2013, 2014, and 2015. An Amendment to the
IDECISION MEMORANDUM MARCH I5,2OI7
)
Application was filed on February 28,zOn. In the Application, Columbine states that it
installed equipment associated with Asymmetric Digital Subscriber Line (ADSL), Very High
Speed Digital Subscriber Line (VDSL),8nd Fiber to the X (FTTX) services with transmission
rates of one to 50 Mbps upstream and one to 50 Mbps downstream. These rates are above the
statutory speed requirements pursuant to ldaho Code 63-3A291. In the Amendment, the
Company "estimates that more than 50% of its customer have access to its broadband network
within its designated service areas." Columbine invested approximately $954,000 in2012,
approximately $1,466,000 in 2013, approximately $1,755,000 in 2014 and approximately
$3,755,000 in 2015 in qualiSing broadband equipment. The Company states that "the listed
equipment shown on the exhibits to the application constitutes an integral part of the relevant
broadband network, necessary to provide broadband services..." See Amendment to the
Application.
STATF REVIEW AND RECOMMENDATION
Staffhas reviewed the list of proposed broadband equipment submitted by Columbine
and believes the identified equipment qualifies for the investment tax credit pursuant to
Procedural Order No. 28784 and ldaho Code $ 63-3029I(3Xb). Staff also believes that the
expenditures identified by the Company, a telecommunications company is "necessary for the
provision of broadband services and an integral part of a broadband network." Stafi, therefore,
recommends that the Commission issue an Order confirming the equipment is qualified
broadband equipment and fonvard the approving Order along with a copy of the original
Application to the ldaho Tax Commission.
COMMISSION DECISION
Does the Commission wish to issue an order confirming the equipment identified in Case
No. GOL-T-!6-01 is qualified broadband equipment as defined in Idaho Code $ 63-3029I(3Xb),
and fonvard it to the ldaho Ta:< Commission?
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2DECISION MEMORANDUM
Seaman
MARCH 15,2017