20230705Decision Memo.pdf

TO:
FROM:
DATE:
RE:
DECISION MEMORANDUM
COMMISSIONER ANDERSON COMMISSIONER HAMMOND COMMISSIONER LODGE
COMMISSION SECRETARY LEGAL
JOHAN E. KALALA-KASANDA CHRIS BURDIN
JULY 5, 2023
IN THE MATTER OF CUSTER TELEPHONE BROADBAND SERVICES LLC'S APPLICATION FOR THE 2022 BROADBAND EQUIPMENT
TAX CREDIT; CASE NO. CTB-T-23-01.
BACKGROUND
In 2001, House Bill 377 was enacted authorizing income tax credit for the installation of
qualifying broadband infrastructure in Idaho. Idaho Code§ 63-3029B(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 equipment "capable of transmitting signals
at a rate of at least two hundred thousand (200,000) bits per second to a subscriber and at least
one hundred thousand twenty-five (125,000) bits per second from a subscriber." Idaho Code
§63-329I(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§ 63-3029I(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. Commission Order No. 35297 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.
DECISION MEMORANDUM -1 -JULY 5, 2023
THE APPLICATION
On May 23, 2023, the Commission received an Application from Custer Telephone
Broadband Services LLC, an Idaho corporation ("CTBS" or "Applicant"), seeking approval of
the equipment for the broadband tax credit installed during the calendar year 2022. However,
Staff informed CTBS that the Application was not in conformity with the requirements of the
new Commission Order No. 35297. On May 26, 2023, CTBS submitted supplemental
information to its Application in compliance with Commission Order No. 35297.
In the Application, CTBS represented that the broadband services it offers to its
customers are associated with cable modem 1 High Speed Internet ("HSI"), fixed wireless HSI,
and Fiber to The Home2 ("FTTH") HSI technologies. It described its network as a fiber optic fed
cable system that provides cable modem service, fiber optic transport electronics, fiber optic
backbone and distribution cable, and fixed wireless network.
CTBS disclosed that the transmission rate of its broadband network is 512 Kilobytes
("KB") per second to lowest subscribed rate and 128 KB from subscribed rate. The lowest
advertised rate is 10 Megabytes ("MB") per second to a subscriber and 1 MB per second from a
subscriber. The highest advertised rate is 1 Gigabytes ("GB") per second to a subscriber and 200
(MB) per second from a subscriber. These rates are above the minimum statutory speed
requirements pursuant to Idaho Code § 63-30291.
CTBS asserted that it serves 1,932 customers with broadband services out of3,100
estimated possible customers in Salmon, Idaho. CTBS also represents that it invested
approximately $235,865.36 in 2022 in qualifying broadband equipment that it confirms is
integral to the broadband network. This qualifies for a 3% broadband tax credit of $7,075.96.
1 A cable modem is a type of network bridge that provides bi-directional data communication via radio frequencychannels on a Hybrid Fiber Coaxial ("HFC"), Radio Frequency over Glass ("RFoG") and coaxial cable infrastructure. Cable modems are primarily used to deliver broadband Internet access in the form of cable Internet, taking advantage of the high bandwidth ofa HFC and RFoG network. 2 Fiber to The Home ("FTTH"), also called Fiber to The Premises ("FTTP"), is the installation and use of optical fiber from a central point to individual buildings to provide high-speed internet access. FTTH dramatically
increases connection speeds available to computer users compared to other technologies.
DECISION MEMORANDUM - 2 -JULY 5, 2023
STAFF REVIEW AND RECOMMENDATION
Staff has reviewed the list of proposed broadband equipment and believes the identified
equipment qualifies for the investment tax credit pursuant to Procedural Order No. 35297 and
Idaho Code§ 63-30291(3)(b). Staff, therefore, recommends that the Commission issue an Order
confirming the equipment is qualified broadband equipment and forward the approved 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 broadband equipment
identified in Case No. CTB-T-23-01 is qualified broadband equipment as defined in Idaho Code
§63-30291(3)(b) and forward it to the Idaho Tax Commission
/ Udmemos/CBT-T-23-01 Custer Telephone Broadband Services LLC's Broadband Tax Credit DECISION MEMORANDUM - 3 -JULY 5, 2023