20090417Decision Memo.pdf

DECISION MEMORANDUM
TO:COMMISSIONER KEMPTON
COMMISSIONER SMITH
COMMISSIONER REDFORD
COMMISSION SECRETARY
LEGAL
WORKING FILE
FROM:GRACE SEAMAN
DATE:APRIL 16, 2009
RE:CITIZEN'S 2008 BROADBAND EQUIPMENT TAX CREDIT
APPLICATION; CASE NO. CTC-09-
BACKGROUND
In 2001 , House Bill 377 was enacted authorizing income tax credit for the installation of
qualifying broadband infrastructure in Idaho. Idaho Code 9 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 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 963-3029I(3)(b). To be eligible for the broadband
equipment tax credit, the taxpayer must obtain from the Commission an Order confirming that
installed equipment qualifies for capital investment credit. Procedural Order No. 28784 and
Idaho Code 963-30291(4).
THE APPLICATION
On March 31 , 2009, the Commission received an Application from Citizen
Telecommunications ofIdaho dba Frontier Communications ofIdaho (Citizens), seeking
approval of equipment for the broadband tax credit for calendar year 2008. In this filing,
Citizens states that it installed various components as part of its Asymmetrical Digital Subscriber
Line (ASDL) broadband network for the provision of high-speed Internet access to customers in
Horseshoe Bend, McCall, Homedale, Aberdeen, Wilder, Garden Valley, Cascade, Riggins, and
DECISION MEMORANDUM - 1 -APRIL 16, 2009
Sweet. Citizens indicates in its Application that it offers network transmission rates of up to 512
Kbps to a subscriber and 3 Mbps from a subscriber. The Company states that broadband service
is now available to approximately 18 750 customers or over 87% ofthe total customer base.
Approximately $893 600 of broadband equipment was installed during calendar year 2008.
STAFF REVIEW AND RECOMMENDATION
Staff has reviewed the list of proposed broadband equipment submitted by Citizens and
believes the identified items qualify for the investment tax credit pursuant to Procedural Order
No. 28784 and Idaho Code 963-3029I(3)(b). Staff also believes that the expenditures by
Citizens, 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 acceptance of the Application and further recommends that the Commission
forward the approving Order along with a copy of the original Applications to the Idaho Tax
Commission.
COMMISSION DECISION
Does the Commission wish to accept Citizen s Application for the broadband investment
tax credit?
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Grace Seaman
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DECISION MEMORANDUM - 2 -APRIL 16, 2009