20100301Decision Memo.pdf

DECISION MEMORANDUM
TO:COMMISSIONER KEMPTON
COMMISSIONER SMITH
CO MMISSI 0 NER RED FORD
COMMISSION SECRETARY
LEGAL
WORKING FILE
FROM:GRACE SEAMAN
DATE:FEBRUARY 23, 2010
RE:CITIZEN'S 2009 BROADBAND EQUIPMENT TAX CREDIT
APPLICATION; CASE NO. CTC-10-
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 9 63-3029I(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 9 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. Procedural
Order No. 28784 and Idaho Code 9 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 February 10 2010, the Commission received an Application from Citizen
Telecommunications ofIdaho dba Frontier Communications ofIdaho (Frontier) seeking
DECISION MEMORANDUM - 1 -FEBRUARY 23 2010
approval of equipment for the broadband tax credit. In the Application, Frontier states that
during calendar year 2009, it installed equipment associated with Asymmetrical Digital
Subscriber Line (ADSL) services with network transmission rates of up to 512 Kbps send and 3
Mbps receive. This equipment was installed in 12 Idaho exchanges: Fairfield, Marsing, McCall
Cascade, Carey, Donnelly, Homedale, Parma, Riggins, Garden Valley, Whitebird and Wilder.
Frontier asserts that broadband is now available to 92% of its Idaho customers. The Company
states that it invested approximately $719 000 in qualifying broadband equipment during 2009.
ST AFF REVIEW AND RECOMMENDATION
Staff has reviewed the list of proposed broadband equipment submitted by Frontier and
believes the identified equipment qualifies for the investment tax credit pursuant to Procedural
Order No. 28784 and Idaho Code 9 63-3029I(3)(b). Staff also believes that the expenditures
identified by Frontier, 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 as defined in Idaho Code 9 63-3029I(3)(b)(i), and forward it to the Idaho
Tax Commission.
COMMISSION DECISION
Does the Commission wish to issue an order confirming the equipment identified in
Case No. CTC-10-01 is qualified broadband equipment as defined in Idaho Code
9 63-3029I(3)(b)(i), and forward it to the Idaho Tax Commission?
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Grace Seaman
udmemos/ctctl 0.01 btc dec memo
DECISION MEMORANDUM - 2 -FEBRUARY 23 2010