20170113Decision Memo.pdf

TO:
FROM:
DATE:
RE:
DECISION MEMORANDUM
COMMISSIONER KJELLANDER
COMMISSIONER RAPER
COMMISSIONER ANDERSON
COMMISSION SECRET ARY
LEGAL
WORKING FILE
GRACE SEAMAN
JANUARY 11, 2017
CITIZENS TELECOMMUNICATIONS COMPANY OF IDAHO OBA
FRONTIER COMMUNICATIONS OF IDAHO'S 2015 BROADBAND
EQUIPMENT TAX CREDIT APPLICATION; CASE NO. CTC-T-16-01.
BACKGROUND
In 200 I, 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 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 ta..x 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 Ta..x Commission.
THE APPLICATION
On December 27, 2016, Citizens Telecommunications Company ofldaho dba Frontier
Communications of Idaho ("Frontier") filed an Application seeking approval of equipment for
DECISION MEMORANDUM -1 -JANUARY 11, 2017
the broadband tax credit. In the Application, Frontier states that it installed equipment associated
with Asymmetrical Digital Subscriber Line ("ADSL") services with transmission rates of up to
640 Kbps "send" and 6 Mbps "receive" in 15 exchanges. Frontier asserts that over 87% of its
customers in the exchanges can be served by the broadband network. During 2015, the
Company invested approximately $880,600 in qualifying broadband equipment.
STAFF 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 § 63-3029I(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."
Thus, Staff recommends that the Commission issue an Order confirming the equipment is
qualified broadband equipment and forward the approving Order along with the 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. CTC-T-16-01 is qualified broadband equipment as defined in Idaho Code§ 63-30291(3)(b),
and forward it to the Idaho Tax Commission?
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race Seaman
Udmcmos/ctc+ l 6-0 I dee memo
DECISION MEMORANDUM JANUARY 11, 2017