20031003Decision Memo.pdf

DECISION MEMORANDUM
TO:CO MMISSIO NER KJELLAND ER
COMMISSIONER SMITH
COMMISSIONER HANSEN
COMMISSION SECRETARY
LEGAL
WORKING FILE
FROM:DOUG COOLEY
DATE:OCTOBER 3, 2003
RE:CUSTER TELEPHONE COOPERATIVE'S APPLICATION FOR
BROADBAND EQUIPMENT TAX CREDIT; CASE NO. CUS-03-
BACKGROUND
In September 5, 2003 , the Commission received an Application from Custer Telephone
Cooperative, Inc. to receive an investment tax credit for eligible broadband equipment pursuant
to Order No. 28784 and Idaho Code 9 63-30291(4). To be eligible for the tax credit, the taxpayer
must obtain from the Commission an Order confirming that installed equipment qualifies for the
tax credit.
DISCUSSION
Custer stated that, during calendar year 2002, it installed various components as part of
its wireline broadband network for the provision of high-speed Internet access to customers in its
Idaho service area. The Company also indicated that high-speed access to customers began in
2001 at transmission rates from 128 kilobits per second (kbps) up to 1.54 megabits per second
(Mbps). The Application indicates that Custer offers Asynchronous Digital Subscriber Line
(ADSL) to approximately 100 customers using primarily AFC brand equipment.
In 2002, Custer represents that it installed fiber optic transceivers, digital loop carrier
shelves, line cards, concentrating electronics, and supporting power supply and software. Custer
also installed approximately 30 miles of fiber optic cable and 10 miles of copper distribution
cable during 2002. Custer capitalized the labor and overhead costs associated with the
installation of this equipment.
DECISION MEMORANDUM OCTOBER 3 , 2003
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STAFF REVIEW
Staff has reviewed the list of proposed broadband equipment submitted by Custer and
believes the equipment is "necessary to the provision of broadband services and an integral part
of a broadband network" according to Idaho Code 9 63-30291(3)(b )(i). Staff has had discussions
with Custer to clarify the nature of various pieces of equipment and has also been assured that
the installation labor, overhead, and supporting equipment is directly related to offering
broadband in Idaho.
STAFF RECOMMENDATION
Staff recommends approval of the Application from Custer Telephone Cooperative and
further recommends that the Commission forward the approving Order and copies of the
Applications to the Idaho Tax Commission.
COMMISSION DECISION
Does the Commission wish to confirm that the equipment in the Application qualifies as
broadband equipment and forward the Application to the Tax Commission?
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i:udmemos/custer 2002
DECISION MEMORANDUM OCTOBER 3 , 2003
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