20090807Decision Memo.pdf

DECISION MEMORANDUM
TO:COMMISSIONER KEMPTON
COMMISSIONER SMITH
COMMISSIONER REDFORD
COMMISSION SECRETARY
LEGAL
WORKING FILE
FROM:GRACE SEAMAN
DATE:AUGUST 7, 2009
RE:CUSTER'S 2008 BROADBAND EQUIPMENT TAX CREDIT
APPLICATION; CASE NO. CUS-09-01.
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 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). 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 ~ 63-30291(4).
THE APPLICATION
On July 15, 2009, the Commission received an Application from Custer Telephone
Cooperative, Inc. (Custer), seeking approval of equipment for the broadband tax credit. The
Application identifies the broadband investments made by Custer during 2008. Custer states it
installed equipment that provides Asymmetric Digital Subscriber Line (ADSL) and High-bit-rate
Digital Subscriber Line (HDSL) services with transmission rates of 128 to 512 Kbps upstream
and 512 Kbps to 8 Mbps downstream. The qualifying equipment was installed in Custer and
DECISION MEMORANDUM - 1 -AUGUST 7, 2009
Lemhi counties. Custer asserts that five out of 1000 possible people have access to broadband
services. The Company identifies approximately $1.5 million in qualifying broadband
equipment for 2008.
ST AFF REVIEW AND RECOMMENDATION
Staff has reviewed the list of proposed broadband equipment submitted by Custer and
believes the identified equipment qualifies for the investment tax credit pursuant to Procedural
Order No. 28784 and Idaho Code ~ 63-30291(3)(b). Staff also believes that the expenditures
identified by Custer, 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 Application to the
Idaho Tax Commission.
COMMISSION DECISION
Does the Commission wish to accept the Application for the broadband investment tax
credit?
~A0 kt~
Grace Seaman
i:udmemos/CUS-O9-
DECISION MEMORANDUM - 2 -AUGUST 7, 2009