20140620Decision Memo.pdf

DECISION MEMORANDUM
TO:COMMISSIONER KJELLANDER
COMMISSIONER REDFORD
COMMISSIONER SMITH
COMMISSION SECRETARY
LEGAL
WORKING FILE
FROM:GRACE SEAMAN
DATE:JUNE 19,2014
RE:CUSTER TELEPHONE COOPERATIVE,INC.’S 2013 BROADBAND
EQUIPMENT TAX CREDIT APPLICATION;CASE NO.CUS-T-14-O1.
BACKGROUND
In 2001,1-louse Bill 377 was enacted authorizing income tax credit for the installation of
qualifying broadband infrastructure in Idaho.Idaho Code §63-30298(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 Cock’§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 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 §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 June 10,2014,Custer Telephone Cooperative,Inc.(“Custer”or “Company”)filed an
Application seeking Commission approval of equipment for the broadband tax credit.In the
Application,Custer states that it installed equipment associated with Asymmetric Digital
DECISION MEMORANDUM -I -JUNE 19,2014
Subscriber Line (ADSL)and Symmetrical Digital Subscriber Line (SDSL)services with
transmission rates of 256 Kbps to 10 Mbps from a subscriber and 256 Kbps to 50 Mbps to a
subscriber.The Company asserts that approximately 74%of its customers can be served by the
broadband network.During 2013,the Company invested approximately $1.3 million in
qualifying broadband equipment in Custer County and Lemhi County.
STAFF 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 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.CUS-T-14-O1 is qualified broadband equipment as defined in Idaho Code §63-30291(3)(b),
and forward it to the Idaho Tax Commission?
/ccc(’
Grace Seaman
Udmcmos/cus-t-I 4.01 blc dcc memo
DECISION MEMORANDUM -2-JUNE 19,2014