20150904Decision Memo.pdf

DECISION MEMORANDUM
TO:COMMISSIONER KJELLANDER
COMMISSIONER SMITH
COMMISSIONER R4PER
COMMISSION SECRETARY
LEGAL
WORKING FILE
FROM:GRACE SEAMAN
DATE:SEPTEMBER 4,2015
RE:CUSTER TELEPHONE COOPERATIVE,INC.’S 2014 BROADBAND
EQUIPMENT TAX CREDIT APPLICATION;CASE NO.CUS-T-15-O1.
BACKGROUND
In 2001,I-louse 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 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 July 17,2015,Custer Telephone Cooperative,Inc.(“Custer”or “Company”)filed an
Application seeking Commission approval of the broadband tax credit for equipment installed
during calendar year 2014.In the Application,Custer states that it installed equipment
DECISION MEMORAJ4DUM -1-SEPTEMBER 4,2015
associated with Asymmetric Digital Subscriber Line (ADSL)and Symmetrical Digital
Subscriber Line (SDSL)services with transmission rates of 256 Kbps to 10Mbps from a
subscriber and 256 Kbps to 100 Mbps to a subscriber.The Company asserts that approximately
82%of its customers can be served by the broadband network.During 2014,the Company
invested approximately S314,000 in qualifying broadband equipment in Custer 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-15-01 is qualified broadband equipment as defined in Idaho Code §63-30291(3)(b),
and fonvard it to the Idaho Tax Commission?
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Grace Seaman
Udmemos/cus-t-15-Olhtc dcc memo
DECISION MEMORANDUM -2-SEPTEMBER 4,2015