20170609Decision Memo.pdf

RE:
DECISION MEMORANDTJM
TO:COMMISSIONER KJELLANDER
COMMISSIONER RAPER
COMMISSIONER ANDERSON
COMMISSION SECRETARY
LEGAL
WORKING FILU
FROM: GRACE SEAMAIT
DATE: JUNE 6,2017
CUSTER TELEPHONE COOPERATIVE, INC.'S 2016 BROAI}BAND
EQUIPMENT TAX CREDIT APPLICATION; CASE NO. CUS-T-[7-01.
BACKGROUND
In 2001, House Bill 377 was enacted authorizing income tax credit for the installation of
quali$ing broadband infrastructure in ldaho. Idaho Code $ 63-30298{3)(aXii). In particular,
Section 63-30291allows 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 ldaho Code $ 63-3029I(3Xb). 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." ldaho Code $ 63-3029(3XbXi). 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
OrderNo. 28784 and ldaho Code $ 63-30291(4). Once the Comrnission 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 May 23,2017, Custer Telephone Cooperative, Inc. ('Custern'or "Company") filed an
Application seeking Commission approval of the broadband tax credit for equipment installed
during calendar year 2016. In the Application, Custer states that it installed equipment
IDECISION MEMORANDUM JI.JNE 6,2017
associated with Fiber to the Home (fTfH) and Symmetrical Digital Subscriber Line (SDSL)
services with transmission rates of 256 Kbps to l0 Mbps from a subscriber and 256 Kbps to 100
Mbps to a subscriber. The Company asserts that approximately 90% of its customers can be
served by the broadband network. During 2016, the Company invested approximately $1.8
million in qualifying broadband equipment in Custer County.
STAFF REVIEW AND RECOMMENDATION
Staffhas 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 ldaho Code $ 63-30291(3)(b). Staffalso 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.o'
See T. Westergard E-Mail, June 6, 2017. Staff, therefore, recommends that the Commission
issue an Order confirming the equipment is qualified broadband equiprnent 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-17-01 is qualified broadband equipment as defined in ldaho Code $ 63-3029(3Xb),
and forward it to the Idaho Tax Commission?
Seaman
Udmcmos/cus.t-17-01
DECISION MEMORANDUM JtNE 6,2A177