20190726Decision Memo.pdf

RE
DECISION MEMORANDUM
TO:COMMISSIONER KJELLANDER
COMMISSIONf,R RAPER
COMMISSIONER ANDERSON
COMMISSION SECRETARY
LEGAL
WORKING FILE
FROM: DANIEL KLEIN
DATE: JULY 25,2019
CUSTER TELEPHONE COOPERATIVEN INCOS 2018 BROADBAND
EQUIPMENT TAX CREDIT; CASE NO. CUS-T-I9-01.
BACKGROUND
In 2001, House Bill 377 was enacted authorizing income tax credit for the installation of
qualifying broadband infrastructure in Idaho. Idaho Code $ 63-30298(3XaXii). 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
transmittirrg signals at a rale of at least 200"000 bits per seconds (bps) to a subscriber and at least
125.000 bps liom a subscriber;' Idaho Code $ 63-3291(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(3XbXi). To be eligible
for the tax credit, the ta,xpayer 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 ldaho Code $ $-3A29\4). Once the Commission as determined the
installed equipment is eligible for the broadband equipment tax credit, an order along u,ith the
original Application is forwarded to the Idaho Tax Commission.
DECISION MEMORANDUM JULY 25,2019I
THE APPLICATION
On May 31,2019, the Commission received an Application from Custer Telephone
Cooperative, lnc. ("Custer Telephone" or "Comp&ry"), seeking approval of the equipment for
the broadband tax credit installed during calendar year 2018. In the Application, Custer
Telephone states that it installed broadband equipment associated with Fiber to the Home
(FTTH) and Asymmetrical Digital Subscriber Line (ADSL). Custer Telephone discloses that its
broadband network has data transmission rates of 256,000 to 10,000,000 bits per second from a
subscriber and 256,000 to 10,000,000 bits per second to a subscriber, These rates exceed the
minimum statutory speed requirements pursuant to ldaho Code $ $4A29I. The Company
estimates that more lhan 85Yo of its Idaho customers have subscribed to its broadband network
within its designated service areas. Custer Telephone invested approximately $936,033.81 in
2018 in qualifying broadband equipment that it confirms is integral 1o the broadband network.
STAFF REVIEW AND RECOMMEN}ATION
Staff has reviewed and audited the list of proposed broadband equipment and believes the
identified equipment qualifies for the investment tax credit pursuant to Procedural Order No.
28784 and ldaho Code $ $4A291(3)(b). Staff, therefore, recommends that the Commission
issue an Order confirming the equipment is qualified broadband equipnient and tbrward the
approving Order along with 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-19-01 is qualified broadband equipment as definedin ldaho Code $
63-3029I(3Xb) and forward it to the Idaho Tax Commission?
Daniel KIein
UdmemoslCUS-T- I 9-0 I Cusler Telephone Elroadband Tax Credit
DECISION MEMORANDUM -2-JULY 25,2019
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