20230705Decision Memo.pdf

TO:
FROM:
DATE:
RE:
DECISION MEMORANDUM
COMMISSIONER ANDERSON
COMMISSIONER HAMMOND COMMISSIONER LODGE COMMISSION SECRETARY LEGAL
JOHAN E. KALALA-KASANDA CHRIS BURDIN
JULY 5, 2023
IN THE MATTER OF CUSTER TELEPHONE COOPERATIVE, INC.'S APPLICATION FOR THE 2022 BROADBAND EQUIPMENT TAX CREDIT; CASE NO. CUS-T-23-02.
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 equipment "capable of transmitting signals
at a rate of at least two hundred thousand (200,000) bits per second to a subscriber and at least
one hundred thousand twenty-five (125,000) bits per second from 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(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. Commission Order No. 35297 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.
DECISION MEMORANDUM - 1 -JULY 5, 2023
THE APPLICATION
On May 23, 2023, the Commission received an Application from Custer Telephone
Cooperative, Inc. ("Custer Telephone " or "Applicant"), seeking approval of the equipment for
the broadband tax credit installed during the calendar year 2022. However, Staff informed the
Applicant that the Application was not in conformity with the requirements of the new
Commission Order No. 35297. On May 26, 2023, the Applicant submitted supplemental
information to its Application in compliance with Commission Order No. 35297.
In the Application, the Applicant represented that the broadband services it offers to its
customers are associated with Asymmetric Digital Subscriber Line1 ("ADSL"), Very high-speed
Digital Subscriber Line2 ("VDSL"), Fiber to The Home ("FTTH") and wireless services
technologies. It described its network as fiber optic fed DLC's with 12K non-loaded copper
distribution cable, fiber optic backbone and transport electronics, fiber to the home distribution
and electronics, and 3G & 4G wireless data.
The Applicant disclosed that the transmission rate of its broadband network is 512
Kilobytes ("KB") per second to lowest subscriber rate and 128 kilobytes (KB) from subscriber.
The lowest advertised rate is 25 Megabytes ("MB") per second to a subscriber and 3 MB per sec
from a subscriber. The highest advertised rate to a subscriber is 1 Gigabytes per second to and
200 MB per second from a subscriber.
The Applicant asserted that it serves 1,620 customers with broadband services out of
1,800 estimated possible customers in Idaho. The Applicant also represented that it invested
approximately $1,984,968.14 in 2022 in qualifying broadband equipment that it confirms is
integral to the broadband network. This qualifies for a 3% broadband tax credit of $59,549.04.
STAFF REVIEW AND RECOMMENDATION
1 ADSL is a type of Digital Subscriber Line ("DSL") technology, a data communications technology that enables
faster data transmission over copper telephone lines than a conventional voiceband modem can provide. ADSL differs from the less common Symmetric Digital Subscriber Line ("SDSL"). In ADSL, bandwidth and bit rate are said to be asymmetric, meaning greater toward the customer premises (downstream) than the reverse (upstream).
2 A VDSL is a DSL technologies that provides data transmission faster than the earlier standards of asymmetric digital subscriber line.
DECISION MEMORANDUM -2 -JULY 5, 2023
Staff has reviewed the list of proposed broadband equipment and believes the identified
equipment qualifies for the investment tax credit pursuant to Procedural Order No. 35297 and
Idaho Code§ 63-30291(3)(b). Staff, therefore, recommends that the Commission issue an Order
confirming the equipment is qualified broadband equipment and forward the approved 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 broadband equipment
identified in Case No. CUS-T-23-02 is qualified broadband equipment as defined in Idaho Code
§63-30291(3)(b) and forward it to the Idaho Tax Commission?Udmemos/CUS-T-23-02 Custer Telephone Cooperative, Inc Broadband Tax Credit DECISION MEMORANDUM - 3 -JULY 5, 2023