20160603Decision Memo.pdf

DECISION MEMORANDUM
TO:COMMISSIONER KJELLANDER
COMMISSIONER RAPER
COMMISSIONER ANDERSON
COMMISSION SECRETARY
LEGAL
WORKING FILE
FROM:GRACE SEAMAN
DATE:JUNE 2,2016
RE:DIRECT COMMUNICATIONS ROCKLAND,INC.’S BROADBAND
EQUIPMENT TAX CREDIT APPLICATION FOR 2014 AND 2015;
CASE NO.DCM-T-16-01.
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(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.
DECISION MEMORANDUM -1 -JUNE 2,2016
THE APPLICATION
On April 11,2016,the Commission received an Application from Direct
Communications Rockland,Inc.(“Direct”or “Company”)seeking approval of equipment for the
broadband tax credit for calendar years 2014 and 2015.On May 19,2016,the Company
submitted an amendment to the 2015 equipment list.Direct states that it installed equipment
associated with Digital Subscriber Line (DSL)and Ethernet services over a fiber and copper
wireline network.The Company asserts that its broadband offerings provide minimum
transmission rates of 6 Mbps to a subscriber and I Mbps from a subscriber;exceeding the
requirements for the broadband equipment tax credit.Approximately 80%of Direct’s customers
can be served by the broadband network.The Company invested approximately Si .1 million in
2014 and approximately $1.2 million in 2015.
STAFF REVIEW AND RECOMMENDATION
Staff has reviewed the list of proposed broadband equipment submitted by Direct 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 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 lix Commission.
COMMISSION DECISION
Does the Commission wish to issue an order confirming the equipment identified in Case
No.DCM-T-16-Ol is qualified broadband equipment as defined in Idaho Code §63-30291(3)(b),
and forward it to the Idaho Tax Commission?
/
brace Seaman
Udmemos/dcm.t.16-OI dcc memo
DECISION MEMORANDUM -2-JUNE 2,2016