20090403Decision Memo.pdf

DECISION MEMORANDUM
TO:COMMISSIONER REDFORD
CO MMISSI 0 NER SMITH
COMMISSIONER KEMPTON
COMMISSION SECRETARY
LEGAL
WORKING FILE
FROM:GRACE SEAMAN
DATE:APRIL 3, 2009
RE:FILER MUTUAL TELEPHONE COMPANY'S 2005 AND 2006
BROADBAND EQUIPMENT TAX CREDIT APPLICATION;
CASE NOS. FIL-09-1 AND FIL-09-
BACKGROUND
In 2001 , House Bill 377 was enacted authorizing income tax credit for the installation of
qualifying broadband infrastructure in Idaho. Idaho Code 9 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 9 63-30291(3)(b). To be eligible for the broadband
equipment tax credit, the taxpayer must obtain from the Commission an Order confirming that
installed equipment qualifies for capital investment credit. Procedural Order No. 28784 and
Idaho Code 9 63-30291(4).
THE APPLICATIONS
On April 2, 2009, the Commission received two Applications from Filer Telephone
Company (Filer) seeking approval of equipment for the broadband tax credit for calendar years
2005 and 2006. In the Applications, Filer states it offers Asymmetric Digital Subscriber Line
(ADSL) Broadband services at transmission rates of 512 Kbps to 1 Mbps upstream and 512
Kbps to 3 Mbps downstream. Filer describes its network as a fiber optic fed digital loop carrier
DECISION MEMORANDUM - 1 -APRIL 3, 2009
with non-loaded copper distribution cable, fiber to the home electronics, fiber optic transport
electronics, fiber optic backbone and distribution cable and copper.
2005 Broadband Tax Credit Application; (Case No. GNR-09-1 ).In this Application
Filer reports that 22% of its possible customers (2003) have broadband service. During 2005
Filer reported that its Broadband investments were installed in Filer and totaled nearly $34 700.
2006 Broadband Tax Credit Application; (Case No. GNR-09-2).In this Application
Filer reports that 32% of its possible customers (1988) have broadband service. During 2006
Filer reported that broadband investments were installed in Filer, Hollister, Clover, and
throughout Twin Falls County and totaled approximately $208,400.
ST AFF REVIEW AND RECOMMENDATION
Staff has reviewed the list of proposed broadband equipment submitted in both
Applications and believes the identified equipment qualifies for the broadband investment tax
credit pursuant to Procedural Order No. 28784 and Idaho Code 963-30291(3)(b). Staff also
believes that the expenditures indentified by Filer, a telecommunications provider, were for
equipment that is "necessary for the provision of broadband services and an integral part of a
broadband network." Staff, therefore, recommends acceptance of the Applications and further
recommends that the Commission forward the approving Order along with a copy of the original
Applications to the Idaho Tax Commission.
COMMISSION DECISION
Does the Commission wish to accept Filer Mutual Telephone Company s 2005 and 2006
Applications for the broadband investment tax credit?
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Grace Seaman
i:udmemos/filer2005 - 2006BTC
DECISION MEMORANDUM - 2 -APRIL 3 , 2009