20170509Decision Memo.pdf

RE:
DECISION MEMORANDT'M
TO:COMMISSIOI$ER IilELLANDER
COMMISSIONSR RAPER
COMMISSIONER ANDERSON
COMMISSION SECRETARY
LEGAL
WORKING FILE
FROM; GRACE SEAMAN
DATE: MAY 2,2017
F'ILER MUTUAL TELEPHONE COMPANY'S 2016 BROADBAND
EQUIPMENT TAX CREDIT APPLICATION; CASE NO. tr'IL-T-17-0I.
BACKGROUND
In 2001, House Bill 377 was enacted authorizing income tax credit for the installatioa of
qualiffing broadband infrastructure in Idaho. Idaho Code $ 63-30298(3XaXii). In particular,
Section 63-3029l 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(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." Idaho Code $ 63-30291(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
Order No. 25784 and ldaho Code $ 61-30291(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 tdaho Tax Commission.
THE APPLICATION
On March 10,2017, the Commission received an Application from Filer Mutual
Telephone Company ("Filer" or "Company'') seeking approval of equipment for the broadband
DECISION MEMORANDUM -t-MAY 2,2017
tax credit. In the Application, Filer states that it installed equipment associated with Asyrnmetric
Digital Subscriber Line (ADSL), High-bit-rate digital Subscriber Line (HDSL), wireless
broadband (WBB), and FTTXT services with transmission rates of 512 Kbps to l0 Cbps in
Gooding and Twin Falls County. These transmission rates are above the statutory speed
requirements pursuant lo ldaho Code 6340291. Filer asserts that approximately 99% of its
customers can be served by the broadband network. During 2015, the Company invested
approximately $1.1 million in qualiffing broadband equipment.
STATF R-BVIEW ATID RECOMMENDATION
Staff has reviewed the list of proposed broadband equipment submitted by Filer and
believes the identified equipment qualifies for the investment tax credit pursuant to Procedural
Order No. 28784 and ldaho Cade $ 63-30291(3Xb). Staff also 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."
See May 1,2017 electronic correspondence. Stafl therefore, recommends that the Commission
issue an Order confirming the equiprnent is qualified broadband equipment and forward the
approving Order along with the a copy of the original Application to the ldaho Tax Comrnission.
COMMISSION DECISION
Does the Commission wish to issue an order confirming the equipment identified in Case
No. FIL-T-I7-01 is qualifred broadband equipment as defined in Idaho Code $ 63-3029I(3Xb),
and forward it to the Idaho Ta:r Commission?
Seaman
Udmcmos/fi1.t.17-01 dcc mcmo
I Fiber to the x (FTTX) is a generic term for any broadband network architecture, such as fiber to the node (FTTN)
and fiber to the home (FTTH), that uses optical fiber to replace all or part of the local loop or the "last-mile"
telecommunications network
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DECISION MEMORAI.IDUM -2-MAY 2,2417