20231024Decision Memo.pdf

DECISION MEMORANDUM
TO:COMMISSIONER ANDERSON
COMMISSIONER HAMMOND
COMMISSIONER LODGE
COMMISSION SECRETARY
LEGAL
FROM:JOHAN E.KALALA-KASANDA
ADAM TRIPLETT
DATE:OCTOBER 24,2023
RE:IN THE MATTER OF FARMERS MUTUAL TELEPHONE COMPANY'S
APPLICATION FOR APPROVAL OF THE IDAHO BROADBAND
EQUIPMENTTAX CREDIT FOR THE YEAR 2022;
CASE NO.FMT-T-23-01.
BACKGROUND
In 2001,House Bill 377 was enacted authorizingincome tax credit for the installation of
qualifying broadband infrastructure in Idaho.Idaho Code §63-3029B(3)(a)(ii).In particular,
Section 63-3029I allows a taxpayer to receive an investment tax credit for eligible broadband
equipment installed during a calendar year.
Qualified broadbandequipment 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
§63-3029I(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 broadbandnetwork."
Idaho Code §63-3029I(3)(b)(i).To be eligible for the tax credit,the taxpayer must obtain from
the Commission an order confirmingthat the installed equipment meets the statutory definition
of qualified broadband equipment.Commission Order No.35297 and Idaho Code §63-
3029I(4).Once the Commission has determined the installed equipment is eligible for the
broadbandequipment tax credit,an order along with the original Application is forwarded to the
Idaho Tax Commission.
DECISION MEMORANDUM -1 -OCTOBER 24,2023
THE APPLICATION
On September 13,2023,the Commission received an Application from Farmers Mutual
Telephone Company ("FMTC"or "Applicant"),seeking Commission determination that certain
telecommunications equipment,installed during the calendar year 2022,is eligible for the
broadbandinfrastructure tax credit authorized by Section 63-3029I of the Idaho Code.
In the Application,FMTC represents that it is a provider of basic local exchange service,
broadbandtelecommunications service,and Tracfone Wireless ("TFW")service.I It is also an
internet service provider in the Fruitland and Nu Acres areas of Idaho.
FMTC asserts that it uses Fiber to the Home2 ("FTTH")technology to provide
uninterrupted high-speedinternet service and has installed broadband equipment associated with
various forms of Digital Subscriber Line3 ("DSL")technologies.In particular,the Company
provides the Very High-Speed Digital Subscriber Line4 ("VDSL")with high-speed data
transmission technologies.
The Company discloses that the lowest broadbandnetwork data transmission rate offered
to customers is 25 megabits per second ("Mbps")to a subscriber and 3 megabits per second from
a subscriber.These rates exceed the minimum statutory speed requirements under Idaho Code §
63-30291.FMTC also states that it provides broadband services to 2764 customers out of 4345
possible customers.FMTC confirms that the assets listed in Exhibit A to the Application
constitute broadband equipment qualifying for a three percent broadband tax credit.
STAFF REVIEW AND RECOMMENDATION
Staff examined the list of proposed broadband equipment contained in Exhibit A and
believes the identified equipment qualifies for the investment tax credit pursuant to Procedural
Order No.35297 and Idaho Code §63-3029I(3)(b).Staff,therefore,recommends that the
Commission issue an Order confirmingthe equipment is qualified broadband equipment and
TFW service.This is a prepaid wireless cellphone service.
2 Fiber to the Home or simply FTTH is a technology that uses optical fiber directly from the central point to the
residential premises.It provides uninterrupted high-speed internet service.The "H"includes both home and small
business.
3 DSL is a modem technology that uses existing telephone lines to transport high-bandwidthdata,such as
multimedia and video,to service subscribers.DSL provides dedicated,point-to-point,public network access.
4 VDSL are extremely high-speed DSL connections over short distances.VDSL offers speeds from 13 Mbps to
more than 100 Mbps over distances of between 1,000 and 4,500 feet -the shorter the distance,the higher the
speed.
DECISION MEMORANDUM -2 -OCTOBER 24,2023
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 confirmingthe broadband equipment
identified in Case No.FMT-T-23-01 is qualified broadband equipment as defined in Idaho Code
§63-3029I(3)(b)and forward it to the Idaho Tax Commission?
3fhan alala-Kasanda
Udmemos/FMT-T-23-01 Decision Memo Farmers Mutual Telephone Company _Broadband Tax Credit
DECISION MEMORANDUM -3 -OCTOBER 24,2023