20140926Decision Memo.pdf

DECISION MEMORANDUM
TO:COMMISSIONER KJELLANDER
COMMISSIONER REDFORD
COMMISSIONER SMITH
COMMISSION SECRETARY
LEGAL
WORKING FILE
FROM:GRACE SEAMAN
DATE:SEPTEMBER 26,2014
RE:FRETEL COMMUNICATIONS,LLC’S 2013 BROADBAND EQUIPMENT
TAX CREDIT APPLICATION;CASE NO.FRC-T-14-O1.
BACKGROUND
In 2001,I-louse Bill 377 was enacted authorizing income tax credit for the installation of
qualiIiing 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 those network facilities capable of
transmitting signals at a rate of at least 200,000 bits per second (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 internal 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.
THE APPLICATION
On September 11,2014,Fretel Communications,LLC (“Fretel”or “Company”)filed an
Application with the Commission seeking approval of equipment for the broadband tax credit for
DECISION MEMORANDUM -1 -SEPTEMBER 26,2014
calendar year 2013.Fretel states in the Application that it installed equipment associated with
Asymmetric digital subscriber line (ADSL)and Ethernet broadband services (using 18k non-
loaded copper distribution,fiber optic backbone and distribution cable).The network is capable
of providing transmission speeds of 256 Kbps to 1 Mbps from a subscriber and 768 Kbps to 1
Mbps to a subscriber.The Company states that its broadband equipment investment was
approximately $92,550 for 2013.
STAFF REVIEW AND RECOMMENDATION
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.28784 and
Idaho Code §63-30291(3)(b).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.”Staff therefore,
recommends that the Commission issue an Order confirming the equipment is qualified
broadband equipment and forward the approving 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 equipment identified in Case
No.FRC-T-14-O1 is qualified broadband equipment as defined in Idaho Code §63-30291(3)(b)
and forward it to the Idaho Tax Commission?
Rtt1
Grace Seaman
Udmemos/frc-I-14-OlbIc dcc memo
DECISION MEMORANDUM -2 -SEPTEMBER 26,2014