20170526Decision Memo.pdf

DECISION MEMORANDTJM
TOr COMMISSIONER KJELLANDER
COMMISSIONER RAPER
COMMISSIONER ANDERSON
COMMISSION SECRETARY
LEGAL
1VORKINC FILE
FROM: GRACE SEAMAN
DATE: ITIAY llt20l7
RE:FREMONT TELCOM'S 2016 BROADBAND EQUIPMENT TAX CREDTT
APPLICATIONi CASE NO. FRE-T-1742.
BACKGRO[.IND
In 2001, House Bill377 was enacted authorizing income tax credit forthe installation of
qualiffing broadband infrastucture in Idaho. Idaho Code $ 63-30298(3XaXii). In particular,
Section 63-30291allows a ta,xpayer to receive an investment ta:r credit for eligible broadband
equipment installed during a calendar year.
"Qualified broadband equipment: is defined as those network facilities capable of
transmining 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. Idaha Code $ 63-30291(3Xb). If the equipment is installed by a
telecommunications carrier, it must also be'hecessary to the provision of broadband services
and an intemal part of a broadband network." ldsho Code g 63-3029(3XbXi). To be eligible
for the ta.x credit, the taxpayer must obtain from the Commission an Order confirming that the
installed equipment meets the statutory definition of qualifred broadband equipment. Procedural
Order No. 28784 wtd ldaho Code $ 63-30291(4). Once the Commission has determined the
installed equipment is eligible for the broadband equipment tar credit, an order along with the
original Application is forwarded to the Idaho Tax Commission.
THE APPLICATION
On April 3,2017, Fremont Telcom ("Fremont" or "Company") filed an Application with
the Commission seeking approvalof equipment for the broadband to< credit for calendar year
DECISION MEMORANDUM -t-MAY |,2017
2016. Fremont states in the Application that it installed equipment associated with Asymmetric
digital subscriber line (ADSL) and Ethemet broadband services (using l8k nonloaded copper
distribution, fiber optic backbone and distribution cable). The network is capable of providing
transmission speeds of 256 Kbps to I Mbps from a subscriber and 768 Kbps to I Mbps to a
subscriber. The Company states that approximately 54% of its customers have broadband
services, Fremont invested approximately $821,000 in broadband equipment during 2016.
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 $ 63-3029(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." See A. Seltzer
E-Mail, May 5, 2017. 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 ldaho Tax Commission.
COMMISSION DECISION
Does the Commission wish to issue an Order confirming the equipment identified in Case
No. FRE-T-17-02 is qualified broadband equipment as defined in ldaho Code $ 63-30291(3Xb)
and forward it to the Idaho Tax Commission?
e Seaman
Udmcmos/frc.t-17-02
DECISION MEMORANDUM -2-MAY lt,20l7