20200612Decision Memo.pdf

DECISION MEMORANDUM
TO:COMMISSIONER KIELLANDER
COMMISSIONER RAPER
COMMISSIONER ANDERSON
COMMISSION SECRETARY
LEGAL
WORKING FILE
FROM: DANIEL KLEIN
DATE: JUNE 9,2020
RE:FREMONT TELECOM'S 2019 BROADBAND EQUIPMENT TAX
CREDIT; CASE NO. FRE-T-20-01.
BACKGROUND
In 2001, House Bill377 was enacted authorizing income tax credit for the installation of
qualifying broadband infrastructure in Idaho. Idaho Code * 63-30298(3Xa)(ii). In parricular,
Section 63-30291allows 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;' Idaln Code 5 63-3291(3)(b). If the equipment is installed by a
telecomnrunications 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. 28784 and lduln Code 5 63-30291(4). Once the Commission has determined the
installed er;uipment is eligible for the broadband equipment tax credit, an order along with the
original Application is forwarded to the Idaho Tax Commission.
DECISION MEMORANDUM JUNE 9,2020
TI{E APPLICATION
On May 28,2O2O, the Commission received an Application from Fremonr Telecom
("Fremont" or "Company"), seeking approval of the equipment for the broadband tax credir
installed during calendar year 2019. In the Application, Fremont states that it installed
equipment associated with Asymmetric Digital Subscriber Line (ADSL), Very-high-bit-rate
Digital Subscriber Line (VDSL), Broadband Ethernet and Ethernet broadbard services (using
l8k non-loaded copper distribution, fiber optic backbone and distribution cable). Fremont
discloses that its broadband network has data transmission rates of 256Kbps to I Mbps from a
subscriber and 768 Kbps to I Mbps to a subscriber which meets rhe required rates of 200,000
bits per second to a subscriber and 125,000 bits per second from a subscriber. The Company
asserts that 79Vo of its Idaho customers have broadband services. Fremont invested
approximately $l ,229,042in2019 in qualifying hroadband equipment rhat it confirms is integral
to the broadband network.
STAFF REVIEW AND RECOMMENDATION
Staff has reviewed and audited the list of proposed broadhand equipment and believes the
identified equipment qualifies for the investment tax credir pursuant to Procedural Order No.
28784 and ldaho Code $ 63-30291(3Xb). Stafl therefore, recomnrencls rhat the Commission
issue an Order confirming the equipment is qualified broadband equipment and forw,ard the
approving Order along with a copy of the original Application ro rhe Idaho Tax Commission.
COMMISSION DECISION
Does the Commission wish to issue an Order confirming the equipment identified in
Case No. FRE-T-20-01 is qualified broadband equipment as defined in lcluho Code
$ 63-30291(3)(b) and forward ir to the Idaho Tax Commission?
,),^/-//z(.
Udnrcnms/lRE-T-30-01 Frenronr llnradhand Tar Credit dcc nrnro
DECISION MEMORANDUM 1
Daniel Klein
JUNE 9,2420