20221004Decision Memo.pdf

TO:
FROM:
DATE:
RE:
DECISION MEMORANDUM
COMMISSIONER ANDERSON COMMISSIONER CHA TB URN COMMISSIONER HAMMOND COMMISSION SECRETARY LEGAL WORKING FILE
JOHAN E. KALALA-KASANDA MICHAEL DUVAL
OCTOBER 4, 2022
THE APPLICATION OF FREMONT TELECOM CO. FOR A BROADBAND EQUIPMENT TAX CREDIT FOR THE YEAR 2021; CASE NO. FRE-T-22-01.
BACKGROUND
The 2001 enactment of House Bill 377 authorized income tax credits for the installation
of qualifying broadband infrastructure in Idaho. Idaho Code § 63-3029B(3)(a)(ii). In particular,
Section 63-30291 allows taxpayers to receive investment tax credits 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 to a subscriber and at least
125,000 bits per second 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 integral part of a broadband network." Idaho Code§ 63-
30291(3)(b)(i). To be eligible for the tax credit, the taxpayer must obtain an order from the
Commission confirming that the installed equipment meets the statutory definition of qualified
broadband equipment. Commission Procedural Order No. 35297 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 State
Tax Commission.
DECISION MEMORANDUM -l -OCTOBER 4, 2022
THE APPLICATION
On August 29,2022,the Commission received an Application from Fremont Telecom
Co.("Fremont"or "Company"),seeking approval of the equipment for the broadband tax credit
installed during the calendar year 2021.On September 19,2022,the Company submitted an
Amended Application ("Application")to comply with the new requirements of Commission
Order No.35297,which supersedes Commission Order No.28784.
In the Application,Fremont represents that it is a telecommunication carrier and offers
broadband services to its customers that include Asymmetric Digital Subscriber Line (ADSL),
Very-high-bit-rate Digital Subscriber Line (VDSL),Broadband Ethernet,and Wavelength
services.The broadband services are offered using fiber optic cables with non-loadedcopper
distribution,fiber optic transport electronics,fiber optic backbone,and distribution cable.The
Company discloses that the data transmission rate offered to customers ranges from 256,000 bits
per second up to 1,000,000,000 bits per second from a subscriber and 768,000 bits per second up
to 1,000,000,000 bits per second to a subscriber.These transmission rates exceed the minimum
statutory speed requirements under Idaho Code §63-30291.Additionally,the Company
represents that it provides broadband services to 2,771 out of 3,705 potential broadband
subscribers,which is 75%of possible subscribers served in Idaho.The Company states that,in
2021,it invested $8,003,282.13in qualifyingbroadband equipment,which is integral to its
broadband network.
STAFF REVIEW AND RECOMMENDATION
Staff reviewed and audited the list of proposed broadband equipment and believes the
equipment qualifies for the investment tax credit.Staff,therefore,recommends that the
Commission issue an order confirmingthe equipment is qualified broadband equipment and
forward that order along with a copy of the Application to the Idaho State Tax Commission.
DECISION MEMORANDUM -2 -OCTOBER 4,2022
COMMISSION DECISION
Does the Commission wish to issue an order confirmingthe equipment identified in Case
No.FRE-T-22-01 is qualified broadband equipment as defined in 1daho Code §63-3029I(3)(b)
and forward the information to the Idaho State Tax Commission.
Johan E.Kalala-Kasanda
Udmemos/FRE-T-22-01 Decision Memo
DECISION MEMORANDUM -3 -OCTOBER 4,2022