20140822Decision Memo.pdf

DECISION MEMORANDUM
TO:COMMISSIONER KJELLANDER
COMMISSIONER REDFORD
COMMISSIONER SMITH
COMMISSION SECRETARY
LEGAL
WORKING FILE
FROM:GRACE SEAMAN
DATE:AUGUST 18,2014
RE:FATBEAM LLC’S 2013 BROADBAND EQUIPMENT TAX CREDIT
APPLICATION;CASE NO.FZ4-T-14-01.
BACKGROUND
In 2001,House Bill 377 was enacted authorizing income tax credit for the installation of
qualifying 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 seconds (bps)to a subscriber and at least
125,000 bps 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 broadband network.”Idaho Code §63-3029I(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
itemized 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 June 2,2014,the Commission received an Application from Fatbeam,LLC
(“Fatbeam”or “Company”)seeking approval of equipment for the broadband tax credit.In the
Application.Fatbeam states that it installed equipment associated with Lit Ethernet and dark
DECISION MEMORANDUM -I -AUGUST 18,2014
fiber services with average transmission rates of 10 0bps.The Company specified that it
deployed services to the Coeur d’Alene School District and to other providers who serve school
districts and businesses in the Rathdrum and Grangeville areas.Fatbeam asserts that 100%of its
customers can be served by the broadband network.During 2013,the Company invested
approximately $438,000 in qualifying broadband equipment.
STAFF REVIEW AND RECOMMENDATION
Staff has reviewed the list of proposed broadband equipment submitted by Fatbeam and
believes the identified equipment qualifies for the investment tax credit pursuant to Procedural
Order No.28784 and Idaho Code §63-3029I(3)(b).Staff also believes that the expenditures
identified by the Company,a competitive broadband service 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 the 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 this
Application is qualified broadband equipment as defined in Idaho Code §63-30291(3)(b),and
forward it to the Idaho Tax Commission?
I‘/1 /fl &-
Grace Seaman
Udmemos/ftz-t-14-Ol dcc memo
DECISION MEMORANDUM -2-AUGUST 18,2014