2001611_dh.doc

DECISION MEMORANDUM

TO: COMMISSIONER KJELLANDER
COMMISSIONER SMITH
COMMISSIONER HANSEN
JEAN JEWELL
RON LAW
LOU ANN WESTERFIELD
GENE FADNESS
LYNN ANDERSON
RANDY LOBB
TONYA CLARK
JOE CUSICK
DOUG COOLEY
BEVERLY BARKER
WORKING FILE

FROM: DON HOWELL

DATE: JUNE 11, 2001

RE: ISSUANCE OF A PROCEDURAL ORDER TO IMPLEMENT THE PROVISIONS OF HOUSE BILL 377 WHICH REQUIRES THAT THE COMMISSION DETERMINE WHETHER DEPLOYED BROADBAND INFRASTRUCTURE QUALIFIES FOR AN IDAHO TAX INVESTMENT CREDIT PURSUANT TO IDAHO CODE § 63-3029I, CASE NO. GNR-T-01-10.

Earlier this year the Legislature enacted and the Governor signed House Bill 377 authorizing income tax credits for the installation of qualifying broadband infrastructure in Idaho. 2001 Idaho Sess., ch. 386 (to codified at Idaho Code § 63-3029B(3)(a)(ii)). In particular, Section 8 of the Bill (to be codified at Idaho Code § 63-3029I) allows a taxpayer to receive an investment tax credit for eligible broadband equipment installed between January 1, 2001 and December 31, 2005.
“Qualified broadband equipment” is defined as those facilities capable of transmitting signals that are 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). To be eligible for the tax credit, the taxpayer must apply and obtain “from the Idaho public utilities commission an order confirming that installed equipment is qualified broadband equipment.” Idaho Code § 63-3029(4). This section also provides that the Commission “may issue procedural orders necessary to implement this section.” Id.
Section 63-3029I(3)(b) describes the various types of facilities that constitute “qualified broadband equipment.” Qualifying equipment is technology-neutral and is available to wireline telecommunications carriers, cellular and PCS carriers, cable and video carriers, and satellite carriers. Qualifying equipment also include packet switching equipment and multiplexing and demultiplexing equipment. The Section also requires that property eligible for the tax credit be “primarily used to provide services in Idaho to public subscribers.” Idaho Code § 63-3029I(3)(b)(vii). For example, a bank that installs its own fiber optic cable for the transmission of data between its various offices would not be eligible for the tax credit because such facilities are not provided for public use. I have attached Section 63-3029I for your information.
To implement the Commission’s responsibilities under the broadband tax credit, the Staff has determined what it believes is the necessary information that should be submitted for the Commission to review a broadband application from a taxpayer. In particular, the Staff believes that the following information should be contained in an application to determine whether the installed equipment is “qualified” broadband equipment.
1. Name and address of applicant including the contact person in the event there are questions regarding the application and its content.

2. Identify the area or location where the equipment is installed in Idaho.

3. Describe the type of broadband service(s) offered to the public in Idaho.

4. State the transmission rate in bits per second that subscribers to the relevant broadband network can receive and send (download and upload).

5. List the brand, manufacturer, model numbers, or other distinguishing features of the installed broadband equipment.

6. Provide the date(s) or time period(s) when the broadband equipment was installed in Idaho.

7. Provide a written description (including basic schematics or general drawings) of the relevant broadband network including a description of how the installed equipment is “an integral part” of a broadband network.

8. Quantify the percentage and number of potential Idaho subscribers that could be served with the broadband equipment and the percentage and number of non-Idaho subscribers that will be/could be served by the broadband network.

9. Enclose a statement certifying that the applicant has read the applicable statutes for broadband investment income tax credit and the applicant believes that the subject broadband equipment qualifies for the tax credit under Idaho Code § 63-3029I.

STAFF RECOMMENDATION
Staff recommends that the Commission issue a Notice of Proposed Order seeking comments on the text of the proposed procedural order. The proposed order would specify that information set out above and any other information that the Commission deemed relevant to its inquiry regarding eligible broadband equipment. Once the Commission received comments regarding its proposed order then it could issue a final order implementing procedures to receive applications from taxpayers.
COMMISSION DECISION
Does the Commission wish to issue a Notice of Proposed Order?
Does the Commission have any changes to the proposed order?

Donald L. Howell, II

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