20030703Decision Memo.pdf

DECISION MEMORANDUM
TO:COMMISSIONER KJELLANDER
COMMISSIONER SMITH
COMMISSIONER HANSEN
JEAN JEWELL
LEGAL
COMMISSION STAFF
WORKING FILE
FROM:DOUG COOLEY
DATE:JULY 2, 2003
RE:IDACOMM, INC.S APPLICATION FOR BROADBAND EQUIPMENT
TAX CREDIT; CASE NO. GNR-03-17.
BACKGROUND
On May 2, 2003, the Commission received an Application from IDACOMM, Inc. to
receive an investment tax credit for eligible broadband equipment pursuant to Order No. 28784
and Idaho Code g 63-30291(4). To be eligible for the tax credit, the taxpayer must apply for and
obtain from the Commission an Order confirming that installed equipment qualifies for the tax
credit.
DISCUSSION
IDACOMM stated that, during calendar year 2002, it installed Alcatel brand fiber optic
cable and supporting splicers and conduit. IDACOMM also installed LuxN brand optical
multiplexers and supporting underground vaults and power supply materials for the provision of
high-speed Internet and other point-to-point data services to customers in Idaho s Treasure
Valley. IDACOMM indicated that it offers high-speed access to customers at transmission rates
from 1.544 Megabits per second (Mbps) up to 1000 Mbps. One hundred percent
IDACOMM's customers are Idaho subscribers of which approximately five percent are
IDACORP-related companies.
DECISION MEMORANDUM JULY 2, 2003
STAFF REVIEW
Staff has reviewed the list of proposed broadband equipment submitted byIDACOMM
and believes the equipment identified qualifies for the investment tax credit pursuant to Idaho
Code ~ 63-30291. Staff was concerned that IDACOMM's offering of dark fiber, rather than
providing dial tone, switching or transmitting the signals for its end-use customers, did not
constitute "telecommunications service" as described in ~ 63-3029(I)(3)(b )(i) thereby
disqualifying IDACOMM for the broadband investment tax credit. Dark or "unlit" fiber does
not have the electronics transmitting information between the ends of the fiber lengths but is
made available for customers to use their own electronics to transmit signals between points.
IDACOMM claims it is eligible for the tax credit because it is a "telecommunications
carrier" as derIDed in the Communications Act of 1934 as amended. See Idaho Code ~ 63-
3029I(3)(b )(i). According to the Federal Communication Commission (FCC), "Because dark
fiber is unused transport capacity, we find that it is a "feature, function, and capability of
facilities used to provide telecommunications services." The FCC goes on to say that"... the
term" used in the provision of telecommunications service" in section 153(29) refers to network
facilities or equipment that is "customarily employed for the purpose" of providing a
telecommunications service."l Although IDACOMM may not be a telecommunications carrier
as defined in the Idaho utilities law (see Order Nos. 28187 and 28497), the installed dark fiber is
used for the provision of telecommunication service under federal law and therefore qualifies as
telecommunication equipment under Idaho Code ~ 63-3029I(3)(b )(i).
Staff recommends approval of the Company s Application and further recommends that
the Commission forward the approving Order and a copy of the original Application to the Idaho
Tax Commission.
COMMISSION DECISION
investment tax credit?
Should the Commission approve IDACOMM, Inc.'s Application for the broadband
oug Cooley i:udmemos/idacomm memo 2
In the Matter of Implementation of the Local Competition Provisions of the Telecommunications Act of 1996, CC
Docket No. 96-98, Third Report and Order Fourth Further Notice of Proposed Rulemaking, para. 339 and 340, Sept.
, 1999.
DECISION MEMORANDUM ruL Y 2, 2003