20080229final_order_no_30506.pdf

Office of the Secretary
Service Date
February 29, 2008
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION OF
CABLE ONE, INC. FOR AN INVESTMENT TAX)
CREDIT FOR INSTALLING QUALIFIED
BROADBAND EQUIPMENT FOR THE YEAR 2005
IN THE MATTER OF THE APPLICATION OF
CABLE ONE, INc. FOR AN INVESTMENT TAX)
CREDIT FOR INSTALLING QUALIFIED
BROADBAND EQUIPMENT FOR THE YEAR 2006
CASE NO. GNR-06-
CASE NO. GNR-07-
ORDER NO. 30506
Cable One, Inc. filed two separate Applications requesting approval of equipment for
the broadband tax credits for the years of 2005 and 2006 pursuant to Order No. 28784 and Idaho
Code g 63-30291(4). To be eligible for the tax credit, the taxpayer must obtain an Order from the
Commission confirming that the communications equipment has been installed and that it meets
the definition of qualified broadband equipment set out in Idaho Code g 63-3029I(3)(b).
Qualified broadband equipment must be capable of transmitting signals at a rate of at least
200 000 bits per second (bps) to a subscriber and at least 125 000 bps from a subscriber. The
qualified broadband equipment must also "extend from the subscriber s side of the headend to
the outside of the structure in which the subscriber is located.Idaho Code g 63-3029I(3)(b)(iii).
In this Order, we find that the Company s investments meet the applicable standards.
THE APPLICATIONS
1. 2005 Broadband Tax Credit (Case No. GNR- T -06-04). Cable One maintains that
the Company enhanced its Hybrid Fiber Coax (HFC) Network with the installation of coaxial
cable and fiber optics in and around the Company s service areas of Boise, Idaho Falls, Twin
Falls, Pocatello and Lewiston. More specifically, the Company submits that its Idaho network at
the end of 2005 consisted of approximately 2 524 total miles of aerial coax, 2 537 miles of
underground coax and 907 miles of fiber optic cable and passed by more than 332 000 out of a
possible 363 190 Idaho homes and businesses. The Application also includes labor and material
costs for supporting hardware such as connectors, conduit, splicing equipment, and enclosure
ORDER NO. 30506
materials. The Company states that these costs are necessary for the operation of the network
and for extending the services to the subscriber s house.
The Company offers Internet and broadband services to homes and businesses in
Idaho at minimum upstream and downstream transmission rates of 128 kbps to 1.5 Mbps
respectively. The Company maintains that all of the equipment listed was purchased and
installed between January 1 , 2005 , and December 31 , 2005. The Application identifies a
broadband tax credit investment of approximately $353 000 in 2005.
2. 2006 Broadband Tax Credit (Case No. GNR-07-05). Cable One maintains that
the Company enhanced its HFC Network with the installation of coaxial cable and fiber optics in
and around the Company s service areas of Boise, Idaho Falls, Twin Falls, Pocatello and
Lewiston. The Company submits that its Idaho network at the end of 2006 consisted of
approximately 2,478 miles of aerial coax, 2 735 miles of underground coax and 930 miles of
fiber optic cable and passed by more than 344 000 out of a possible 351 491 Idaho homes and
businesses. The Application also includes labor and material costs for supporting hardware such
as connectors, conduit, splicing equipment, and enclosure materials. The Company states that
these costs are necessary for the operation of the network and for extending the services to the
subscriber s house.
The Company offers Internet and broadband services to homes and businesses in
Idaho at minimum upstream and downstream transmission rates of 128 kbps to 1.5 Mbps
respectively. The Company maintains that all of the equipment listed was purchased and
installed between January 1 , 2006, and December 31 , 2006. The Application identifies a
broadband tax credit investment of approximately $390 000 in 2006.
STAFF REVIEW
To implement its responsibilities under Idaho Code g 63-30291 , the Commission
issued Procedural Order No. 28784 in July 2001. This Order identifies information that must be
included in an application for a broadband tax credit. Once the information is filed with the
Commission, the Staff reviews the application and submits a recommendation to the
Commission. Staff has reviewed the list of proposed broadband equipment submitted by Cable
One. Staff notes that some of the itemized investments contained in both Applications were for
expenses associated with the replacement of existing broadband network facilities as a result of
road or utility construction. These expenses did not necessarily expand the availability of
ORDER NO. 30506
broadband services to additional subscribers. Staff submits that the Idaho Tax Commission is
best qualified to determine the eligibility of such investments.
Consequently, Staff certifies that the itemized equipment meets the eligibility
requirements for broadband services pursuant to Idaho Code g 63-30291, but offers no
determination regarding the qualification of these expenses for broadband tax credit. Idaho Code
g 63-3029I(b). Staff further recommends that the Commission forward a copy of the original
Applications along with an Order certifying that the equipment meets the qualifications for
broadband tax credit to the Idaho State Tax Commission.
The Company also specifies that the itemized equipment complies with Idaho Code
63-3029I(3)(b)(iii), which requires that qualifying equipment extends from the subscriber s side
of the headend to the outside of the subscriber s structure. In its Applications, the Company
explains how this standard was used to determine the qualifying amount of expenses related to
drop spending.Because the broadband tax credit applies to relatively new investment, and
considering the number of homes and businesses that are built pre-wired with coaxial cable, Staff
believes the Company s adoption of standard industry practice of an estimate of 60% allocation
is conservative and accepts this estimate.
COMMISSION FINDINGS
Having reviewed Cable One s Applications and Staffs recommendations, we find
that the Applications for a qualifying broadband equipment Order should be granted. The
Company has demonstrated that it installed qualifying broadband equipment, identified in its
Application, during 2005 and 2006 in conformance with Idaho Code g 63-30291. We further
find that as configured, the installed equipment is an integral part of a broadband network
necessary to deliver broadband services to Idaho customers. Based on the foregoing, the
Commission issues this Order confirming that Cable One, Inc. has installed qualified broadband
equipment as a precondition to seeking an Idaho broadband tax credit. The Commission makes
no findings regarding the costs of the installed broadband equipment. In addition, the
Commission makes no finding whether Cable One, Inc. may obtain a tax credit for broadband
equipment that replaced existing broadband equipment.
ORDER
IT IS HEREBY ORDERED that Cable One, Inc.s Applications for an Order
certifying that it has installed qualifying broadband equipment for 2005 and 2006 is granted.
ORDER NO. 30506
IT IS FURTHER ORDERED that a copy of this Order and a copy of the
Applications be served upon the Idaho State Tax Commission.
THIS IS A FINAL ORDER. Any person interested in this Order (or in issues finally
decided by this Order) may petition for reconsideration within twenty-one (21) days of the
service date of this Order with regard to any matter decided in this Order. Within seven (7) days
after any person has petitioned for reconsideration, any other person may cross-petition for
reconsideration. See Idaho Code gg 61-626 63-30291(4).
DONE by Order ofthe Idaho Public Utilities Commission at Boise, Idaho , this .,J'rrl..
day of February 2008.
OWL (
MARSHA H. SMITH, COMMISSIONER
ATTEST:
J a D. Jewell
C mmlSSlOn Secretary
O:GNR-06-04 GNR-07-05 ks dh
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ORDER NO. 30506