20221220Decision Memo.pdf

DECISION MEMORANDUM
TO:COMMISSIONER ANDERSON
COMMISSIONER CHATBURN
COMMISSIONER HAMMOND
COMMISSION SECRETARY
LEGAL
WORKING FILE
FROM:JOHAN E.KALALA-KASANDA
MICHAEL DUVAL
DATE:DECEMBER 20,2022
RE:IN THE MATTER OF CABLE ONE,INC.'S APPLICATION FOR
APPROVAL OF THE IDAHO BROADBAND EQUIPMENTTAX CREDITFORTHEYEAR2021;CASE NO.GNR-T-22-05.
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 second to a subscriber and at least
125,000 bits per second 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 confirmingthat the installed equipment meets the statutory definitionof qualified
broadband equipment.Commission Procedural Order No.35297 and Idaho Code §63-3029I(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.
DECISIONMEMORANDUM -!-DECEMBER 20,2022
THE APPLICATION
On November 28,2022,the Commission received an Application from Cable One,Inc.
("Cable One"or "Company"),seeking Commission determination that the broadband equipment
installed during the calendar year 2021 meets the statutory definition of qualified broadband
equipment.
In the Application,Cable One represents that the broadband services it offers to
customers are High-Speed Data services (HSD).This is provided through a network that uses an
MX960 router that all data traffic travels through.The Company explains,further,that the
network also contains several Cable Modem Termination Systems'(CMTSs)that deliver
broadband service to customers.The network also utilizes a NetworkTime Protocol2 S€fVer that
makes sure that all the equipment in the headend'has the right time on it.Alcatel 9700 CDS is
the equipment that delivers the Company's commercial fiber service.
The Company discloses that the lowest broadband network data transmission rate offered
to customers is 3 Megabits per second (Mbps)and the maximum offered is 200 Mbps.These
rates exceed the minimum statutory speed requirements under Idaho Code §63-30291.The
Company also represents that it has 516,197 potential Idaho customers at the end of 2021.An
estimated 99.9 percent of customers who have access to Cable One also have access to its
broadband network.The Company's cable network is estimated to reach 95 percent of the
population within its service areas.Cable One states that it invested $28,495,267 in 2021 in
qualifying broadband equipment that it confirms is integral to its broadband network.
STAFF REVIEW AND RECOMMENDATION
Staff examined the list of the proposed broadband equipment and believes the equipment
qualifies for the investment tax credit.Staff recommends that the Commission issue an order
confirmingthe listed equipment is qualified broadband equipment and forward that order along
with a copy of the Application to the Idaho State Tax Commission.
'A Cable Modem Termination System (CMTS)is a piece of equipment,typically located in a cable company'sheadendorhubsite,which is used to providehigh speed data services,such as cable Internet or Voice over InternetProtocol,to cable subscribers.
2 The NetworkTime Protocol is a networking protoco1 for clock synchronization between computer systems overpacket-switched,variable-latency data networks.
3 A headend is a control center in a cable television system where various signals are brought together andmonitoredbeforebeingintroducedintothecablenetwork.
DECISIONMEMORANDUM -2 -DECEMBER 20,2022
COMMISSION DECISION
Does the Commission wish to issue an order confirmingthe equipment identified in Case
No.GNR-T-22-05 is qualified broadband equipment as defined in Idaho Code §63-3029I(3)(b),
and forward the order and a copy of the Application to the Idaho State Tax Commission?
ohan E.Kalala-Kasanda
Udmemos/GNR-T-22-05 Decision Memo
DECISION MEMORANDUM -3 -DECEMBER 20,2022