20100503Decision Memo.pdf

DECISION MEMORANDUM
TO:COMMISSIONER KEMPTON
COMMISSIONER SMITH
COMMISSIONER REDFORD
COMMISSION SECRETARY
LEGAL
WORKING FILE
FROM:GRACE SEAMAN
DATE:APRIL 28, 2010
RE:MIDV ALE TELEPHONE EXCHANGE'S 2006 & 2007 BROADBAND
EQUIPMENT TAX CREDIT APPLICATION; CASE NO. MID-I0-01.
BACKGROUND
In 2001 , House Bill 377 was enacted authorizing income tax credit for the installation of
qualifying broadband infrastructure in Idaho. Idaho Code 9 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 963-30291(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 ofa broadband network.Idaho Code 963-30291(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 9 63-30291(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 Tax Commission.
THE APPLICATION
On April 12, 2010, the Commission received an Application from Midvale Telephone
Exchange (Midvale) seeking approval of equipment for the broadband tax credit. In the
DECISION MEMORANDUM - 1 -APRIL 28 , 2010
Application, Midvale states that it installed equipment associated with Digital Subscriber Line
(DSL) and Asynchronous Transfer Mode (A TM) services with minimum transmission rate of 45
Mbps. Midvale asserts that 95% of its customers in five of the six exchanges can be served by
the broadband network. Based on the information provided by Midvale, the Company invested
approximately $277 ,500 in 2006 and $634 200 in 2007 in qualifying broadband equipment.
ST AFF REVIEW AND RECOMMENDATION
Staff has reviewed the list of proposed broadband equipment submitted by Midvale and
believes the identified equipment qualifies for the investment tax credit pursuant to Procedural
Order No. 28784 and Idaho Code 963-30291(3)(b). Staff also believes that the expenditures
identified by Midvale, a telecommunications 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 as defined in Idaho Code 9 63-30291(3)(b)(i), and forward it to the Idaho
Tax Commission.
COMMISSION DECISION
Does the Commission wish to issue an order confirming the equipment identified in Case
No. MID-I0-0l is qualified broadband equipment as defined in Idaho Code 9 63-30291(3)(b)(i),
and forward it to the Idaho Tax Commission?
Ih tL U' k'VLI-'L-
Grace Seaman
udmemoslMidvale 2006 2007 Tax Credit Dee Memo
DECISION MEMORANDUM - 2 -APRIL 28 2010