20221004Decision Memo.pdf

DECISION MEMORANDUM
TO:COMMISSIONER ANDERSON
COMMISSIONER CHATBURN
COMMISSIONER HAMMOND
COMMISSION SECRETARY
LEGAL
WORKING FILE
FROM:JOHAN E.KALALA-KASANDA
CHRIS BURDIN
DATE:OCTOBER 4,2022
RE:POTLATCH TELEPHONE COMPANY D/B/A TDS TELECOM
BROADBAND EQUIPMENTTAX CREDIT FOR JANUARY 1,2021 -
DECEMBER 31,2021;CASE NO.POT-T-22-01.
BACKGROUND
In 2001,House Bill 377 was enacted authorizing income tax credit for the installation of
qualifyingbroadband 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 confirming that the installed equipment meets the statutory definition of 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.
DECISION MEMORANDUM -1 -OCTOBER 4,2022
THE APPLICATION
On July 12,2022,the Commission received an application from Potlatch Telephone
Company d/bla TDS Telecom ("TDS"or "Company"),seeking approval for Idaho State tax
credit for the qualifying broadband equipment installed during the calendar year 2021.
In the Application,TDS represents that it offers Digital Subscriber Line (DSL)services
to customers in the State of Idaho and began offering fiber to the home (FTTH)services in some
locations as early as June 2020.The Company discloses that the lowest broadband network data
transmission rate offered to customers is 5Mbps/512kbs and up to 1Gig symmetrical where
passive optical network (PON)has been deployed.The PON is a system commonlyused by
telecommunications network providers that brings fiber optic cabling and signals all or most of
the way to the end user.Depending on where the PON terminates,the system can be described
as fiber to the curb,fiber to the building or fiber to the home.
The transmission rates that the Company offers exceed the minimum statutory speed
requirements under Idaho Code §63-30291.Additionally,the Company has quantified the
percentage of its Idaho customers,by location,who have access to broadband,as of December
31,2021.This is illustrated in Table No.1 below:
Table No.1
Speed Tier Percentage
more than 100Mbps x 25Mbps 40
25Mbps x 5Mbps 22
25Mbps x 3Mbps 6
10Mbps x 1Mbps 19
4Mbps x 1Mbps 2
1Mbps x 256kbps 5
Less than lMbpsx 256kbps 6
Total 100%
The Company also states that it invested $871,213.90 in 2021 in qualifying broadband
equipment that it confirms is integral to its broadband network.
DECISION MEMORANDUM -2 -OCTOBER 4,2022
STAFF REVIEW AND RECOMMENDATION
Staff reviewed and audited the list of proposed broadband equipment and believes the
equipment qualifies for the investment tax credit.Staff,therefore,recommends that the
Commission issue an order confirming the equipment is qualified broadband equipment and
forward that order along with a copy of the Application to the Idaho State Tax Commission.
COMMISSION DECISION
Does the Commission wish to issue an order confirming the equipment identified in Case
No.POT-T-22-01 is qualified broadband equipment as defined in Idaho Code §63-3029I(3)(b)
and forward it to the Idaho State Tax Commission?
ohan E.Kalala-Kasanda
Udmemos/POT-T-22-01 Decision Memo
DECISION MEMORANDUM -3 -OCTOBER 4,2022