20030808Decision Memo.pdf

DECISION MEMORANDUM
TO:CO MMISSI 0 NER KJELLAND ER
COMMISSIONER SMITH
CO MMISSI 0 NER HANSEN
JEAN JEWELL
COMMISSION STAFF
LEGAL
WORKING FILE
FROM:DOUG COOLEY
DATE:AUGUST 6, 2003
RE:APPLICATIONS FOR BROADBAND EQUIPMENT TAX CREDIT
CASE NO. PRJ- T -03-01.
BACKGROUND
On July 16, 2003, the Commission received an Application from Project Mutual
Telephone Cooperative Association, Inc. to receive an investment tax credit for eligible
broadband equipment pursuant to Order No. 28784 and Idaho Code ~ 63-30291(4). To be
eligible for the tax credit, the taxpayer must obtain from the Commission an Order confirming
that installed equipment qualifies for the tax credit.
DISCUSSION
Project Mutual stated that, during calendar year 2002, it installed various components as
part of its wireline and wireless broadband network for the provision of high-speed Internet
access to customers in Cassia and Minidoka counties. The companies also indicated that high-
speed access to customers began in 2001 at transmission rates from 256 kilobits per second
(kbps) up to 1.54 megabits per second (Mbps).
In 2002, Project Mutual indicates that it installed fiber optic cable, fiber optic transceivers
and multiplexers, and Digital Subscriber Line (DSL) moderns with supporting line cards, ports
and cables. Project Mutual also installed wireless moderns, antennae, optical laser multiplexers
and an ATM switch in providing ADSL and HDSL broadband service to customers in Minidoka
and Cassia counties. Project Mutual also capitalized the labor and overhead costs associated
with the installation of this equipment
DECISION MEMORANDUM AUGUST 6, 2003
STAFF REVIEW
Staff has reviewed the list of proposed broadband equipment submitted by the companies
and believes the equipment is "necessary to the provision of broadband services and an integral
part of a broadband network" according to Idaho Code ~ 63-30291 (3)(b)(i). Staffhas had
discussions with Project Mutual to clarify the nature of various pieces of equipment and has also
been assured that the installation labor, overhead, and supporting equipment is directly related to
offering broadband in Idaho.
STAFF RECOMMENDATION
Staff recommends approval of the Application from Project Mutual and further
recommends that the Commission forward the approving Order and copies of the Applications to
the Idaho Tax Commission.
COMMISSION DECISION
Does the Commission wish to confirm that the equipment in the Application qualifies as
broadband equipment and forward the Applications to the Tax Commission?
DOll Coole
udmemos/project mutual 2002
DECISION MEMORANDUM AUGUST 6, 2003