20021021Decision Memo.doc

DECISION MEMORANDUM

TO: COMMISSIONER KJELLANDER
COMMISSIONER SMITH
COMMISSIONER HANSEN
JEAN JEWELL
RANDY LOBB
DON HOWELL
LYNN ANDERSON
JOE CUSICK
CAROLEE HALL
WAYNE HART
BIRDELLE BROWN
BEVERLY BARKER
RON LAW
TONYA CLARK
GENE FADNESS
WELDON STUTZMAN
WORKING FILE

FROM: DOUG COOLEY

DATE: OCTOBER 21, 2002

RE: QWEST APPLICATION FOR BROADBAND EQUIPMENT TAX CREDIT.

BACKGROUND
On August 16, 2002, the Commission received an Application from Qwest Corporation to receive an investment tax credit for eligible broadband equipment pursuant to Order No. 28784 and Idaho Code § 63-3029I(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
Qwest’s Application states that, during calendar year 2001, it installed various components as part of its wireline broadband network for the provision of high-speed Internet access to customers in many of the Company’s respective Idaho service areas. The Company also stated that the equipment was installed in 2001 and is capable of offering high-speed access to customers at transmission rates from 256 kilobits per second (kbps) to over 100 megabits per second (Mbps).
Specifically, Qwest stated that it installed eleven Digital Subscriber Line (DSL) switches in the Treasure Valley, Twin Falls, Idaho Falls and Pocatello. In addition, Qwest installed five Asynchronous Transfer Mode (ATM) switches and four Frame Relay switches at various locations throughout its southern Idaho service area. Qwest included in its Application interoffice trunks and facilities that are necessary for connecting customers to the Internet. The interoffice facilities “do not constitute specific individual broadband services that are offered to subscribers. Rather, these assets comprise part of the network that provides the means by which the above services are offered.” Consistent with Part 32 of Federal Communications Commission Rules and Regulations, Qwest also capitalized such items as labor, engineer, transportation, and other overhead costs associated with the installation of this equipment.

STAFF REVIEW
Staff has reviewed the list of proposed broadband equipment submitted by Qwest and believes the equipment is “necessary to the provision of broadband services and an integral part of a broadband network” according to Idaho Code § 63-3029I (3)(b)(i). Staff also discussed with Qwest the nature of various projects and equipment and has 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 Qwest Corporation and further recommends that the Commission forward the approving Order and copies of the Application 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 Application to the Tax Commission?

________________________________
Doug Cooley

i:udmemos/qwest broadband memo

DECISION MEMORANDUM 1 OCTOBER 21, 2002