20090206Decision Memo.pdf

DECISION MEMORANDUM
TO:COMMISSIONER REDFORD
COMMISSIONER SMITH
COMMISSIONER KEMPTON
COMMISSION SECRETARY
LEGAL
WORKING FILE
FROM:GRACE SEAMAN
DATE:FEBRUARY 5, 2008
RE:RURAL TELEPHONE COMPANY BROADBAND TAX CREDIT FOR
2005-2008; CASE NO. RUR- T -09-01.
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 963-3029I(3)(b). To be eligible for the broadband
equipment tax credit, the taxpayer must obtain from the Commission an Order confirming that
installed equipment qualifies for capital investment credit. Procedural Order No. 28784 and
Idaho Code 963-30291(4).
THE APPLI CA TI 0
On January 27 2009, the Commission received an Application from Rural Telephone
Company (Rural), seeking approval of equipment for the broadband tax credit. Rural'
Application lists the broadband investments made during a three-year period beginning on
January 2005 through December 2007. Rural states that its broadband network includes a
collaboration of Rural Telephone Company and Syringa Network, LLC fiber serving several
locations throughout Elmore County. Rural offers services to customers at transmission rates of
DECISION MEMORANDUM - 1 -FEBRUARY 5 , 2009
544 Mbps and higher. The Company states that the equipment was installed in Idaho for its
Idaho subscribers and that it invested approximately $1.1 million dollars in qualifying broadband
equipment during the calendar years of2005, 2006 and 2007.
STAFF REVIEW AND RECOMMENDATION
Staff has reviewed the list of proposed broadband equipment submitted by Rural and
believes the identified equipment qualifies for the investment tax credit pursuant to Procedural
Order No. 28784 and Idaho Code 9 63-3029I(3)(b). Staff also believes that the expenditures
identified by Rural, 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 acceptance of Rural's Application and further recommends that the Commission
forward the approving Order along with a copy ofthe original Application to the Idaho Tax
Commission.
COMMISSION DECISION
Should the Commission accept Rural Telephone Company s Application for the
broadband investment tax credit?
!fh (l DvM tW-
Grace Seaman
Gs: umemos/RuralTelCoO5-
DECISION MEMORANDUM - 2 -FEBRUARY 5 , 2009