20080620Decision Memo.pdf

DECISION MEMORANDUM
TO:COMMISSIONER REDFORD
COMMISSIONER SMITH
COMMISSIONER KEMPTON
COMMISSION SECRETARY
LEGAL
WORKING FILE
FROM:GRACE SEAMAN
DATE:JUNE 11, 2008
RE:2007 BROADBAND EQUIPMENT TAX CREDIT FOR SILVER
ST AR AND COLUMBINE TELEPHONE COS.; CASE NOS.
SIL- T -08-01 AND COL- T -08-01.
BACKGROUND
In 2001 , House Bill 377 was enacted authorizing income tax credit for the
installation of qualifying broadband 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 seconds (bps) to a subscriber and
at least 125 000 bps from a subscriber. Idaho Code ~ 63-3029I(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 ~ 63-30291(4).
DISCUSSION
On May 12, 2008, the Commission received Applications from Silver Star
Telephone Co., Inc, (Silver Star) and Columbine Telephone Co., Inc., dba Silver Star
Communications (Columbine) seeking approval of equipment for the broadband tax
credit. The broadband investments were made during calendar year 2007. Both
Companies state it installed fiber optic cables and central office and outside equipment to
offer Asymmetric Digital Subscriber Line (ADSL), Symmetrical Digital Subscriber Line
DECISION MEMORANDUM JUNE 11 2008
(SDSL) and Trunk level 1 (T-l) services at network transmission rates of between 256
Kbps and 4 Mpbs upstream and between 256Kpbs and 9Mbps downstream to customers.
Silver Star states that it provides 129 out of 619 possible customers with broadband
service in the counties of Bonneville and Wayan. Columbine states it provides 2244 out
of 4467 possible customers with broadband service in Teton County. Silver Star s 2007
broadband investment was approximately $155 600 and Columbines 2007 broadband
investment was approximately $1 655 000.
ST AFF REVIEW AND RECOMMENDATION
Staff has reviewed the list of proposed broadband equipment submitted by Silver
Star and Columbine and believes the equipment identified meets the statutory
requirements for the investment tax credit pursuant to Procedural Order No. 28784 and
Idaho Code ~ 63-3029I(3)(b). Staff also believes that the expenditures indentified by the
Companies, 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 the Application and further recommends that the Commission forward the
approving Order along with a copy of the original Application to the Idaho Tax
Commission.
COMMISSION DECISION
Does the Commission wish to accept Silver Star and Columbine s Applications
for the broadband investment tax credit?
u-U
Grace Seaman
gseaman/udmemos/silverstar columbine broadband
DECISION MEMORANDUM JUNE 11 , 2008