20170331Decision Memo.pdf

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DECISION MEMORANDUM
TO:COMMISSIONER KJELLANDER
COMIVIISSIONER RAPER
COMMISSIONER ANDERSON
COMMISSION SECRETARY
LEGAL
WORKINC TILE
FROM: GRACE SEAMAN
DATE: MARCH 30,24fi
SYRTNGA NETWORKS, LLC'S 2016 BROADBAI\ID EQUIPMENT TAX
CREDIT APPLICATION; CASE NO. SZ9-T-r7-01.
BACKGROUND
In 2001, House Bill377 was enacted authorizing income tax credit for the installation of
qualiSing broadband infrastructure in ldaho. Idaho Code $ 63-30298(3XaXii). In particular,
Section 63-30291allows a taxpayer to receive an investment tal< 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(3Xb). If the equipment is installed by a
telecommunications canier, it rnust also be "necessary to the provision of broadband services and
an integral part of a broadband network." Idoho Code $ 63-3029(3)(bxi). To be eligible for the
tar credit, tlre taxpayer must obtain from the Commission an Order confirming that the installed
equipment meets the statutory definition of qualified broadband equipment. Procedural Order
No. 28784 and ldaho Code $ 63-10291(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 fonrrarded to the tdatro Tax Commission.
THE APPLICATION
On January 25,2017, the Commission received an Application from Syringa Networks,
LLC ("Syringa" or "Company") seeking approva[ of equipment for the broadband tax credit for
calendar year 2016. In an cmail sent on March 27 ,2017, the Company provided additional
DECISION MEMORANDUM I MARCH 3A,2017
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information associated with the Application. Syringa states it is a provider of wholesale broadband
telecommunications service and other telecommunications services in southern ldaho. In the
Application, Syringa lists investments associated with is fiber optic facilities, equipment, and
engineering connected with the broadband network. Syringa states "the list of installed equipment
is necessary to the provision of broadband service and is an integral part of the broadband
networks." The Company asserts that "our network is capable of transmitting signals at a
minimum rate of 1.5 Mbps for both upstream and downstream transmissions." This rate is above
the statutory speed requirements pursuant to ldaho Code 63-30291. Syringa reports investments of
approximately $3,052,000 in qualifoing broadband equipment for calendar year2016.
STAFF REVIEW AND RECOMMENDATION
Staff has reviewed the list of proposed broadband equipment submitted by Syringa and
believes the identified equipment qualifies for the investment tax credit pursuant to Procedural
Order No. 28784 and ldaho Code $ 63-3029I(3)(b). Statrfurther believes that the expenditures
identified by Syringa, a wholesale broadband telecommunications service provider, were for
equipment that is "necessary for the provision of broadband services and an integral part of a
broadband network." Staff, therefore, recommends that the Commission issue an Order
confirming the equipment is qualified broadband equipment and forward the approving Order
along with the a copy of the original Application to the tdaho Tax Commission.
COMMISSION DECISION
Does the Commission wish to issue an Order confirming the equipment identified in Case
No. SZ9-T-17-01 is qualified broadband equipmenl as defined in ldaho Code $ 63-30291(3)(bxi),
and forward it to the Idaho Tax Comrnission?
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Grace Seaman
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DECISION MEMORANDUM MARCH 3O,2OI7