20040727Decision Memo.pdf

DECISION MEMORANDUM
TO:COMMISSIONER KJELLANDER
COMMISSIONER SMITH
CO MMISSI 0 NER HANSEN
COMMISSION SECRETARY
LEGAL
W 0 RKIN G FILE
FROM:DOUG COOLEY
DATE:JULY 23, 2004
RE:BROADBAND TAX CREDIT APPLICATIONS;
CASE NOS. FIL-04-1; VZN-04-8; AND FMT-04-
BACKGROUND
In April and June 2004, the Commission received Applications asking for approval of
equipment for the broadband tax credit pursuant to Order No. 28784 and Idaho Code 9 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.
ST AFF ANALYSIS
Filer Mutual Telephone Company (Case No. FIL-04-) - Filer Mutual's Application
states that the Company installed transport cable, digital subscriber line access multiplexers
(DSLAM) and modems during 2003 in expanding its broadband network. The Company offers
high-speed Internet and other data services to customers in Idaho s Twin Falls County. Filer
Mutual indicated that it offers high-speed access to customers at transmission rates of 1 Megabits
per second (Mbps). All of Filer Mutual's customers are Idaho subscribers. The Application
states that Filer Mutual invested approximately $307 000 in 2002 and $636 000 in 2003.
Verizon Northwest (Case No. VZN-04-
)-
Verizon states in its Application that during
calendar year 2003 the Company installed equipment used to provide DSL and high-speed data
(e.g. T-l) services to customers in the exchanges of Bayview, Bonners Ferry, Coeur d' Alene
Clark Fork, Genesee, Hayden Lake, Hope, Kellogg, Moscow, Orofino, Pinehurst
DECISION MEMORANDUM JULY 23 2004
Plummer/Worley, Post Falls, Potlatch, Priest River, Rathdrum, Spirit Lake, Weippe, Wallace
Sandpoint, and St. Maries. Such components include digital access platforms, long-range digital
transport, line cards, access ports, fiber optic cable, fiber terminals , and supporting software.
Verizon states that transmission rates range from 128 Kbps to well beyond 6 Mbps. The
Application states that Verizon invested approximately $8 600 000 in qualifying broadband
equipment during 2003.
Farmers Mutual Telephone Company (Case No. FMT-04-- Farmers Mutual
stated that, during calendar year 2003, it installed a Digital Subscriber Line (DSL) line cards, line
splitters, line filters, assembly and connection equipment, line ports and various other
components that support the provision of high-speed internet access to over 1000 potential
customers in the Fruitland, Idaho area. Farmers Mutual indicated that it began offering 256 kbps
to OC48 speeds to end-users in 2001 via AsYnchronous Digital Subscriber Line (ADSL). The
Application states that during 2003 Farmers invested approximately $126 000 in broadband
equipment.
STAFF REVIEW
Staff has reviewed the lists of proposed broadband equipment submitted by the
companies and believes that the equipment identified qualifies for the investment tax credit
pursuant to Idaho Code 9 63-30291. Staff recommends approval of the Applications and further
recommends that the Commission forward the approving Orders along with a copy of the
original Applications to the Idaho Tax Commission.
COMMISSION DECISION
Should the Commission approve the Applications for the broadband investment tax
credits?
:O~
i:udmemos/group broadband memo 4
DECISION MEMORANDUM JULY 23 2004