20080822Decision Memo.pdf

DECISION MEMORANDUM
TO:COMMISSIONER REDFORD
CO MMISSI 0 NER SMITH
COMMISSIONER KEMPTON
COMMISSION SECRETARY
LEGAL
WORKING FILE
FROM:GRACE SEAMAN
DATE:AUGUST 21, 2008
RE:ST AFF REVIEW OF BROADBAND TAX CREDIT APPLICATIONS;
CASE NOS. CEN-08-1 AND VZN-08-
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
9 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).
THE APPLICATIONS
1. CenturvTel ofIdaho, Inc, (CenturvTel) Case No. CEN-08-
CenturyTel's Application identifies the broadband investments for the calendar year
2007. In the Application, CenturyTel stated that it installed Asymmetrical Digital Subscriber
Line (ADSL) service with transmission rates of 1 Mbps to a subscriber and 125 Kpbs from a
subscriber in the North Fork, Leadore, and Salmon exchanges. CenturyTel asserts that the
number of potential ADSL subscribers in 2007 was 3,495 or 64%. The Application states that
CenturyTel invested approximately $209 000 in qualifying broadband equipment during 2007.
DECISION MEMORANDUM - 1 -AUGUST 21 2008
2. Verizon Northwest Inc., (Verizon) Case No. VZN-08-
Verizon s Application identifies the broadband investments for the calendar year 2007.
In the Application, Verizon stated that it installed Digital Subscriber Line (DSL) and other high
speed data (e.g. T-1) services with transmission rates of 1.544 Mbps to 51.84 Mbps in 25
exchanges in northern Idaho. Verizon asserts 100% of its customers in these exchanges have
access to broadband services. The Application states that Verizon invested approximately $13
million in qualifying broadband equipment during 2007.
STAFF REVIEW AND RECOMMENDATION
Staff has reviewed the list of proposed broadband equipment submitted by the companies
and believes the identified equipment qualifies for the investment tax credit pursuant to
Procedural Order No. 28784 and Idaho Code ~ 63-3029I(3)(b). Further, Staff believes that the
expenditures indentified by CenturyTel and Verizon 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 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
Does the Commission wish to accept these Applications for the broadband investment tax
credit?
~4-~
Grace Seaman
i:udmemos/centurytel & Verizon BTC 2007
DECISION MEMORANDUM - 2 -AUGUST 21 2008