20180413Decision Memo.pdf

DECISTON MEMORANDIiM
TO COMMISSIONER KJELLANDER
COMMISSIONER RAPER
COMMISSIONER ANDERSON
COMMISSION SECRETARY
LEGAL
WORKING FILE
FROM:DANIEL KLEIN
APRIL 12,2018DATE:
RE:FRONTIER COMMUNICATTONS NORTHWEST INC'S APPLICATION
FOR THE BROADBAND EQUIPMENT TAX CREDIT FOR 20ft:' CASE
NO. VZN-T-18-01.
BACKGROUNI)
In 2001, House Bilt 377 was enacted authorizing income tax credit for the installation of
quali$ing broadband infrastructure in ldaho. Idaho Code $ 63-30298(3XaXii). In particular,
Section 63-30291allows 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
transmining 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 $ 63-329(3Xb). If the equipment is installed by a
telecommunications carrier, it must also be "necessary to the provision of broadband services
and an integral part of a broadband network." Idaho Code $ 63-30291(3XbXD. To be eligible
for the tax credit, the 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 $ 63-30291(4). Once the Commission as determined the
installed equipment is eligible for the broadband equipment tax credit, an order along with the
original Application is forwarded to the Idaho Tax Commission.
DECISTON MEMORANDUM -t-APRIL 12,2OI8
THE APPLICATION
On January 18, 2018, the Commission received an Application from Frontier
Communications Northwest Inc. ("FC Northwest" or "Company"), seeking approval of the
equipment for the broadband tax credit instatled during calendar year 2017. In the Application,
FC Northwest states that it made certain investments that constitute "qualified broadband
equipment". FC Northwest discloses that it installed equipment associated with Asymmetrical
Digital Subscriber Line ("ADSL") services with transmission rates up to 640 Kbps "send'and 6
Mbps "receive" in 20 exchanges, which meels the required rates of 200,000 bits per second to a
subscriber and I25,000 bits per second from a subscriber. The Company asserts that 8l % of is
Idaho subscribers have access to the broadband network. FC Northwest invested approximately
$2,251,389 in 2016 in qualiSing broadband equipment that it confirms is integral to the
broadband network
STAF'F REVIEW AND RECOMMENDATION
Staff has reviewed and audited the list of proposed broadband equipment and believes the
identified equipment qualifies for the investment tax credit pursuant to Procedural Order No.
28784 and ldaho Code $ 63-3029(3)O), Staff, therefore, recommends that the Commission
issue an Order confirming the equipment is qualified broadband equipment and forward the
approving Order along with a copy of the original Application to the Idaho Tax Commission.
COMMISSION DECISION
Does the Commission wish to issue an Order confirming the equipment identified in
Case No. VZN-T-I8-01 is qualified broadband equipment as defined in ldaho Code $
63-3029I(3)(b) and fonvard it to the ldaho Tax Commission?
Daniel
DECISION MEMORANDUM -2-APRIL 12,2OI8
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