20130621Decision Memo.pdf

DECISION MEMORANIRTM
TO:COMMISSIONER KJELLANDER
COMMISSIONER REDFORD
COMMISSIONER SMITH
COMMISSION SECRETARY
LEGAL
WORKING FILE
FROM:GRACE SEAMAN
DATE:JUNE 21,2013
RE:QWEST CORPORATION’S BROADBAND EQUIPMENT TAX CREDIT
APPLICATION FOR YEARS 2008 -2012;CASE NO.QWE-T-13-02.
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 net’vork 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 §63-30291(3)(b).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(3)(b)(i).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 Idaho Code §63-30291(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 fonvarded to the Idaho Tax Commission.
THE APPLICATION
On June 4,2013,Qwest Corporation (“Qwest”or “Company”)filed an Application with
the Commission seeking approval of equipment for the broadband tax credit for five consecutive
years (calendar years 2008 through 2012).On June 19,2013,the Company submitted a revised
DECISION MEMORANDUM -1 -JUNE 21,2013
Application removing items associated with Vale,OR and pole attachments.In the Application,
Qwest states that it installed equipment associated with various forms of DSL-based broadband
services using a mix of fiber and metallic cable transport in approximately 70 Idaho exchanges.
During the five-year period,Qwest states that it made investments totaling approximately $130
milLion.With the Application,the Company provided information that includes new as well as
retired investments.The information is listed below.
Year Transmission Rates %1 Retirements Investment
2008 256 Kbps—4OMbps 89 ($1,673,911)S26,008.403
2009 256 Kbps—4OMbps 89 (5437,930)524.563,461
2010 256 Kbps—4OMbps 89 ($700,053)$24,263,537
2011 256 Kbps—4OMbps 90 ($463,124)$29,025,714
2012 256 Kbps—4OMbps 90 ($122.698)$26.037.870
TOTAL ($3,397,716)$129,898,985
STAFF REVIEW AND RECOMMENDATION
Staff has reviewed the list of proposed broadband equipment submitted by Qwest and
believes the identified equipment qualifies for the investment tax credit pursuant to Procedural
Order No.28784 and Idaho Code §63-30291(3)(b).Staff also believes that the expenditures
identified by the Company,a telecommunications 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 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.QWE-T-13-02 is qualified broadband equipment as defined in Idaho Code §63-30291(3)(b)
and forward it to the Idaho Tax Commission?
Grace Seaman
i udmc,iios!qwct I 302b1c 2003-2012
The percentage oPlivirnz units (or street addresses)that have access to broadband services.
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