20240514Decision Memo.pdf

DECISION MEMORANDUM
TO: COMMISSIONER ANDERSON
COMMISSIONER HAMMOND
COMMISSIONER LODGE
COMMISSION SECRETARY
LEGAL
FROM: JOHAN E. KALALA-KASANDA
MICHAEL DUVAL, DEPUTY ATTORNEY GENERAL
DATE: MAY 14, 2024
RE: IN THE MATTER OF CENTURYTEL OF IDAHO, INC.'S
APPLICATION FOR THE 2022 BROADBAND EQUIPMENT TAX
CREDIT; CASE NO. CEN-T-23-02.
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). Idaho Code §
63-3029I allows a taxpayer to receive an investment tax credit for eligible broadband equipment
installed during a calendar year.
Qualified broadband equipment is defined as equipment"capable of transmitting signals
at a rate of at least two hundred thousand (200,000) bits per second to a subscriber and at least
one hundred twenty-five thousand (125,000)bits per second from a subscriber." Idaho Code §
63-3029I(3)(b). If the equipment is installed by a telecommunications carrier, it must also be
"necessary to the provision of broadband service 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. Commission Order No. 35297 and Idaho Code § 63-
3029I(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 forwarded to the
Idaho Tax Commission.
DECISION MEMORANDUM - 1 - MAY 14, 2024

THE APPLICATION
On December 27, 2023, the Commission received an Application from CenturyTel of
Idaho, Inc. ("CenturyTel" or"Company"), seeking approval of the equipment for the broadband
tax credit installed during the calendar year 2022.
In the Application, CenturyTel represented that it uses terrestrial wireline technology and
has installed broadband equipment associated with various forms of DSL-based equipment
(asymmetric digital subscriber line &very high-speed digital subscriber line in various vintages).
Data transportation is a mixture of fiber optic and metallic cable—which typically also supports
traditional telephone services. Equipment terminals are located in central office buildings,
remote buildings, and in cabinets on concrete pads each serving a neighborhood.
CenturyTel disclosed that the lowest broadband network data transmission rate it offers
its customers is 500,000 bits per second for downloads and 250,000 bits per second for uploads.
These rates exceed the minimum statutory speed requirements under Idaho Code § 63-30291.
CenturyTel also represented that it provides 5,368 Idaho customers with broadband service and
estimates a total of 5,726 potential Idaho customers to be served with its broadband network
within its designated service areas, or potentially 94% of Idaho customers. CenturyTel stated
that it invested $517,170 in 2022 in qualifying broadband equipment that it confirms is integral
to its broadband network.
STAFF REVIEW AND RECOMMENDATION
Staff reviewed the entire Application submitted by CenturyTel, including the list of
proposed broadband equipment. However, Staff has not been able to determine whether the
equipment listed in the Application qualifies for the broadband investment tax credit. This is
because CenturyTel filed an incomplete Application and failed to respond to subsequent audit
requests. Additionally, the Application is not in compliance with Commission Order No. 35297.
As a result, Staff would recommend that the Commission deny this Application. CenturyTel can
resubmit its Application, if it so desires, ensuring that the application is in full compliance with
Commission Order No. 35297.
DECISION MEMORANDUM - 2 - MAY 14, 2024

The reasons for this recommendation are as follows:
• Applicants are required to provide a specific list of the equipment or types of
equipment that the applicant is requesting that the Commission determines is
`qualified broadband equipment' as defined in Idaho Code § 63-3029I(3)(b). List the
brand, manufacturer, model numbers, of the installed equipment, number of items,
and total cost. Commission Order No. 35297 at 6. This was not the case in the
Application submitted by CenturyTel. Staff discovered that the majority of the
equipment listed on the spreadsheet attached to the Application had the statement
"Electronic Information Not Available" for the brand, manufacturer, and model
number of the equipment listed. Thus, Staff was not able to determine whether the
listed equipment qualify for tax credit per Commission Order No. 35297.
• On January 11, 2024, Staff sent an audit request, with a response date of Friday,
February 9, 2024, seeking clarification and additional information for the missing
information in the Application. The response date came and passed with no reply
from CenturyTel.
• On March 14, 2024, Staff sent a reminder to Ms. Amanda Brown, Senior Director of
Tax and the signee of the Application. No reply was received.
• On March 15, 2024, Staff received an email communication from Toni Mincic, Sr Dir
Tax Controversy, confirming that she was working on the requests and requested an
opportunity to discuss so that she may gain a better understanding of the nature of the
audit. Staff spoke with Ms. Mincic over the phone and explained that the Application
is not in compliance with Commission Order No. 35297. Ms. Mincic accepted and
sent a letter requesting an extension of the response date as advised by Staff.
• On March 20, 2024, Staff issued a new date by which CenturyTel. was to submit
responses to its audit requests. The newly established due date was Friday, April 19,
2024.
• On April 4, 2024, Ms. Mincic sent an email to Staff stating that she was working on
the audit requests and gathering all the information.
• As of May 2, 2024, Staff has not heard from Ms. Mincic or the Company.
DECISION MEMORANDUM - 3 - MAY 14, 2024

COMMISSION DECISION
1) Does the Commission wish to deny the Application?
2) Anything else.
ohaii E. Kalala-Kasanda
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DECISION MEMORANDUM -4 - MAY 14, 2024