20240514Decision Memo.pdf

DECISION MEMORANDUM
TO: COMMISSIONER ANDERSON
COMMISSIONER HAMMOND
COMMISSIONER LODGE
COMMISSION SECRETARY
LEGAL
FROM: JOHAN E. KALALA-KASANDA
ADAM TRIPPLETT
DATE: MAY 14,2024
RE: IN THE MATTER OF CUSTER TELEPHONE BROADBAND SERVICES
LLC'S APPLICATION FOR THE 2023 BROADBAND EQUIPMENT TAX
CREDIT; CASE NO. CTB-T-24-01.
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 §
63-30291(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 § 63-3029I(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. Idaho Code § 63- 3029I(4); Order No. 35297. 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 March 25, 2024, the Commission received an Application from Custer Telephone
Broadband Services LLC, an Idaho corporation ("CTBS"), seeking approval of the equipment
for the broadband tax credit installed during the calendar year 2023.
In the Application, CTBS represented that it is a provider of basic local exchange service,
broadband telecommunications service, and other telecommunications services in Idaho.
Application at 1. The broadband services it offers to its customers are associated with cable
modem' high-speed internet("HSI"), fixed wireless HSI, and Fiber-to-the-Home2 ("FTTH")HSI
technologies. It described its network as a fiber optic fed cable system that provides cable
modem service, fiber optic transport electronics, fiber optic backbone and distribution cable, and
fixed wireless network.
CTBS stated that the transmission rate of its broadband network is 512 Kilobytes ("Kb")
per second at the lowest subscribed rate and 128 Kb from the subscribed rate. The lowest
advertised rate is 10 megabytes ("Mb")per second for a subscriber and 1 Mb per second for a
subscriber. The highest advertised rate is 1 gigabyte per second for a subscriber and 200 Mb per
second for a subscriber. These rates are above the minimum statutory speed requirements under
Idaho Code § 63-3029I. CTBS disclosed that it serves 1,950 customers with broadband services
out of 3,100 estimated possible customers in Salmon, Idaho.
CTBS disclosed that it invested approximately $21,502,924.49 in 2023 in qualifying
broadband equipment—that it confirms is integral to the broadband network. This qualifies for a
3%broadband tax credit of$45,087.73.
STAFF REVIEW AND RECOMMENDATION
Staff has reviewed the list of proposed broadband equipment and believes the identified
equipment qualifies for the investment tax credit pursuant to Procedural Order No. 35297 and
' A cable modem is a type of network bridge that provides bi-directional data communication via radio frequency
channels on a hybrid fiber coaxial(HFC),radio frequency over glass(RFoG)and coaxial cable infrastructure. Cable
modems are primarily used to deliver broadband Internet access in the form of cable Internet,taking advantage of
the high bandwidth of a HFC and RFoG network.
2 FTTH,also called fiber to the premises,is the installation and use of optical fiber from a central point to individual
buildings to provide high-speed internet access. FTTH dramatically increases connection speeds available to
computer users compared to other technologies.
DECISION MEMORANDUM - 2 - MAY 14, 2024

Idaho Code § 63-3029I(3)(b). Staff, therefore, recommends that the Commission issue an Order
confirming the equipment is qualified broadband equipment and forward the approved 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 broadband equipment
identified in Case No. CTB-T-24-01 is qualified broadband equipment as defined in Idaho Code
§ 63-3029I(3)(b) and forward it to the Idaho Tax Commission?
1-17
rkohan AKalala-.'Kasan(da
1:\Uti1ity\UDMEM0S\CTB-T-24-01 Decision Memo.docx
DECISION MEMORANDUM - 3 - MAY 14, 2024