20240917Decision Memo.pdf

DECISION MEMORANDUM
TO: COMMISSIONER ANDERSON
COMMISSIONER HAMMOND
COMMISSIONER LODGE
COMMISSION SECRETARY
COMMISSION STAFF
LEGAL
FROM: JOHAN E. KALALA-KASANDA
MICHAEL DUVAL,DEPUTY ATTORNEY GENERAL
DATE: SEPTEMBER 17, 2024
RE: IN THE MATTER OF CABLE ONE, INC.'S APPLICATION FOR
APPROVAL OF THE IDAHO BROADBAND EQUIPMENT TAX CREDIT
FOR THE TAX YEAR 2023; CASE NO. GNR-T-24-04.
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 63-3029I 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 thousand twenty-five (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 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. Commisison 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 State Tax Commission.
DECISION MEMORANDUM - 1 - SEPTEMBER 17, 2024

THE APPLICATION
On June 06, 2023, the Commission received an Application, with a cover letter, from
Cable One, Inc. ("Company"), seeking Commission determination that the broadband equipment
installed during the calendar year 2023 meets the statutory definition of qualified broadband
equipment. On July 2, 2024, Staff sent the first production request to the Company, requesting
additional information. This was because, after a thorough examination of the Application, Staff
concluded that the Application was not in full compliance with the requirements of Commission
Order No. 35297. On July 11, 2024, the Company submitted an Amended Application in
compliance with Commission Order No. 35297. On August 16, 2024, following additional
revisions to its assets list,the Company filed the 2nd revision of its assets list to the Commission.
In the Application, the Company represented that it provides high-speed data services
through a network that features two MX960 routers, which all data traffic traverses.
Additionally, the network includes several Cable Modem Termination Systems that deliver
broadband service directly to customers. These are the devices that communicate with cable
modems in customer homes. To enhance content delivery speeds,Netflix, Akamai, Mobi,
Facebook, and Google caches store online content locally in Boise, allowing customer requests
to be fulfilled locally rather than routed to distant third-party data centers. The network also
employs a Network Time Protocol server to ensure that all equipment in the headend maintains
accurate timing. Furthermore, Juniper ACX Commercial Access Routers provide our
commercial fiber service, while other network switches enable server connectivity within the
headend.
The Company disclosed that the lowest broadband network data transmission rate offered
to customers is 100 Mbps and the highest is 940 Mbps. These rates exceed the minimum
statutory speed requirements under Idaho Code § 63-3029I. The Company also represented that
it serves 236,746 customers in Idaho and 231,468 of these customers subscribe to HSD services.
An estimated 97.78 percent of the Company's customers have access to its broadband network.
The Company stated that it invested$44,997,092 in 2023 in qualifying broadband
equipment that it confirms is integral to its broadband network. The 3%tax credit associated
with this investment is $ 1,349,913.
DECISION MEMORANDUM - 2 - SEPTEMBER 17, 2024

STAFF REVIEW AND RECOMMENDATION
Staff examined the list of the proposed broadband equipment and believes the equipment
qualifies for the investment tax credit pursuant to Commission Order No. 35297 and Idaho Code
§ 63-30291(3)(b). Staff recommends that the Commission issue an order confirming the listed
equipment is qualified broadband equipment and forward that order along with a copy of the
Application to the Idaho State Tax Commission.
COMMISSION DECISION
Does the Commission wish to issue an order confirming the equipment identified in Case
No. GNR-T-24-04 is qualified broadband equipment as defined in Idaho Code § 63-3029I(3)(b)
and forward that order along with a copy of the Application to the Idaho State Tax Commission?
r
J han E. Kalala-Kasanda
Commission Staff
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DECISION MEMORANDUM - 3 - SEPTEMBER 17, 2024