20021028_298.pdf

DECISION MEMORANDUM
TO:COMMISSIONER KJELLANDER
COMMISSIONER SMITH
CO MMISSI 0 NER HANSEN
JEAN JEWELL
RANDY LOBB
DON HOWELL
LYNN ANDERSON
JOE CUSICK
CAROLEE HALL
WAYNE HART
BIRDELLE BROWN
BEVERL Y BARKER
RON LAW
TONYA CLARK
GENE FADNESS
WELDON STUTZMAN
WORKING FILE
FROM:DOUG COOLEY
DATE:OCTOBER 21,2002
RE:QWEST APPLICATION FOR BROADBAND EQUIPMENT TAX
CREDIT.
BACKGROUND
On August 16, 2002, the Commission received an Application from Qwest Corporation
to receive an investment tax credit for eligible broadband equipment pursuant to Order No.
28784 and Idaho Code 9 63-30291(4). To be eligible for the tax credit, the taxpayer must obtain
from the Commission an Order confirming that installed equipment qualifies for the tax credit.
DISCUSSION
Qwest's Application states that, during calendar year 2001 , it installed various
components as part of its wireline broadband network for the provision of high-speed Internet
access to customers in many of the Company s respective Idaho service areas. The Company
also stated that the equipment was installed in 2001 and is capable of offering high-speed access
to customers at transmission rates from 256 kilobits per second (kbps) to over 100 megabits per
second (Mbps).
DECISION MEMORANDUM OCTOBER 21 2002
Specifically, Qwest stated that it installed eleven Digital Subscriber Line (DSL) switches
in the Treasure Valley, Twin Falls, Idaho Falls and Pocatello. In addition, Qwest installed five
Asynchronous Transfer Mode (ATM) switches and four Frame Relay switches at various
locations throughout its southern Idaho service area. Qwest included in its Application
interoffice trunks and facilities that are necessary for connecting customers to the Internet. The
interoffice facilities "do not constitute specific individual broadband services that are offered to
subscribers. Rather, these assets comprise part of the network that provides the means by which
the above services are offered." Consistent with Part 32 of Federal Communications
Commission Rules and Regulations, Qwest also capitalized such items as labor, engineer
transportation, and other overhead costs associated with the installation of this equipment.
STAFF REVIEW
Staff has reviewed the list of proposed broadband equipment submitted by Qwest and
believes the equipment is "necessary to the provision of broadband services and an integral part
of a broadband network" according to Idaho Code 9 63-30291 (3)(b )(i). Staff also discussed with
Qwest the nature of various projects and equipment and has been assured that the installation
labor, overhead, and supporting equipment is directly related to offering broadband in Idaho.
STAFF RECOMMENDATION
Staff recommends approval of the Application from Qwest Corporation and further
recommends that the Commission forward the approving Order and copies of the Application to
the Idaho Tax Commission.
COMMISSION DECISION
Does the Commission wish to confirm that the equipment in the Application qualifies as
broadband equipment and forward the Application to the Tax Commission?
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DECISION MEMORANDUM OCTOBER 21 , 2002