20100201_2838.pdf

DECISION MEMORANDUM
TO:COMMISSIONER KEMPTON
CO MMISSI 0 NER SMITH
COMMISSIONER REDFORD
COMMISSION SECRETARY
LEG AL
WORKING FILE
FROM:GRACE SEAMAN
DATE:JANUARY 29, 2010
RE:VERIZON'S 2008 BROADBAND EQUIPMENT TAX CREDIT
APPLICATION; CASE NO. VZN-I0-01.
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). 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 network 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 forwarded to the Idaho Tax Commission.
THE APPLICATION
On January 25 2010, the Commission received an Application from Verizon Northwest
Inc. (Verizon) seeking approval of equipment for the broadband tax credit. In the Application
DECISION MEMORANDUM - 1 -JANUARY 29, 2010
Verizon states that it installed equipment associated with Digital Subscriber Line (DSL) and high
speed data (e.g. T-l) services with transmission rates of 1.544 to 51.84 Mbps in 22 exchanges in
northern Idaho. Verizon asserts that 100% of its customers in these exchanges are served or can
be served by the broadband network. The Application states that Verizon invested
approximately $17 million in qualifying broadband equipment during 2008.
ST AFF REVIEW AND RECOMMENDATION
Staff has reviewed the list of proposed broadband equipment submitted by Verizon 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 Verizon, 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 as defined in Idaho Code ~ 63-30291(3)(b)(i), and forward it to the Idaho
Tax Commission.
COMMISSION DECISION
Does the Commission wish to issue an order confirming the equipment identified in
VZN-I0-0l is qualified broadband equipment as defined in Idaho Code ~ 63-30291(3)(b)(i),
and forward it to the Idaho Tax Commission?
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Grace Seaman
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DECISION MEMORANDUM - 2 -JANUARY 29 , 2010