20150209_4587.pdf

DECISION MEMORANDUM
TO:COMMISSIONER KJELLANDER
COMMISSIONER REDFORD
COMMISSIONER SMITH
COMMISSION SECRETARY
LEGAL
WORKING FILE
FROM:GRACE SEAMAN
DATE:FEBRUARY 4,2015
RE:DIRECT COMMUNICATIONS ROCKLAND,INC.’S BROADBAND
EQUIPMENT TAX CREDIT APPLICATION FOR 2011,2012,AND 2013;
CASE NO.DCM-T-14-01.
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 December 24,2014,the Commission received an Application from Direct
Communications Rockland.Inc.(“Direct”or “Company”)seeking approval of equipment for the
DECISION MEMORANDUM -I -FEBRUARY 4,2015
broadband tax credit.Direct states that it installed equipment associated with Fiber to the Home
(FTTH),Digital Subscriber Line (DSL),and Cable Broadband services using a backbone
network of fiber-optic cable and Ethernet technologies.Direct states that it provides minimum
transmission rates of 6 Mbps download and I Mbps upload.The Company asserts that
approximately 80%of its customers can be served by the broadband network.During the three-
year period,Direct invested approximately $31 56,690.The annual investments are as follows:
Year Approx.Investment Counties
2011 $674,290 Bear Lake,Power
2012 $1,257,100 Bannock.Bear Lake,Caribou,Franklin,Power
2013 $1,225,300 Bannock.Bear Lake,Bingham,Franklin,Power
STAFF REVIEW AND RECOMMENDATION
Staff has reviewed the list of proposed broadband equipment submitted by Direct 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 the expenditures
identified by the Company,a telecommunications provider,were for equipment that is
“necessary for the provision of broadband services and an integral part of a broadband network.”
Thus,Staff recommends that the Commission issue an Order confirming the equipment is
qualified broadband equipment and forward the approving Order along with the a copy of the
original Application to the Idaho Tax Commission.
COMMISSION DECISION
Does the Commission wish to issue an order confirming the equipment identified in Case
No.DCM-T-14-01 is qualified broadband equipment as defined in Idaho Code §63-30291(3)(b),
and forward it to the Idaho Tax Commission?
t 7
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Grace Seaman
Udmemos!dcm-t-14-Ol dcc mcmo
DECISION MEMORANDUM -2-FEBRUARY 4,2015