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HomeMy WebLinkAbout20160606_4987.pdfDECISION MEMORANDUM TO:COMMISSIONER KJELLANDER COMMISSIONER RAPER COMMISSIONER ANDERSON COMMISSION SECRETARY LEGAL WORKING FILE FROM:GRACE SEAMAN DATE:JUNE 2,2016 RE:DIRECT COMMUNICATIONS ROCKLAND,INC.’S BROADBAND EQUIPMENT TAX CREDIT APPLICATION FOR 2014 AND 2015; CASE NO.DCM-T-16-01. BACKGROUND In 2001,House Bill 377 was enacted authorizing income tax credit for the installation of qualifying broadband infrastructure in Idaho.Idaho Code §63-30298(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. DECISION MEMORANDUM -1 -JUNE 2,2016 THE APPLICATION On April 11,2016,the Commission received an Application from Direct Communications Rockland,Inc.(“Direct”or “Company”)seeking approval of equipment for the broadband tax credit for calendar years 2014 and 2015.On May 19,2016,the Company submitted an amendment to the 2015 equipment list.Direct states that it installed equipment associated with Digital Subscriber Line (DSL)and Ethernet services over a fiber and copper wireline network.The Company asserts that its broadband offerings provide minimum transmission rates of 6 Mbps to a subscriber and I Mbps from a subscriber;exceeding the requirements for the broadband equipment tax credit.Approximately 80%of Direct’s customers can be served by the broadband network.The Company invested approximately Si .1 million in 2014 and approximately $1.2 million in 2015. 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 lix Commission. COMMISSION DECISION Does the Commission wish to issue an order confirming the equipment identified in Case No.DCM-T-16-Ol is qualified broadband equipment as defined in Idaho Code §63-30291(3)(b), and forward it to the Idaho Tax Commission? / brace Seaman Udmemos/dcm.t.16-OI dcc memo DECISION MEMORANDUM -2-JUNE 2,2016