20030723_545.pdf

DECISION MEMORANDUM
TO:COMMISSIONER KJELLANDER
CO MMISSI 0 NER SMITH
COMMISSIONER HANSEN
JEAN JEWELL
COMMISSION STAFF
LEGAL
WORKING FILE
FROM:DOUG COOLEY
DATE:JULY 16, 2003
RE:APPLICATIONS FOR BROADBAND EQUIPMENT TAX CREDIT.
BACKGROUND
On May 21 2003 , the Commission received Applications from Albion Telephone
Company, Cambridge Telephone Company, Inc., Columbine Telephone Company, Silver Star
Telephone Company, Inc., and Direct Communications Rockland, Inc. to receive an investment
tax credit for eligible broadband equipment pursuant to Order No. 28784 and Idaho Code ~ 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.
D ISCUSSI ON
Each of the companies stated that, during calendar year 2002, it installed various
components as part of its wireline broadband network for the provision of high-speed Internet
access to customers in each company s respective Idaho service area. The companies also
indicated that high-speed access to customers began in 2001 at transmission rates from 128
kilobits per second (kbps) up to 1.54 megabits per second (Mbps). The following paragraphs
summarize the equipment and expenses listed in each Application for 2002 investments.
Albion Telephone Company. Albion indicates that it has installed a Digital Loop Carrier
(DLC) system with supporting line cards, ports, transceivers and a fiber terminal. During 2002
it installed over 60 miles of fiber optic cable that connects its offices in Cassia, Butte, and Custer
counties. Albion provides xDSL broadband services to customers at speeds from 256 kbps to
DECISION MEMORANDUM JULY 16, 2003
54 Mbps. Albion also capitalized the labor and overhead costs associated with the installation
of this equipment.
Cambridge Telephone Company. Inc. Cambridge states that it has installed fiber optic
cable and fiber multiplexing terminals providing ADSL broadband service to customers in
Adams and Washington counties. Cambridge capitalized the labor and overhead costs associated
with the installation of this equipment.
Columbine Telephone Company.Columbine indicates that, during 2002, it installed
DSL-capable line cards and supporting equipment in providing ADSL and HDSL broadband
services to customers in Teton County. Columbine also capitalized the labor and overhead costs
associated with the installation of this equipment.
Silver Star Telephone Company. Inc. Silver Star states that, during 2002, it installed
additional DSL line cards to provide Asynchronous Digital Subscriber Line (ADSL) to
customers in Bonneville County at speeds from 128 kbps from subscribers to 1.5 Mbps from
subscribers. Silver Star capitalized the labor and overhead costs associated with the installation
of this equipment
Direct Communications Rockland. Inc.Direct indicates that it has installed fiber
optic cable and supporting and line cards and ports to provide ADSL broadband service to
customers in Bear Lake, Bannock, Power, and Caribou counties. Direct capitalized the labor and
overhead costs associated with the installation of this equipment
STAFF REVIEW
Staff has reviewed the list of proposed broadband equipment submitted by the companies
and believes the equipment is "necessary to the provision of broadband services and an integral
part of a broadband network" according to Idaho Code ~ 63-30291 (3)(b )(i). Staff has had
discussions with several of the companies to clarify the nature of various pieces of equipment
and has also 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 Applications from Albion Telephone Company,
Cambridge Telephone Company, Inc., Columbine Telephone Company, Silver Star Telephone
DECISION MEMORANDUM JULY 16 2003
Company, Inc., and Direct Communications Rockland and further recommends that the
Commission forward the approving Order and copies of the Applications to the Idaho Tax
Commission.
COMMISSION DECISION
Does the Commission wish to confirm that the equipment in the Applications qualifies as
broadband equipment and forward the Applications to the Tax Commission?
ug Coley
i:udmemos/Group Broadband 2002
DECISION MEMORANDUM JULY 16, 2003