20030825_594.pdf

DECISION MEMORANDUM
TO:CO MMISSI 0 NER KJELLAND ER
COMMISSIONER SMITH
COMMISSIONER HANSEN
JEAN JEWELL
COMMISSION STAFF
LEGAL
WORKING FILE
FROM:DOUG COOLEY
DATE:AUGUST 21,2003
RE:MIDV ALE TELEPHONE'S APPLICATION FOR BROADBAND
EQUIPMENT TAX CREDIT. CASE NO. MID-03-
BACKGROUND
On August 5 , 2003 , the Commission received an Application trom Midvale Telephone
Exchange, Inc. to receive an investment tax credit for eligible broadband equipment pursuant to
Order No. 28784 and Idaho Code ~ 63-3029I( 4). To be eligible for the tax credit, the taxpayer
must obtain trom the Commission an Order confirming that installed equipment qualifies for the
tax credit.
DISCUSSION
Midvale 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 its
Idaho service area. The Company also indicated that high-speed access to customers began in
2001 at transmission rates trom 128 kilobits per second (kbps) up to 1.54 megabits per second
(Mbps). The Application indicates that Midvale offers Asynchronous Digital Subscriber Line
(ADSL) to customers using primarily AFC brand equipment.
In 2002, Midvale represents that it installed fiber optic transceivers, digital loop carrier
shelves, line cards, concentrating electronics, and supporting power supply and software.
Midvale capitalized the labor and overhead costs associated with the installation of this
equipment.
DECISION MEMORANDUM AUGUST 21 , 2003
STAFF REVIEW
Staff has reviewed the list of proposed broadband equipment submitted by Midvale and
believes the equipment is "necessary to the provision of broadband services and an integral part
of a broadband network" according to Idaho Code ~ 63-3029I (3)(b)(i). Staff has had
discussions with Midvale 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 Application trom Midvale Telephone Exchange 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 Application qualifies as
broadband equipment and forward the Application to the Tax Commission?
17
c::~
oug Cooley
i:udemoslMidvale 2002
DECISION MEMORANDUM AUGUST 21 , 2003