ARCHIVED - Telecom Decision CRTC 2009-789

1 Introduction

2 Definitions

3 Becoming a Required Contributor

4 Reporting and Payment Responsibilities of TSPs to the CFA

5 Responsibilities of the CFA

6 Changes to the Revenue-Percent Charge or Subsidy Amounts Payable

7 Audit and Affidavit Requirements of TSPs to the NCF Auditor

1 CRTC Revenue-Based Contribution Regime – Reporting Forms

2 Sample Audit Report for Filing with the CRTC

3 Sample Audit Report for Filing with the NCF Auditor

4 Sample Affidavit

1.1

1.2

1.3

1.4

1.5

1.6

1.7

1.8

1.9

1.10

1.11

1.12

2.1

3.1

3.2

Audit requirements can be found in Sections 7.4 to 7.7 below. A sample audit report is contained in Appendix 2 of these Procedures. A sample affidavit is contained in Appendix 4 of these Procedures.

3.3

3.4

3.5

3.6

4.1

4.2

4.3

4.4

4.5

a) If the revision results in an increase in CER, process the revision;

b) If the revision results in a decrease in CER that reduces CER by $50 million or less and by 20% or less of the Required Contributor's CER for the immediate preceding data year, process the revision; and

c) If the revision results in a decrease in CER that reduces CER by over $50 million, or by more than 20% of the Required Contributor's CER for the immediately preceding data year (unless the reduction is less than $10,000 of CER in which case the CFA will process the revision), refer the revision to the CRTC for approval and not process the revision until it is approved by the CRTC.

4.6

4.7

4.8

4.9

(a) Recognizing that timely payment by Required Contributors to the CFA of amounts payable by Required Contributors to the CFA hereunder is essential to the orderly operation of the National Contribution Fund, in the event a Required Contributor fails to make payment to the CFA of the amount so required to be paid by it, in full and on the relevant due date or within two (2) business days thereafter (in this Section 4.9 called a 'Defaulting Contributor'), the CFA shall make all reasonable efforts to advise such Defaulting Contributor of (i) the fact that such Defaulting Contributor has failed to make payment of an amount due to the CFA hereunder, and (ii) the amount of the required payment. If, within five (5) business days of the CFA having given the notice referred to in the immediately preceding sentence to a Defaulting Contributor, such Defaulting Contributor shall have failed to remit such amount to the CFA (together with any applicable Late Payment Charges), such Defaulting Contributor shall, if requested by the CFA, provide to the CFA, within the next ten (10) business days of the request, security for such Defaulting Contributor's payment obligations to the CFA hereunder in accordance with these Procedures. Unless otherwise agreed by the CFA, security provided by a Defaulting Contributor pursuant to this Section 4.9 (a) shall remain in effect until such Defaulting Contributor shall have paid, in full and on the relevant due dates or within two (2) business days thereafter, all amounts required to be paid by such Defaulting Contributor to the CFA hereunder in respect of twelve (12) consecutive payment periods following such failure to pay. In the event security provided by a Defaulting Contributor to the CFA pursuant to this Section 4.9 (a) shall thereafter have been released and such Defaulting Contributor shall again default in making due and punctual payment of amounts due to the CFA hereunder, the provisions of this Section 4.9 (a) shall again be applicable in respect of any subsequent failure on the part of such Defaulting Contributor to make full and timely payment of amounts payable by such Defaulting Contributor to the CFA hereunder. The CFA shall, prior to requesting security, consult with the Chief Financial Officer of CPCC.

(b) Security required of a Defaulting Contributor hereunder shall consist of readily realizable security, such as a deposit of cash or marketable securities, an irrevocable letter of credit or letter of guarantee issued by a Canadian chartered bank, an irrevocable performance bond issued by a Canadian issuer of performance bonds, or such other form of readily realizable security as may be satisfactory to the CFA, acting reasonably (a 'Credit'). The Credit shall be in form and substance satisfactory to the CFA and shall name the CFA, for and on behalf of the National Contribution Fund, as beneficiary. The Credit provided by a Defaulting Contributor hereunder shall be in a principal amount equal to the sum of the net amounts payable by such Required Contributor to the CFA in accordance with these Procedures in respect of the most recent three (3) payment periods preceding the due date of the payment that gave rise to the obligation of such Defaulting Contributor to provide security hereunder (or three times the net amount payable by such Defaulting Contributor in respect of the payment period preceding the due date of the payment that gave rise to the obligation of such Defaulting Contributor to provide security hereunder in the case of a Defaulting Contributor, which shall not have been at such time a Required Contributor hereunder for at least three payment periods, as the case may be), as determined in good faith by the CFA. Such Credit shall entitle the CFA, for and on behalf of the National Contribution Fund, to draw against the Credit, or to demand payment by the issuer of the Credit, as the case may be, for any amount payable by such Defaulting Contributor to the CFA pursuant to these Procedures, up to the undrawn principal amount of the Credit. Partial drawings under any such Credit shall be permitted. The CFA shall be entitled to draw upon the Credit, in the case of a Credit issued by a third party, upon provision of a written statement of the CFA, addressed to the issuer of the Credit, as to non-payment of the corresponding amounts pursuant to the provisions of these Procedures by the Defaulting Contributor on whose behalf the Credit was issued, without any requirement that the CFA pursue or exhaust any remedies or recourses it may have against such Defaulting Contributor before being entitled to require payment under such Credit. Despite the foregoing, the CFA may not call for payment under any such Credit until the relevant amount, if in respect of contribution payable by such Defaulting Contributor to the CFA hereunder, has been overdue for not less than two (2) business days following the relevant due date. Promptly following the making of any such drawing or demand for payment under any such Credit, the CFA shall advise the Defaulting Contributor and the CRTC of the making of such drawing or demand for payment. Each Defaulting Contributor from whom a Credit is required pursuant to the provisions of these Procedures shall cause the Credit, or a replacement thereof satisfactory in form and in substance to the CFA, acting reasonably, to be maintained in force for so long as required by this Section 4.9.

(c) A Defaulting Contributor required to provide a Credit hereunder shall arrange for an increase in the undrawn principal amount of the Credit provided by it or issued on its behalf hereunder in the event that the undrawn principal amount payable under any such Credit shall, at any time, be less than eighty-five percent (85%) of the sum of the net amounts payable by such Defaulting Contributor to the CFA in respect of the then most recent three (3) payment periods pursuant to these Procedures, as notified to such Defaulting Contributor by the CFA. Any such increase shall be for an amount sufficient to ensure that the undrawn principal amount of the Credit respecting such Defaulting Contributor's obligations hereunder shall not be less than the sum of the net amounts payable by such Defaulting Contributor to the CFA in respect of the then most recent three (3) payment periods. Each Defaulting Contributor shall cause the undrawn principal amount of any Credit provided by it or issued on its behalf hereunder to be so increased, or to otherwise post readily realizable security for performance of its obligations hereunder in form and substance satisfactory to the CFA, acting reasonably, within ten (10) business days of the undrawn principal amount of such Credit ceasing to be equal to at least eighty-five percent (85%) of the sum of the net amounts payable by such Defaulting Contributor to the CFA in respect of the then most recent three (3) payment periods pursuant to these Procedures. For the avoidance of doubt, in the event the CFA shall make a drawing or a demand for payment under a Credit in accordance with the provisions of these Procedures and, following the drawing or the payment by the financial institution or other party which issued such Credit, the then remaining undrawn balance of such Credit shall be less than the sum of the net amounts payable by the Defaulting Contributor on whose behalf the Credit has been issued to the CFA in respect of the then most recent three (3) payment periods, such Defaulting Contributor shall cause the undrawn principal amount of such Credit to be increased in accordance with this Section 4.9.

(d) In the event that the undrawn principal amount payable under any Credit issued on account of a Defaulting Contributor at any time shall be greater than the sum of the net amounts payable by such Defaulting Contributor to the CFA in respect of the then most recent three (3) payment periods pursuant to these Procedures, as notified to such Defaulting Contributor by the CFA in accordance with these Procedures, the Defaulting Contributor on whose behalf such Credit has been issued shall be entitled to request the CFA to consent, and the CFA shall consent, to the reduction in the undrawn principal amount payable under such Credit, such that the undrawn principal amount of the Credit respecting such Defaulting Contributor's obligations hereunder shall be not more than the sum of the net amounts payable by such Defaulting Contributor to the CFA in respect of the then most recent three (3) payment periods.

SECTION FIVE

Responsibilities of the CFA

5.1

5.2

5.3

5.4

5.5

5.6

5.7

a) to be paid to the National Contribution Fund;

b) to be paid by the Fund to the TSP for subsidy;

c) of contribution uncalled at the beginning of the month;

d) of contribution uncalled this month;

e) of uncalled contribution reclaimed this month;

f) of contribution uncalled at the end of the month; and

g) the date on which payment is due.

5.8

5.9

a) CFA Payments;

b) Consortium Costs;

c) Subsidy payments to NWTel as prescribed by the CRTC;

d) Subsidy payments to the small ILECs as prescribed by the CRTC;

e) Unpaid subsidies to the remaining LECs relating to prior periods; and

f) Any amount required to restore the NCF cash reserve to its minimum balance.

5.10

5.11

a) Determine the remaining contribution amount, being the total amount credited to the NCF, including surpluses from prior periods and any interest and penalties earned, minus the priority charges;

b) Determine the amount of the subsidy requirement due to each of the remaining LECs using the bands and rates per band approved by the CRTC from time to time;

c) Determine the total calculated in b) above and compare it to the remaining contribution amount available calculated in a) above to determine whether there is sufficient money in the NCF to pay all of the subsidies determined in b) above;

d) If pursuant to c) above, there is more due to be collected in contribution than paid in subsidy to the remaining LECs, then reduce each TSPs contribution pro rata;

e) For each TSP whose contribution has been reduced, record the amount of the reduction as uncalled contribution and also calculate the total uncalled contribution to date;

f) If pursuant to c) above, there is more subsidy to be paid to the remaining LECs than the contribution to be collected, then determine the additional contribution required and allocate that amount to each TSP pro rata on the sum of their contribution to date for the contribution year;

g) Deduct from each TSP uncalled contribution, to the extent possible, the amount of any contribution being reclaimed;

h) In the event that the additional subsidy required in excess of contribution is also in excess of the total of all uncalled contribution to date, take the amount of such excess from the NCF cash reserve;

i) If, pursuant to h) above, there is sufficient money in the NCF, pay the subsidy amounts due to each of the remaining LECs;

j) If, pursuant to h) above, there is insufficient money in the NCF, apportion the deficit to each of the remaining LECs by reducing the amount of subsidy due to each of these LECs in proportion to the overall deficit. For greater clarity, the calculation is represented as follows:

k) For each of the remaining LECs, the amount calculated in j) above will be included in their respective Payment and Receipt Advices. The Payment and Receipt Advices will also report the amount of unpaid subsidy payable to them; and

l) Any unpaid subsidy or reduction in the NCF cash reserve below the minimum balance becomes a priority charge for the following month.

For the purposes of this section (5.11), subsidy includes all subsidy payable in a month including adjustments to subsidy mandated by the CRTC, unless the CRTC has prescribed another manner in which such adjustments to subsidy is to be paid or received by the NCF.

5.12

5.13

5.14

5.15

5.16

5.17

5.18

5.19

6.1

6.2

6.3

6.4

6.5

7.1

7.2

7.3

7.4

7.5

7.6

7.7

7.8

7.9

Area A: Company identification

A.1 Legal name of entity

A.2 Name under which the telecommunications service provider (TSP) carries on business

A.3 List of related TSPs (provide separate list if required)

Area B: Contact information

B.1 Person who completed this form

B.2 Title of position

B.3 Telephone number

B.4 Fax number

B.5 Email address

Area C: Reporting year information - Attach copy of relevant financial statements

C.1 Reporting year

C.2 Fiscal year end

Area D: Calculation of Contribution-Eligible Revenues

D.1.A Total Operating Revenues reported in financial statements

D.1.B Add deductions from revenues

D.1 Total Operating Revenues for contribution purposes

LESS

D.2 Non-Canadian Revenues

D.3 Canadian Non-Telecommunications Revenues

D.4 Canadian Telecommunications Services Revenues
(D.1-D.2-D.3)

LESS

D.5 Contribution payments received

D.6 Inter-carrier payments

D.7 Retail Internet Service Revenues

D.8 Retail Paging Service Revenues

D.9 Terminal Equipment Revenues

D.10 Non-Contribution-Eligible Revenues eliminated from those bundles to which both contribution-eligible and non-eligible revenue are attributed

D.11 Subtotal D.5+D.6+D.7+D.8+D.9+D.10

ADD

D.12 Contribution-Eligible Revenues on package discounts

D.13 Contribution-Eligible Revenues D.4-D.11+D.12

·1 Supplier

·2 Services purchased

·3 Expense

·4 Total

1. I have personal knowledge of the matters hereinafter deposed to except where stated to be based on information and belief and where so stated I verily believe the same to be true.

2. As of the date of this Affidavit, I am ____________________ (corporate title) of the telecommunications service provider (TSP) ____________________ (provide legal name of corporation), a company that carries on business as _________________________ (where applicable).

3. Attached as Exhibit(s) 'X' to this my affidavit is the Annual Reporting Form, and supporting financial information and reports, of _________________________ (legal name of telecommunications service provider) filed with the Commission in accordance with its obligations pursuant to Changes to the contribution regime, Decision CRTC 2000-745, 30 November 2000 (Decision 2000-745).

4. The Annual Reporting Form and supporting financial information and reports, attached as Exhibit(s) 'X', are in compliance with the determinations, procedures and guidelines of the Canadian Radio-television and Telecommunications Commission ('CRTC') as set out in Decision 2000-745, Orders CRTC 2001-220 and 2001-221, Telecom Decision CRTC 2002-35, and any other subsequent procedures or directions issued or approved by the CRTC from time to time.

5. The information contained in Exhibit(s) 'X' is accurate and true.