Telecom Commission Letter addressed to National Contribution Fund - Required Contributors

Ottawa, 7 October 2019

Our reference: 8663-C12-201503186

BY EMAIL

To: National Contribution Fund - Required Contributors

RE:   Follow-up to Telecom Regulatory Policy CRTC 2016-496 – Calculation of contribution-eligible revenues

The purpose of this letter is to provide you notice of the contribution reporting changes related to the Broadband Fund and when they will take effect.

In Telecom Regulatory Policy 2016-496, Footnote1 the Commission determined, among other things, that contribution-eligible revenues will be expanded to include both retail Internet access and texting service revenues. Footnote2 This change to the calculation of the revenue-percent charge is to take effect the first year of implementation of the Commission’s Broadband Fund.

The first year for the Broadband Fund will be 2020.

Contribution reporting changes

The following are the contribution reporting changes related to the Commission’s Broadband Fund:

  1. Retail Internet service revenues can no longer be deducted on line D.7 (retail Internet revenue) or line D.10 (for non-contribution-eligible revenues eliminated from bundles).
  2. Retail paging service revenues can no longer be deducted on line D.8 (retail Paging revenue) or line D.10 (for non-contribution-eligible revenues eliminated from bundles).
  3. Inter-carrier payments deducted on line D.6 (Inter-carrier payments) can include payments made to other telecommunications service providers for telecommunications services incurred to earn retail Internet and/or retail paging revenues, as these revenues will be contribution-eligible.

Effective date of the contribution reporting changes

The following are the dates that the contribution reporting changes outlined above will take effect:

  1. Starting with the January 2020 data-month, the monthly reporting to the Central Fund Administrator (CFA) (a) cannot include deductions for retail Internet or retail paging revenues and (b) can include the inter-carrier payments related to retail Internet and retail paging revenues.
  2. For the 31 March 2020 annual revenue reports that are due to the Commission based on the 2019 fiscal year-ends, the reporting should follow the current contribution reporting rules (i.e., (a) retail Internet and retail paging revenues can be deducted and (b) inter-carrier payments related to retail Internet or retail paging revenues cannot be deducted). Reporting is being done following the current rules to allow for balancing to the 2019 monthly filings with the CFA.
  3. For the 31 March 2021 annual revenue reports that are due to the Commission based on the 2020 fiscal year-ends, the reporting should follow the new contribution reporting rules (i.e., (a) retail Internet and retail paging revenues cannot be deducted and (b) inter-carrier payments related to retail Internet or retail paging revenues can be deducted). Reporting is being done following the new rules to allow for balancing to the 2020 monthly filings with the CFA.
    Companies with non-December fiscal year-ends will have to provide supplemental information for that portion of their annual revenue report period prior to January 2020 (e.g., a company with an August fiscal year-end reporting September 2019 to August 2020 will have to provide supplemental information for September to December 2019), related to their (a) retail Internet and retail paging revenues and (b) any related inter-carrier payments. This supplemental information is required to allow for balancing to the monthly filings with the CFA. The exact supplemental information required and how it will be provided will be identified in the fall of 2020.

Monthly collection of contribution

Subsidy and video relay service have a relatively stable collection and pay-out from month to month.

Under the Commission’s Broadband Fund, broadband collection and pay-outs will vary from month to month depending on the timing of broadband payments that need to be made each month.

As a result of these monthly variances, the uncalled contribution amounts will vary from month to month and required contributors need to be prepared to make any uncalled contribution payments to the CFA that are required in any given data-month.

Commission staff plans to provide a forecast of pay-out schedules, as information becomes available, to assist required contributors to plan for possible monthly collection variances.

Uncalled contribution at year end

Currently, any uncalled contribution that has not been distributed in a given year is forgiven at year-end through a Commission direction to the CFA in the annual revenue-percent charge decision.

Under the Commission’s Broadband Fund, not all monies will be collected and paid out during a given year (e.g., while allocated for payment, the $100 million for year one will not all be collected and paid out during 2020).

The revenue-percent charge decisions to be published starting in 2020 will identify that any uncalled Broadband Fund monies not collected and paid out during a given year will remain as uncalled contribution at year-end for future collection and pay-out (i.e., it will not be forgiven at year-end as it is today).

Sincerely,

Original signed by

Kim Wardle
Director, Broadband Fund
Telecommunications Sector

c.c.:  Julie Cook, CRTC, julie.cook@crtc.gc.ca
Jean-Philippe Lachapelle, CRTC, jean-philippe.lachapelle@crtc.gc.ca
Robert Thompson, CRTC, robert.thompson@crtc.gc.ca

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