Telecom Commission Letter addressed to National Contribution Fund - Required Contributors

Ottawa, 7 October 2020

Our reference: 8663-C12-201503186

To : National Contribution Fund - Required Contributors

RE:  Contribution and Telecom Fees reporting for March 2021 – Calculation of contribution-eligible revenues

The purpose of this letter is to provide you notice of contribution and telecom fees reporting changes that will take effect for the March 2021 reporting.

In October 2019, Commission staff issued a letter advising of contribution reporting changes associated with the Commission’s Broadband Fund and when they would take effect, including:

• Retail Internet service revenues and retail paging service revenues would become contribution-eligible (i.e., no longer eligible for deduction) and 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.  Both of these changes were effective with the January 2020 data-month reporting to the Central Fund Administrator (CFA).
• For the 31 March 2021 annual revenue reports that are due to the Commission based on the 2020 fiscal year-ends, companies were told to report following the newcontribution 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 canbe deducted).
• For companies with non-December fiscal year-ends, supplemental information was going to be required to allow for balancing to the monthly filings with the CFA. The exact supplemental information required and how it will be provided would be identified in the fall of 2020.

While the calculation of contribution-eligible revenue for contribution purposes changed starting in January 2020, the calculation of contribution-eligible revenue for Telecommunications Fees Regulations purposes has not changed.

Therefore, reporting changes are required from what was identified in October 2019, so that the needs of both contribution and telecom fees can be met without requiring companies to submit two full separate reports.

Contribution reporting changes

For all companies, their March 2021 annual revenue reports are based on their 2020 fiscal year-ends and should be reported based on the contribution rules in effect for each month that makes up its fiscal period.  Compared to the October 2019 letter, this change only impacts non-December fiscal year-end companies.

• For December fiscal year-end companies, there is no change from the October 2019 letter.  They will still report based on the newcontribution rules (i.e., (a) retail Internet and retail paging revenues cannot be deducted and (b) inter-carrier payments related to retail Internet and/or retail paging revenues can be deducted) because their entire fiscal period occurred during 2020 when the new contribution rules were in place.
• For non-December fiscal year-end companies, this is a change from the October 2019 letter and it will eliminate the need for them to provide supplemental 2019 information.  They will now report based on (1) the old contribution rules for that portion of their fiscal reporting period that occurred during 2019 (i.e., (a) retail Internet and retail paging revenues can be deducted and (b) inter-carrier payments related to retail Internet and/or retail paging revenues cannot be deducted), and (2) the new contribution rules for that portion of their fiscal reporting period that occurred during 2020 (i.e., (a) retail Internet and retail paging revenues cannot be deducted and (b) inter-carrier payments related to retail Internet and/or retail paging revenues can be deducted).
  • For example, a company with an August fiscal year-end, reporting September 2019 to August 2020, will include (1) September to December 2019 information based on the old contribution rules and (2) January to August 2020 information based on the new contribution rules in its annual revenue report.
  • This reporting change will eliminate the need for supplemental information to be provided to allow for balancing to the monthly CFA filings.

In addition, the following changes will be made to form 601 (the annual revenue report):

• A new check-box field is being added requiring companies to confirm that they have attached their financial statements and statement of attestation (affidavit or audit report) to form 601 before they will be able to submit the form.  If the box is not checked, the company will not be able to submit the form.  The field is being added to ensure that companies attach the two required documents before submitting form 601, thereby eliminating the need for the form to be re-issued because the documents were not initially attached.
• The fiscal year-end field is changing to a drop-down box for the company to select the month of its fiscal year-end.  This field is being changed to allow for edit checks related to the reporting of retail Internet and retail paging revenue.

Telecom fee reporting changes

Since the telecom fee invoices will be issued following the old contribution rules, supplemental information will be required from all companies to allow for the conversion of their annual revenue report contribution-eligible revenue to the telecom fees contribution-eligible revenue without requiring two full separate reports.

The following changes will be made to form 702 (telecommunications fees invoicing information):

1. Line D.13 (Contribution-eligible revenues) on form 601 will be carried-forward to a new field on form 702 (item 1), similar to how line 1 on form 101 is carrier-forward to line D.1.A on form 601.  This change means that form 702 cannot be submitted until after form 601 has been submitted (similar to how form 601 cannot be submitted until form 101 has been submitted).
2. In a new field (item 2), companies will input the retail Internet service revenues they earned during that portion of their fiscal reporting period that occurred during 2020 that met the Commission approved deduction.  For example, (a) a December fiscal year-end company would provide its retail Internet service revenues for the 12 months of 2020 and (b) an August fiscal year-end company would provide its retail Internet service revenues for the 8 months that occurred in 2020.
3. In a new field (item 3), companies will input the retail paging service revenues they earned during that portion of their fiscal reporting period that occurred during 2020 that met the Commission approved deduction.  For example, (a) a December fiscal year-end company would provide its retail paging service revenues for the 12 months of 2020 and (b) an August fiscal year-end company would provide its retail paging service revenues for the 8 months that occurred in 2020.
4. In a new field (item 4), companies will input the amount of inter-carrier payments related to their retail Internet and/or retail paging revenues that occurred during 2020 and that they had claimed on line D.6 (Inter-carrier payments) on their contribution annual revenue report.
5. The system will calculate the company’s telecom fees contribution-eligible revenue based on the old rules as follows: item 1 - item 2 - item 3 + item 4.

For non-December fiscal year-end companies, the three new input fields are only for that portion of their fiscal period that occurred during 2020 (as they have claimed the related amounts for that portion of their fiscal year that occurred in 2019 on their contribution annual revenue report).

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).

Starting in 2020, the intention is 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).

Sincerely,

Original signed by

Kim Wardle
Director, Broadband Fund
Telecommunications Sector

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

Date modified:

2020-10-07