CNAC Funding Mechanism

Canadian Numbering Administration Consortium Inc. ("CNAC") has been mandated by the Canadian Radio-television and Telecommunications Commission ("CRTC") to supervise the administration of numbering resources in Canada. The CRTC has also directed that certain elements of the telecommunications industry fund the costs of numbering administration. For additional information please see: http://www.crtc.gc.ca/cisc/eng/cisf3f1h.htm

Who is Required to Contribute

All Canadian Telecommunications Service Providers ("TSPs") that meet the "Eligible Person" criteria are required to contribute to funding numbering administration (an Eligible Person is a Canadian Carrier under the Telecommunications Act).

More specifically, a TSP will be an Eligible Person if it meets the "Eligibility Criteria for Shareholders" as defined in the CNAC Service User Agreement (CNAC SUA). The eligibility criteria are as follows:

a Person that is an ILEC, a CLEC, an Independent Telephone Company, a Canadian International Carrier, an Interexchange Carrier or a Wireless Service Provider.

How are Contribution Amounts Determined

TSPs that satisfy the above noted criteria are obligated to share in the funding of numbering administration. The funding share is paid annually by the applicable TSPs based on the individual TSP’s percentage share of the industry’s gross Canadian Telecommunications Service Revenues, subject to an annual minimum charge, plus an annual base-line fee.

Telecommunications Services Revenue is the revenue derived by the TSP from the following services (see Section 1.1 of the CNAC SUA):

services which are provided over the PSTN by Eligible Persons and which utilize Numbering Resources including, for greater certainty and without limitation, local exchange services, long distance services, wireless telephony services, and international long distance services; but shall exclude enhanced services (e.g. call answer, speed dialling, three-way calling), the sale or lease of terminal equipment (e.g. telephone sets, PBXs, key systems, answer-record machines, computers), the sale or lease of private lines, other private line and private network services, internet services, and paging services.

CNAC uses a third-party billing and collection agent (currently Welch LLP ("B&C Agent")) for the purposes of determining and collecting the applicable annual fee from applicable TSPs. TSPs are required to submit an annual reporting worksheet and other documents ("Annual Reporting Documents") that provide the company’s telecommunications service revenue for the preceding calendar year to Welch LLP by April 1 of the current year .This revenue data is used to determine the applicable annual fee to be paid by each company to fund the administration of numbering resources in Canada for the CNAC fiscal year which starts July 1 of each year and ends on June 30 of the following year. The B&C Agent uses lists maintained by the CRTC to determine the TSPs to be sent reporting worksheet requests and as a result it is important for each TSP to ensure that its company is on the proper CRTC list.

Following the fee determination, the B&C Agent sends an invoice to applicable TSPs setting out the applicable fee to be paid along with the applicable payment dates depending on the method of payment selected (ie. annual, quarterly, or monthly).

Annual Fee

The minimum charge and annual base-line fee is determined by the following table (as determined by consensus agreement of CSCN participants on August 28, 1998).

Annual Gross Revenues from Telecommunications Services¹	Percentage Share of Funding Costs² (A)	Baseline Fee (B)	Annual Fee³ (A+B)
Less than $5,000,000	% of Funding Costs ($50 Minimum)	$50	% of Funding Costs + $50 ($100 Minimum)
$5,000,000 or greater	% of Funding Costs ($1,250 Minimum)	$1,250	% of Funding Costs + $1,250 ($2,500 Minimum)

Notes:

As set out on Reporting Worksheet.
Percentage is determined by dividing the Eligible TSP’s Revenues by the aggregate of revenue reported by all Eligible TSPs on all Reporting Worksheets filed for the year.
Annual Fee is subject to GST or HST (or equivalent).

Additional Fees

In addition to the annual fee, the following additional fees may be appliable to compensate the B&C Agent and/or CNAC for additional processing:

Payment Frequency¹	Fee charged for payments made monthly or quarterly	Late Filing Fee²	Late Payment Fee³ (per payment date missed)	Suspension Fee⁴
Annual	-	$440	$330	$600 + $100/month
Quarterly	$100	$440	$330	$600 + $100/month
Monthly	$100	$440	$330	$600 + $100/month

Notes:

Fee is appliable to TSPs that select monthly or quarterly payment option for Annual Fee(maximum processing fee: Monthly: $1,200; Quarterly: $400).
Fee charged is Annual Reporting Documents (properly completed) are not filed by the April 1 due date.
Payment of fee is not made on or before applicable payment date. The late fee is charged on each late payment. Late payments will also be subject to 18% p.a. interest from original due date until amount is paid in full.
Fee charged is TSP is suspended by CNAC and monthly fee of $100 continues for each month that TSP remains suspended. The suspension fee and all other applicable fees are required to be paid in full prior to suspension being lifted.

Additional fees will be invoiced to the TSPs and such invoices are due upon receipt.

The filing of the Annual Reporting Documents and/or payment of the annual fee (including additional fees if applicable) is mandatory for Eligible TSPs. The failure to pay fees invoiced will result in additional fees being charged (see above) and will result in numbering resources being suspended and/or may result in numbering resources already issued being reclaimed from your company. The suspension of numbering resources or any reclamation may hamper your company’s ability to continue to carry on its telecommunications business.

The role of the Canadian Numbering Administrator (CNA) is being performed by COMsolve Inc. under contract with Canadian Numbering Administration Consortium Inc. (CNAC). The CNAC Privacy Policy and the www.cnac.ca Website Terms of Use may be found using the following links:
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