Canada Communication Profile

Since the early 1990s the Canadian telecommunications market has been undergoing a process of progressive liberalisation. Competition was introduced firstly in the long-distance market, then the cellular market followed by the local fixed-line market. Canada made an early start with broadband and its initial development was managed relatively well, attaining the second highest broadband people penetration in the world by 2002. However, since then, Canada’s position has slipped dramatically. In the past few years Canada has made some evolution, rising from 20th in the OECD in terms of broadband people penetration to its current ranking of 11th. Canada’s broadband markets have as well ranked poorly in terms of prices and speeds.

Canada’s poor performance led to calls for a lighter-handed regulatory framework, and as a result several reforms were legislated in 2007 which resulted in the Canadian regulator issuing decisions in relation to numerous local residential fixed-line markets across Canada. Broadband deployment continues to evolution under active government encouragement, with over 95 % of Canadians living in communities served by high-speed Internet access by 2010. However, while government policy has encouraged widespread availability, Canadian regulatory policy has as well been blamed for the country’s poor ranking in world standings for broadband services. Limits on foreign ownership and inconsistent regulatory decisions, have lowered the amount of competition needed to spur new and better offerings.

Cable still leads DSL in terms of subscriber numbers, with DOCSIS 3.0 upgrades reigniting cable subscriber increase. The growing request for converged voice, data and TV services has been a strong driver behind the deployment of Next Generation Networks (NGN), in particular IP-based networks. Although a lot of of these developments have been led by the cable companies, the ongoing decline in traditional fixed line revenues is compelling the incumbent telcos to modernise their network infrastructure. DSL operators such as Bell Canada and SaskTel have invested large sums of money in FTTN and VDSL services that allow them to offer the same services as their cable counterparts. In contrast, despite the large number of WiMAX spectrum licences in the market, WiMAX developments have been largely a niche market. This may change with Barrett Xplore’s plans for a nationwide WiMAX network complimented by a 4G satellite network by 2012.
 

Canada’s wireless industry has experienced rapid increase since its inception in 1985, driven by advances in cellular technology, the deregulation of the Canadian telecom industry and significant switching from wireline to wireless services.

Following a decade of market consolidation, in early 2011 the wireless market remained largely dominated by Rogers Wireless, Bell Mobility and TELUS Mobility. However, due to the federal government’s Advanced Wireless Services auctions in 2008, the prospect of increased competition emerged as a number of new entrants prepared to establish themselves as wireless service providers across the country.

Canada currently ranks 12th in the OECD for broadband penetration, down from second place in 2002. Canada’s broadband markets as well continue to rank poorly in terms of prices and speeds. Nevertheless, government policy has encouraged widespread availability, particularly to rural and regional areas, such that approximately 95% of Canadians live in communities served by broadband access.

Market highlights:

• During late 2010 and early 2011 new mobile providers had launched services, namely Globalive’s Wind Mobile, newly created Public Mobile, Mobilicity and finally cableco Vidéotron’s Vidéotron. Meanwhile cableco Shaw Communications has stated its intention to launch wireless services in 2012.
• Whilst the presence of new entrants offering largely low-cost services and handsets may not have a sizeable impact on the in general market share of the likes of Rogers, Bell and TELUS (who collectively account for around 94% of Canada’s wireless market), the entry of the large cable companies such as Vidéotron Itee and Shaw Communications into the wireless market is additional likely to pose a threat to that dominance.
• In the broadband market, cable still leads DSL in terms of subscriber numbers, with DOCSIS 3.0 upgrades reigniting cable subscriber increase, whilst fibre deployments are starting to gain momentum.Following Barrett Xplore’s planned deployment of a nationwide WiMAX network complemented by a 4G satellite network, rural Canadians can look forward to faster broadband with higher bandwidth allowances.
• Following a lengthy review process, in May 2011 the CRTC announced a new target for ‘basic’ broadband access across Canada. The CRTC stated that by the end of 2015 amount Canadians should have access to broadband speeds of at least 5Mb/s for downloads and 1Mb/s for uploads.

Note: Dollar amounts are in Canadian $ unless otherwise stated.

Broadband Market
Canada is not part the leading OECD nations for broadband penetration, though operator investments both in fixed-line and mobile technologies are addressing shortfalls. Government policy has encouraged widespread broadband availability, particularly in rural and regional areas, resulting in 95% of Canadians being able to access broadband. Cable still leads DSL in terms of subscriber numbers, with networks upgraded with DOCSIS 3.0 technology igniting cable subscriber increase as services of up to 200Mb’s become additional widely available. Fibre deployments are as well gaining momentum. Prominent WiMAX network deployments include those of Barrett Xplore and Shaw Communications, which in early 2012 abandoned plans for a cellular network in favour of WiMAX/WiFi. The regulator has as well upgraded the targets for basic broadband to be 5Mb/s downloads by the end of 2015. This should lead to a period of sustained development in the Canadian regional broadband sector. This statement provided updated statistics, analysis and forecasts on the Canadian fixed-line and mobile broadband sector, providing statistical overviews and an analysis on operator strategies.

Bell acquires Quebec’s Astral Media for C$3.38 billion; Shaw Communications begins extending its WiFi network; Eastlink launches 200Mb/s service; Rogers Communications discontinues WiMAX service; regulator’s mid-2011 market data update; company operating and financial data to Q1 2012; market developments into 2012.

Digital TV Broadcasting

Canadian TV and video markets are experiencing significant changes, characterised by convergence with digital media, broadband and telecommunications services. Cable TV operators and telcos, and to a lesser extent satellite companies, are increasingly competing for the triple play consumer. The slow but steady transition from analogue to digital TV is increasing the use of new products and services such as VoD and High Definition services. Rising broadband penetration continues to drive the triple play market, with around 95% of amount Canadian households passed by broadband networks by early 2010. Broadband penetration is as well fostering the emergence of IPTV and is driving the migration from traditional circuit-switched telephone lines to VoIP telephony.

Telecoms, Broadband and Wireless

The convergence of voice, internet and TV continues to bring Canadian telcos and broadcasting operators together as direct competitors in the emerging market for bundled services. Broadband and wireless revenues will underpin the sector’s revenue increase during the next few years, with the key drivers being wireless data and content inclunding the steady increase in the broadband subscriber base. Wireless data revenue will be bolstered by the fast-expanding footprint of LTE and HSPA networks, which has been the focus of network operator investment for the last few years. Broadband penetration remains part the lowest in the OECD, though efforts from both the government and operators will address shortcomings and focus delivery of services on the fibre sector. This will lead to a slow contraction of the DSL subscriber base as customers are migrated to FttH networks. A stimulus for FttH expansion part telcos has come from cablecos whose upgraded networks now commonly offer up to 200Mb/s. This statement provides a broad range of key statistical data on the major telecoms segments, together with an overview of each major sector, an analysis of market developments and an assessment of operator strategies.

Government proposes relaxation of foreign company ownership rules in telecom sector; regulator’s policy to migrate telcos to IP networks; company data to Q1 2012; regulator’s mid-2011 market data update; market developments into 2012.

Infrastructure - FttH, NGNs & IP Networks

Canada's national telecom infrastructure is predominantly based on a copper-wire circuit switched network. Since the mid-1990s, Canada's telecom infrastructure has been undergoing significant modernisation, driven largely by the request for cable television and broadband services. In particular, the growing request for converged voice, data and TV services is driving the deployment of Next Generation Networks in the form of IP-based networks. Although a lot of of these developments have been led by the cable companies, the ongoing decline in traditional fixed-line revenues is compelling the incumbent telcos to modernise their network infrastructure, by deploying optical fibre deeper into the network, albeit at slower deployment rates than other developed nations. In addition to the cable and telco networks, there are a number of NGNs emerging in the public and not-for-profit arenas.

Major Telecommunication and Cable Operators

The major operators in the Canadian telecommunications are broadly categorised as either incumbents or competitors. Incumbents are the telephone companies that provided telecom services on a regional monopoly basis prior to the introduction of competition and include the out-of-territory affiliates of the incumbents. There are a number of categories of competitors, with most competition coming from the cable sector in the form of rapidly expanding cable broadband, VoIP and additional recently mobile services.

Wireless Communications

The Canadian wireless industry has witnessed relatively strong subscriber increase since the country began to emerge from economic recession in late 2009. Although wireless penetration remains low by OECD standards, the emergence of new entrants in recent years, inclunding the proliferation of cheaper voice and data plans, is stimulating multiple-SIM card use. The continuing decline in voice revenues per subscriber is generally offset by data revenues which averaged about 45% increase in 2011 and an anticipated 35-40% for 2012.

Data revenues will become even additional significant for sector in coming years in light of their upgrades to HSPA+ networks and the rapid expansion of 4G LTE platforms: network operators plan to extend their LTE offers to at least half of the people by the end of 2012, while a number of smaller regional players are as well active in the market. The Advanced Wireless Services auction of 2008 overhauled Canada’s wireless market providing a number of new entrants. With the exception of Shaw Communications, which recently opted to pursue a WiFi strategy, amount have become players contributing to market competition.