2010 Canada - Telecoms, Wireless, Broadband and Forecasts

Although Canada’s telecommunications sector was among the most advanced in the world in the early 2000s, by 2010 Canada’s performance in areas such as broadband penetration and wireless penetration was trailing many of its OECD counterparts. In addition, while telecom services revenue growth has been exceeding GDP growth in recent years, it has so by only around threefold, a modest factor by comparison to global ratios of communications industry to GDP growth.

Despite slowing wireless subscriber growth, wireless revenues are being underpinned by strong wireless data revenue growth. Significantly, the launch by Bell Mobility and TELUS of their HSPA networks will further drive data use and will continue the paradigm shift from largely voice-centric to increasingly data-centric wireless services. In addition, five new operators are in the process of entering the market which should reinvigorate subscriber growth, at least in the budget segment of the market.

Furthermore, the deployment of new and the expansion of existing FttN networks will provide much-needed stimulus to the lacklustre broadband penetration levels and speeds. The government has also pledged to provide federal funding support, of up to 50% of costs, for successful applicants who are prepared to deploy a broadband network to rural Canadians.

Perhaps most significantly, in early 2010 the government announced the elimination of the foreign investment restrictions applicable to a number of economic sectors, including the satellite and telecommunications industries. The aim, generally speaking, is to open up access to capital and foreign investment for the Canadian telecommunications sector, which in turn should enable telecommunications providers to invest in and adopt new technologies faster than they would otherwise be able to.

Market highlights:

• Despite Canada’s comparatively low broadband penetration rate, by early 2010 there were positive signs of a growing momentum towards increased fibre deployments and DOCSIS upgrades. For instance, although Bell has pushed out is FttN target timelines, by early 2010 its FttN network was available to around 3 million homes with subscribers numbering half a million and increasing at around 50% per annum. Meanwhile in Western Canada, Telus has also been increasing the rate of its FttN deployment, achieving coverage of more than 75% of households in its top 50 communities.
• Cable telephony subscriber numbers of the four major cable companies combined are increasing by around 30% per annum reaching and by early 2010 this figure had grown to 3.2 million. As Canada has among the highest rates of cable broadband per capita, there remains significant scope for these companies to continue growing their new telephony businesses.
• Canada’s wireless penetration, in terms of subscribers per capita, continues to lag behind other G8 countries. With a national wireless penetration rate of around 70% in early 2010, Canada is still a long way behind the USA which has estimated penetration of over 90%.
• However, during 2010/11 there is likely to be resurgent subscriber growth following the entry of some five new players. Globalive’s Wind Mobile launched services over a 3G network in Toronto in December 2009, while newly created Public Mobile planned to launch mobile services in early-to-mid-2010. Another two, Dave Wireless’ Mobilicity and cableco Vidéotron’s Vidéotron Wireless, both planned to launch by the middle of 2010. The fifth new entrant, the cable company Shaw Communications, signalled its intention to enter the wireless market in late 2011.
• During 2009 wireless data growth rates averaged around 35% across the major wireless providers, as the popularity of non-voice wireless services such as email, social networking, Internet browsing, music and video downloads, mobile TV, satellite radio and text, multi-media and instant messaging grows apace. The growth was largely due to the 3G upgrades and the rapid uptake of smart phones such as the iPhone.
• The rapid growth of wireless data in recent years is expected to be even stronger during 2010/11, due to further network upgrades to HSPA+ and then again around 2011/12 due to upgrades to 4G LTE. Significantly, the increasing availability of mobile broadband will bring a commensurate shift from traditional voice calling to mobile VoIP usage. Indeed it is anticipated that mobile VoIP calling will constitute approximately half of all mobile voice traffic within ten years.
• During 2009 and early 2010 smart grid developments in Canada were gathering pace. For instance, Hydro One, Ontario’s electricity transmission company, surpassed the key milestone of having installed one million smart meters by mid-2009, then the largest smart meter deployment by a utility in North America. Consistent with the Green Energy Act, Hydro One was on track to install a smart meter in every home and small business in Ontario by end-2010. By summer 2010 one million households are expected to be participating in the Time-of-Use energy pricing system and by mid-2011 approximately 3.5 million households will be availed of the system.

Forecast residential DSL, cable, FttH and 4G wireless broadband subscribers – higher market growth scenario – 2011 - 2015

(Source: BuddeComm forecasts)

Data in this report is the latest available at the time of preparation and may not be for the current year.