2012 Canada - Telecoms, IP Networks, Digital Media and Forecasts

FttH offers expanding in the wake of market challenge from cablecos

BuddeComm’s latest annual publication, Canada – Telecoms, IP Networks, Digital Media and Forecasts, provides a comprehensive overview of the trends and developments in the telecoms and digital media sectors in one of the world’s more progressive markets. The report includes the regulator’s mid-2011 market data update, company operating and financial data to Q1 2012, and market developments into 2012.

Telecom sector background

Canada’s fully privatised telecom market is dominated by the incumbents Bell Canada, TELUS, Bell-Aliant, MTS and SaskTel. Smaller operators including cablecos and utility telcos serve a range of municipal areas. Despite competition, the five largest companies control the large majority of telecom sector revenue. Service revenue has grown steadily in recent years, bucking the trend for stagnant or negative growth seen in many other developed markets. Although growth has slowed since 2007, it continues to be supported by the broadband sector and data services (both broadband and wireless), which are compensating for falling fixed-voice revenue Wireless revenue now comprises almost half of total telecom revenue, compared to a third in 2006.

Broadband sector

Canada’s slide in OECD broadband rankings in recent years has enervated the government and regulator to step up policies to widen the availability of broadband and improve accessible data rates. The market remains dominated by the major incumbents which has resulted in limited effective competition in the DSL sector. Nevertheless since 2009 there has been a notable increase in fibre deployments and DOCSIS upgrades, and the next two to three years will see telcos expedite their FttH network roll outs in response to cablcos’ expanding the reach of their 100Mb/s and 200Mb/s offerings.

Wireless broadband has become a realistic alternative to fixed-line broadband, with the deployment of WiMAX networks supplemented by the expanding reach of HSPA and LTE. Shaw Communications has stepped up its WiMAX efforts, since deciding using its spectrum allocation to develop a more expensive cellular network, though Rogers Communications in early 2012 ended its WiMAX offering, choosing instead to use its spectrum allocation for LTE.

Mobile sector

The mobile sector received a boost since the market entry of four new players which had obtained AWS spectrum in 2008. Despite these new entrants, the market is expected to remain relatively concentrated for at least the next three to five years. On a national level three carriers alone together account for more than 90% of the market by subscribers. However, on a provincial level the provision of wireless services is dominated by the local fixed-line incumbent. Revenue is expected to climb steadily during the next few years as operators capitalise on mobile data services made more practicable for consumers by the proliferation of available devices and more capable networks.

Key telecom parameters – 2010; 2013

(Source: BuddeComm)

Market Highlights

• Rogers Communications recently discontinued its ‘Portable Internet’ WiMAX service, instead focussing on its 3G and 4G mobile broadband networks. The move followed the accession by the regulator that Rogers and Bell could convert their use of 2.5GHz spectrum from fixed (including WiMAX) to mobile use.
• Given market constraints and the cost of deploying broadband to thinly populated regional areas, the regulator in mid-2011 upgraded the target for basic broadband access across Canada, aiming for a minimum 5Mb/s service by 2015.
• The cableco Shaw Communications withdrew from the wireless market in favour of developing a WiFi alternative, citing the high cost of deploying the former and the uncertain returns on investment expected from a competitive market.
• In early 2012 the regulator introduced a policy to encourage telcos to migrate to IP throughout their networks, aiming to phase out voice circuit-switched technology and so end the need for operators to convert IP voice traffic to the older TDM standard where necessary.
• The fibre sector has developed strongly in recent years as telcos respond to cablecos’ offerings based on DOCSIS3.0 technology. SaskTel is investing around $670 million in an FttH network to 2019, while Bell Canada has launched an FttH services across Quebec City offering downloads of up to 175Mb/s.

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