Canada - Telecoms, Wireless and Broadband

Abstract

For those seeking high level strategic information and objective analysis on this region, this report is essential reading and gives further information on:

• Forecast growth in select telecommunication markets
• The emerging trends and convergence in Canadian voice, broadband and digital TV sectors
• How Canada is faring in terms of global broadband development
• The current and emerging broadband technologies and their long-term projections
• The growth of wireless voice and data and the deployment of 3G and 4G technologies
• Key information on the major telecommunication operators

• During 2008 overall telecom service revenues grew by an estimated 5% to approximately $40 billion. The majority of the growth was accounted for by the wireless and broadband sectors. In contrast, long-distance revenues fell by approximately 10%. It is estimated that for 2009, wireless and broadband together will account for over 60% of total telecom industry revenues.
• Competitors accounted for approximately 25% of telecommunication revenues. Cable companies, in particular, will continue to make significant inroads into local telephony markets as their cable telephony subscriber growth remains strong. By end-2009 it is estimated that cable telephony will account for close to 20% of total residential lines.
• Although wireless subscriber growth is forecast to be around 6-9% during 2009, wireless revenues are forecast to remain in double-digit growth, underpinned by growth in data services such as SMS and MMS.
• By 2009 around 95% of Canadian households with Internet access used broadband connections. However, in terms of overall broadband penetration, in the last six years Canada' s position in the OECD has slipped from second place to tenth place. In addition, in terms of prices, Canada' s broadband is ranked the third most expensive in the OECD.
• During 2007 and 2008 BCE negotiated to be acquired by Teachers Private Capital (the Ontario Teachers Pension Plan and the US-based private equity investment firms Providence Equity Partners Inc and Madison Dearborn Partners), in a transaction that was valued at around $50 billion. However, as a sign of the uncertainty created by the US financial crisis and the broader global economic downturn, the purchaser withdrew on the eve of the deal' s closure in December 2008.
• A significant outcome of the Advanced Wireless Services auction in 2008 was the decision by Bell Mobility and TELUS Mobility to jointly upgrade their networks to GSM. This was due partly to the decision to move to LTE as a 4G platform, but also due to the mandatory roaming agreements on which their new AWS licences are conditional.
• Such an upgrade will bring their networks in line with Rogers' GSM network, will give customers greater choice of handsets and will lower the costs involved in switching between operators, thereby facilitating new entry as well as greater competition between the incumbents. The upgrade, estimated at $1 billion, will be shared between the two companies and will be a major development for the industry in 2010. In mid-2009 SaskTel announced that it too would upgrade to GSM and MTS Allstream is expected to follow suit.
• Despite strong growth in demand for digital TV services, and although IPTV is an essential service in order for the telcos to compete in the triple play market, the telcos have been relatively slow to deploy IPTV. By 2009 there were five IPTV providers in Canada, namely Aliant TV, Bell TV, MTS TV, SaskTel Max and Telus TV. Nevertheless the number of IPTV subscribers is estimated to be less than half-a-million.
• The rate of IPTV deployment will be greatly dependent on the rate of deployment of FttH and FttN networks. FttH is still largely limited to Greenfield MDU developments. In addition, Bell' s earlier FttN deployment targets of passing four million homes by 2008 have been pushed out to 2012. Moreover, following an unfavourable CRTC decision in 2009, Bell may opt to further delay its FttN deployment.

• This report includes what we term scenario forecasts. By describing long-range scenarios we identify a band within which we expect market growth to occur. The associated text describes what we see as the most likely growth trend within this band.
• The projections shown in the tables in this report are based on our own historical information, as well as on telecommunication sector statistics from official and non-official, national and international sources. We assume a possible deviation of 15-20% around this data.
• All statistics for GDP, revenue, etc are shown in US$, in order to maintain consistency within and between markets. At the same time we acknowledge that this can introduce some irregularities.