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5.0 Telecommunications

5.4 Data and private line

This pie chart shows the data and private line revenues as a percentage of total telecommunications revenues in 2008. Data and private line: 11%; Telecommunications revenues: $40.3 billion.

In 2008, data and private line revenues were $4.3 billion, or approximately 11% of total telecommunications revenue, making data and private line the smallest telecommunications sector. In 2008, there were approximately 150 companies offering data and private line services. Of these, incumbent TSPs accounted for approximately 40%, and the alternative TSPs, such as cable BDUs, utility telcos, and resellers accounted for the remaining 60%.

Highlights

  • Data revenues increased 5.9% to $2.6 billion in 2008, while private line revenues increased 2.1% to $1.7 billion, resulting in an overall increase in data and private line revenues of 4.3%.
  • Data protocol services revenue continued to shift towards the new services, IP VPN (virtual private network) and Ethernet, with these services accounting for $1.3 billion, or 76% of data protocol revenues in 2008, up from 70% in 2007.
  • Alternative TSPs' share of data and private line revenues decreased from 36% in 2007 to 31% in 2008.

Description of services

Data services provide managed local area network (LAN) and wide area network (WAN) services for data, video, and voice networks within a metropolitan area or on a broader national or international scale. Data services include legacy protocols such as X.25 (packet switched network), asynchronous transfer mode (ATM); frame relay; newer protocols such as Ethernet and IP-VPN; and the provisioning and management of networks and network equipment.

Private line services provide the capability to link two or more locations over dedicated facilities for the purpose of transporting data, video, or voice traffic. Private line services include high-capacity digital transmission services (at speeds ranging up to gigabit speeds over fibre) and digital data systems, as well as voice-grade and other analogue services. Transmission facilities include copper wire, fibre optic cable, or satellite.

Sector analysis

In 2008, data and private line revenues were $4.3 billion or approximately 1% less than what they were in 2004. Over the 2004 to 2006 period, data and private line revenues were decreasing between 2.0% and 6.5% annually mainly due to the decline in private line and legacy data protocol service revenues. By 2007, private line revenues started to increase and the revenue growth in non-legacy data services exceeded the decline in legacy data protocols. In 2007 and 2008, data and private line revenues increased by 4.6% and 4.3%, respectively.

In 2008, data revenues increased 5.9% to $2.6 billion, and accounted for approximately 60% of total data and private line revenues. Private line revenues, at $1.7 billion, increased 2.1%. The increase in data revenues can be attributed to growth in newer data services such as Ethernet and IP-VPN. Revenues from these services now represent 76% of the data protocol revenues in 2008 as compared to 70% in 2007.

The incumbent TSPs, excluding their out-of-territory operations, were the major providers in the data and private line markets with revenues of $3.0 billion representing 69% of the data and private line revenues in 2008. The remaining $1.3 billion was generated by the alternative TSPs, of which 54% was generated by the incumbent TSPs' out-of-territory operations. The incumbent TSPs' out-of-territory operations share of the data and private line revenues decreased from 20% in 2007 to 14% in 2008, whereas the remaining alternative TSPs' revenue share remained relatively unchanged at 17%.

Data segment

The data protocol revenue market share of the incumbent TSPs, excluding their out-of-territory operations, increased from 53% in 2007 to 60% in 2008. With respect to their out-of-territory operations, their market share decreased from 25% in 2007 to 13% in 2008. The market share of the remaining TSPs increased from 22% in 2007 to 27% in 2008.

Data services are classified into one of three categories: (1) legacy data protocols such as X.25, ATM, and frame relay, (2) newer protocols such as Ethernet and IP-VPN, and (3) other services such as other protocols, network management, and networking equipment. Newer data protocol service revenues increased 23.0% from $1.1 billion in 2007 to $1.3 billion in 2008, whereas legacy service revenues declined 9.2%, decreasing from $478 million in 2007 to $434 million in 2008. Newer data protocol service revenues increased over the 2004 to 2008 period at approximately 23% annually as compared to legacy service revenues which declined by approximately 15% annually over the same period.

These trends are expected to continue given (i) the increased flexibility, capacity, and interoperability that the new generation of IP services provide, and (ii) that revenues from legacy services such as X.25, frame relay, and ATM networks are expected to decline. In addition to capturing revenue from the legacy data services, the newer data services also contributed to the flat growth in private line revenues due to their ability to cost effectively replicate the functionality, such as capacity, and security associated with private line services. Newer data protocol revenues have increased to the point where, by 2008, they captured over 76% of the $1.8 billion in data protocol revenues. The newer data protocols generated more revenues in 2008 than the legacy protocols did in 2004.

As noted above, the incumbent TSPs' data protocol revenue market share, when operating within their traditional territory, increased from 53% in 2007 to 60% in 2008. With respect to the newer data protocols, their revenue market share increased from 50% in 2007 to 61% in 2008, while their share of legacy data protocols remained constant at 57%.

Private line segment

Private line revenues were approximately 15% lower in 2008 than they were in 2004. Between 2004 and 2006, private line revenues declined annually by approximately 10%. Since then, private line revenues have started to increase. In 2007 and 2008, they increased annually at approximately 1 to 2%. The decline in private line revenues and the subsequent slow growth in private line revenues, compared to data services, could be attributed to, among other things, the newer data protocols, such as IP-VPN, that can replicate the functionality of private lines.

In 2008, the private line revenue market share for the incumbent TSPs' in-territory operations increased from 73 to 74%, while their market share for their out-of-territory operations decreased from 17 to 16%. The remaining alternative TSPs were unchanged at 10%.

With regard to short- and long-haul private line routes when operating within their traditional territories, the incumbent TSPs' revenue market share for short-haul routes decreased from 84% in 2007 to 82% in 2008; for long-haul routes, it increased from 65% in 2007 to 68% in 2008.

Data and Private Line - Statistical Tables and Charts

Table 5.4.1 Data and private line revenues ($ millions)

                    CAGR
  2004   2005   2006   2007   2008 2004-2008
Data                    
Data protocols 1,418   1,354   1,496   1,602 # 1,772 5.7%
Annual Growth 2.7%   -4.5%   10.5%   7.1%   10.6%  
Other 916   885   809   870   846 -2.0%
Annual Growth 14.1%   -3.4%   -8.6%   7.6%   -2.8%  
Total data and other 2,334   2,239   2,305   2,472 # 2,618 2.9%
Annual Growth 6.9%   -4.1%   2.9%   7.3%   5.9%  
Private Line                    
Short-haul 890   788   649   717 # 729 -4.9%
Annual Growth -5.3%   -11.5%   -17.6%   10.4%   1.8%  
Long-haul 1,151   1,066   1,016   964 # 986 -3.8%
Annual Growth -14.0%   -7.4%   -4.7%   -5.2%   2.3%  
Total private line 2,041   1,854   1,665   1,680 # 1,715 -4.3%
Annual Growth -10.4%   -9.2%   -10.2%   0.9%   2.1%  
Total data and private line 4,375   4,093   3,970   4,153 # 4,333 -0.2%
Annual Growth -2.0%   -6.5%   -3.0%   4.6%   4.3%  

Source: CRTC data collection

Figure 5.4.1 Data and private line revenue market share, by type of TSP

These two pie charts describe the percentage revenue market share of various industry participant groups for data and private line: Pie chart for 2007: Incumbent TSPs (excluding out-of-territory): 63%; Incumbent TSPs (out-of-territory): 20%; Non-incumbent alternative TSPs: 17%. Pie chart for 2008: Incumbent TSPs (excluding out-of-territory): 69%; Incumbent TSPs (out-of-territory): 14%; Non-incumbent alternative TSPs: 17%.

Figure 5.4.2 Data revenue market share, by type of TSP

These two pie charts describe the percentage revenue market share of various industry participant groups for data: Pie chart for 2007: Incumbent TSPs (excluding out-of-territory): 58%; Incumbent TSPs (out-of-territory): 21%; Non-incumbent alternative TSPs: 21%. Pie chart for 2008: Incumbent TSPs (excluding out-of-territory): 66%; Incumbent TSPs (out-of-territory): 12%; Non-incumbent alternative TSPs: 22%.

Table 5.4.2 Data protocol revenues, by service category ($ millions)

                    CAGR
  2004   2005   2006   2007   2008 2004-2008
New Protocols                    
Retail                    
Ethernet 427.4   391.1   469.9   488.5 # 474.1 2.6%
Annual Growth 21.7%   -8.5%   20.1%   4.0%   -2.9%  
IP-VPN 110.7   221.1   362.9   535.2 # 751.7 61.4%
Annual Growth 70.6%   99.7%   64.1%   47.5%   40.4%  
Total retail 538.1   612.2   832.8   1,023.7 # 1,225.8 22.8%
Annual Growth 29.3%   13.8%   36.0%   22.9%   19.7%  
Wholesale                    
Ethernet 44.4    49.6   86.7   90.0 # 99.4 22.3%
Annual Growth -7.7%   11.7%   74.8%   3.9%   10.4%  
IP-VPN 2.4   2.4   11.0   11.3   13.1 52.9%
Annual Growth 0.0%   0.0%   358.3%   2.4%   16.6%  
Total wholesale 46.8   52.0   97.7   101.3 # 112.5 24.6%
Annual Growth -7.3%   11.1%   87.9%   3.7%   11.1%  
Total new protocols 584.9   664.2   930.5   1,125.0 # 1,338.3 23.0%
Annual Growth 25.4%   13.6%   40.1%   20.9%   19.0%  
Legacy Protocols                    
Retail 732.4   640.6   509.4   415.2 # 373.1 -15.5%
Annual Growth -10.1%   -12.5%   -20.5%   -18.5%   -10.1%  
Wholesale 100.2   49.0   55.8   62.4   60.7 -11.7%
Annual Growth 0.5%   -51.1%   13.9%   11.8%   -2.6%  
Total legacy 832.6   689.6   565.2   477.5 # 433.8 -15.0%
Annual Growth -8.9%   -17.2%   -18.0%   -15.5%   -9.2%  
Total data protocols 1,417.5   1,353.8   1,495.7   1,602.5 # 1,772.1 5.8%
Annual Growth 2.7%   -4.5%   10.5%   7.1%   10.6%  

Source: CRTC data collection

Table 5.4.3 Data protocol revenue market share, by service category (%)

           
  2004 2005 2006 2007 2008
New data          
Incumbent TSPs (excluding out-of-territory) 70 63 57 50 61
Incumbent TSPs (out-of-territory) 14 17 24 29 13
Non-incumbent alternative TSPs 15 21 19 21 26
Legacy data          
Incumbent TSPs (excluding out-of-territory) 54 54 59 57 57
Incumbent TSPs (out-of-territory) 31 28 19 16 12
Non-incumbent alternative TSPs 15 18 23 26 31
Total data protocols          
Incumbent TSPs (excluding out-of-territory) 61 58 58 53 60
Incumbent TSPs (out-of-territory) 24 22 22 25 13
Non-incumbent alternative TSPs 15 19 20 22 27

Source: CRTC data collection

Figure 5.4.3 Private line revenue market share, by type of TSP

These two pie charts describe the percentage revenue market share of various industry participant groups for private line: Pie chart for 2007: Incumbent TSPs (excluding out-of-territory): 73%; Incumbent TSPs (out-of-territory): 17%; Non-incumbent alternative TSPs: 10%. Pie chart for 2008: Incumbent TSPs (excluding out-of-territory): 74%; Incumbent TSPs (out-of-territory): 16%; Non-incumbent alternative TSPs: 10%.

Table 5.4.4 Private line revenues, by service category ($ millions)

                      CAGR
    2004   2005   2006   2007   2008 2004-2008
Private Line                      
Retail                      
Short-haul   521   503   431   430 # 348 -9.6%
Annual Growth   5.0%   -3.5%   -14.3%   -0.3%   -19.0%  
Long-haul   732   660   634   576 #  549 10.4%
Annual Growth   -0.9%   -9.8%   -3.9%   -9.1%   -4.8%  
Total retail private line   1,253   1,163   1,065   1,006 #  897 0.2%
Annual Growth   1.5%   -7.2%   -8.4%   -5.6%   -10.9%  
Wholesale                      
Short-haul   369   285   217   287 #  381 -15.1%
Annual Growth   -16.9%   -22.8%   -23.9%   32.2%   32.9%  
Long-haul   419   406   382   387 #  437 1.1%
Annual Growth   -30.2%   -3.1%   -5.9%   1.4%   12.8%  
Total wholesale private line   788   691   599   674 #  818 -8.2%
Annual Growth   -24.5%   -12.3%   -13.3%   12.6%   21.3%  
Total private line   2,041   1,854   1,665   1,680 #  1,715 -4.3%
Annual Growth   -10.4%   -9.2%   -10.2%   0.9%   2.1%  

Source: CRTC data collection

Table 5.4.5 Private line - Short-haul and long-haul revenue market share (%)

  2004   2005   2006   2007   2008  
Short-haul                    
   Incumbent TSPs (excluding out-of-territory) 90   73   84   84   82  
   Incumbent TSPs (out-of-territory) 9   24   14   13   15  
   Non-incumbent alternative TSPs 1   3   2   3   3  
Long-haul                    
   Incumbent TSPs (excluding out-of-territory) 72   77   78   65   68  
   Incumbent TSPs (out-of-territory) 20   14   11   20   17  
   Non-incumbent alternative TSPs 7   10   10   15   15  
Total                    
   Incumbent TSPs (excluding out-of-territory) 80   76   80   73   74  
   Incumbent TSPs (out-of-territory) 15   17   13   17   16  
   Non-incumbent alternative TSPs 5   7   7   10   10  

Source: CRTC data collection

Figure 5.4.4 Data and private line service revenue distribution, by customer size and type of provider (2008)

The following combination column chart shows the relative revenue market share for data and private line for small business, medium business, large business, and very large business, for Incumbent TSPs (excluding out-of-territory), non-incumbent Alternative TSPs, and Incumbent TSPs (out-of-territory). The non-incumbent Alternative TSPs and the Incumbent TSPs (out-of-territory) are stacked, and the combined number will be known as Alternative TSP total. For small business: For Incumbent TSPs (excluding out-of-territory): 79%; For non-incumbent Alternative TSPs: 4%; For Incumbent TSPs (out-of-territory): 17%. Alternative TSP total is 21%. For medium business: For Incumbent TSPs (excluding out-of-territory): 60%; For non-incumbent Alternative TSPs: 18%; For Incumbent TSPs (out-of-territory): 22%. Alternative TSP total is 40%. For large business: For Incumbent TSPs (excluding out-of-territory): 52%; For non-incumbent Alternative TSPs: 28%; For Incumbent TSPs (out-of-territory): 20%. Alternative TSP total is 48%. For very large business: For Incumbent TSPs (excluding out-of-territory): 71%; For non-incumbent Alternative TSPs: 11%; For Incumbent TSPs (out-of-territory): 18%. Alternative TSP total is 29%.
  Date Modified: 2009-08-05

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