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Privacy and Security
Transparency

Executive summary

Access to communications services

Radio and television broadcasting, whether over the air, or over broadcasting distribution undertaking (BDU) networks, such as cable and satellite, is available to virtually to all Canadians. In 2008, approximately 90% of Canadian households subscribed to a BDU for programming services.

Canadians have access to advanced communications services. Approximately 94% of Canadian households can access broadband services using landline facilities. Satellite facilities extend this reach to virtually all households and are only limited by capacity constraints. Canadians can also access broadband mobile services. Approximately 91% of Canadians can access these services using handheld mobile devices.

In 2008, 52% of Canadian households subscribed to landline broadband Internet access services and over 99% of Canadian households subscribed to telephone service, using either landline or mobile devices.

Communications revenue growth

In 2008, these connections generated communications revenues of $54 billion, an increase of 6.0% over the previous year. Broadcasting revenues, representing 26% of this amount, increased 7% to $14 billion, whereas telecommunications revenues increased 6% to $40 billion.

Convergence

The deployment of high-capacity digital networks and the emergence of Internet Protocol (IP) as the standard for data transmission and delivery have facilitated the carriage of multiple types of data on a single network; this has been a major enabler of network convergence. Today's unified data networks are capable of delivering all forms of information, be it voice, data, text or video. In 2008, over 80% of communications revenues were generated by converged companies offering both broadcasting and telecommunications services.

Convergence in the communications industry can be observed through the behaviour of consumers. In 2008, approximately 25% of residential customers subscribed to service bundles that consisted of two or more of the following services: local telephone, Internet access, video, and mobile.

In 2008, excluding mobile revenues, almost 44% of cable companies' revenues were from telecommunications services. Similarly, broadcasting service revenues represented approximately 10% of the incumbent telephone companies' residential communications revenues.

Convergence in the communications industry not only changes the competitive landscape in Canada as companies enter each others' non-traditional markets; it also raises a number of regulatory and legislative concerns.

Competition

The communications service industry generally operates in a competitive environment. The Commission has rate deregulated all but a handful of the BDUs. The Commission has also forborne from economic regulation 77% of residential local exchange lines and 68% of business local exchange lines, representing 75% of all local revenues. With respect to the remaining telecommunications services, the Commission has forborne from economic regulation 94% of long distance, 80% of data and private line, 98% of Internet, and 100% of wireless service revenues. Overall, approximately 90% of total telecommunications revenues were from forborne services.

The alternative telecommunications service providers' (TSPs) share of total wireline telecommunications revenues continued to increase and reached 32% in 2008. The alternative TSPs' market share included the incumbent telephone companies' activities when operating outside of their traditional territories (7%), other facilities based TSPs such as cable companies and hydro utility companies with telecommunications activities (20%), and resellers (7%).

The large cable companies are major providers of high speed Internet service, as they have approximately 55% of high speed residential Internet subscribers in 2008. In 2005, they started to provide local telephone service generally over a managed IP network and by year-end 2008 they captured approximately 22% of local residential lines to become major competitors of the incumbent telephone companies in residential markets.

The competitors of the incumbent telephone companies which include incumbent telephone companies when operating outside of their traditional territories, continued to gain market share primarily due to the dramatic growth in local competition. Competitors had strong growth in their number of residential local lines, essentially cable BDUs, where competitor lines increased 34%. In the local business market, competitor lines decreased 7%.

Broadcasting

Of the $14 billion generated by the broadcasting industry, 11% was from radio broadcasters, 39% from television, and 50% from BDU broadcasting activities. BDU broadcasting revenue growth was 2.0 and 2.3 times greater than that of radio, and television respectively; BDU broadcasting revenues increased 10%; whereas private commercial radio revenues increased 5.2% and television revenues increased 4.4%.

Advertising revenues are a major component of the broadcasting industry. Generally, these revenues account for between 50 and 95% of the broadcasters' total revenues. Over the 2004 to 2008 period, commercial radio and conventional television advertising revenues increased 6.5 and 0.9% respectively; whereas, pay, pay-per-view (PPV), video-on-demand (VOD), and speciality television advertising revenues increased 9%. Internet advertising revenues however increased 56% over the same period. By 2008, Internet advertising revenues were at the same level as those from radio.

Radio

Private commercial broadcasters, representing 61% of radio and audio services, generated $1.6 billion in 2008, a 5% increase over the previous year. There were 1,213 radio and audio services in Canada in 2008, of which 59 were digital. Seventy-four percent of the radio and audio services were broadcast to English-language Canadians, 22% to French-language Canadians, and the remaining 4% was to third-language Canadians.

National average weekly hours tuned per capita have remained unchanged at 18.3 hours in 2008. On a per-listener basis, average weekly hours tuned declined 1% to 20.0 hours.

Although 45 AM stations were converted to FM since 2004, the average revenues per FM station remained relatively unchanged at approximately $2.6 million per station; whereas the average revenues per AM station increased from $1.6 million in 2004 to over $2.0 million in 2008.

Television

Television revenues in 2008 were approximately $5.5 billion. There were 707 television services. CBC/SRC conventional television, representing 8% of television revenues, had the highest revenue growth in 2008, increasing 16% to $412 million. Pay, PPV, VOD, and specialty services revenues increased 8% to $2.9 billion in 2008 and represented 54% of total television revenues.

Overall viewing of Canadian programs on Canadian English-language services remained relatively unchanged at 43% in 2008, whereas viewing of Canadian programs on French-language services decreased 1% to 64%. While drama & comedy continues to be the most popular type of programming, it is predominantly of non-Canadian content.

In 2008, 80% of English-language drama & comedy programs were non-Canadian and 67% of the French-language drama & comedy programs were non-Canadian.

BDU

The cable BDU footprint encompasses over 12.6 million Canadian households. In 2008, approximately 11.1 million or 90% of Canadian households subscribed to a BDU for television service, an increase of 2.8% over the previous year. Of those subscribing to a BDU, 24% subscribed either to a direct-to-home (DTH) or multipoint distribution system (MDS) BDU. The top 4 cable BDUs and the two DTH providers captured 90% of all BDU subscribers in 2008.

BDU programming revenues per subscriber per month¹ increased $3.57 or 7% to $53.36 in 2008.

New Media broadcasting

Canadians are benefiting from the wide spread availability of broadband services. A growing number of Canadians both Anglophone and Francophone use the Internet to watch videos (42% and 37%, respectively, in 2008). More Canadians are watching television programming online. The percentage of Canadians watching television programming in a typical week, including clips from television programs, increased 29% for Anglophones and 23% for Francophones.

Telecommunications

The vast majority of the $2.1 billion increase in telecommunications revenues is directly attributable to the 11% and 9% revenue growth of mobile phone and residential high speed Internet services, respectively. The number of mobile phone subscribers increased 9% in 2008. Canadians continued to embrace technologies including broadband access to the Internet as the number of residential subscribers to high speed Internet services increased by 9%.

To a lesser extent, overall industry revenues continued to benefit from the revenue growth of the newer data services that meet business customer requirements for increased speed, functionality, and cost-efficiency. These services now represent over 76% of the data protocol revenues, with data services such as Ethernet and IP-based virtual private networks having a combined revenue growth of 19%.

Regulatory developments

The Canadian Radio-television and Telecommunications Commission (Commission) has developed forward-looking policies and procedures in response to the challenges and the economic environment facing the communications companies. The Commission developed a new regulatory framework for BDUs that give the broadcasting system added flexibility while retaining the necessary regulations to achieve the objectives of the Broadcasting Act.

In response to the economic downturn, the Commission opted for shorter licence terms to give the large private conventional television broadcasters some flexibility during the current period of economic uncertainty. The Commission will also hold a policy proceeding in the fall of 2009 to address a number of policy issues including, but not limited to, group-based licensing, revenue support for conventional broadcasters, digital transmission issues, and spending requirements on Canadian programming.

The growing popularity of certain Internet applications, such as online video, can lead to network congestion. To address this, the Commission has launched a proceeding to examine the current and potential traffic management practices of Internet service providers operating in Canada.

With respect to telecommunications, the Commission continues with its action plan to review its regulatory measures with a view to ensuring that such measures are implemented in a manner consistent with the Policy Direction.²

How Canada compares Internationally

In terms of pricing, Canadian prices for wireline telecommunications service continue to compare favourably with other foreign jurisdictions. For wireless service, at a low-usage level Canadian rates are below those in the United States, but tend to be higher than in other countries surveyed. At a medium- and high-usage level, Canadian wireless rates are within the middle of the group of countries examined. For Internet service, Canada compares favourably for low-use broadband Internet service, and reflects a median price point for medium- and high-use baskets.

Canada has the highest proportion of households with broadband connections among the G7 countries. Broadband to the home in Europe is primarily supplied via digital subscriber line (DSL) technology over fixed telephone lines, whereas in Canada, consumers have more choice as broadband delivery is widely available over both cable and DSL.

Data collection

The data compiled for this report was obtained from a number of sources, the majority of which was collected using the Commission's data collection survey forms. Broadcasting data was generally for the twelve-month period ending 31 August and telecommunications data was for the twelve-month period ending 31 December. The financial data for the broadcasting industry does not reflect the economic downturn that started in the third quarter of 2008.

The Commission collaborates with other government agencies and departments such as Statistics Canada and Industry Canada to minimize the reporting burden on the industry. The data collected for monitoring purposes is also used by Statistics Canada for its national system of accounts. Additional questions are also added to meet these specific needs of Statistics Canada.

In 2009, the Commission also collaborated with Industry Canada to minimize the reporting burden on the industry. The Commission worked with Industry Canada to identify the availability of broadband Internet access service. The data, jointly collected, will assist Industry Canada in the administration of the $225 million broadband deployment initiative that was part of the federal government's economic incentive plan.

Data collection forms are reviewed annually to ensure that only relevant data is collected. The amount of data requested from the industry was reduced for all companies for this collection period. Smaller companies, with revenues less than $10 million generally, had a 50% reduction in the amount of data requested while larger companies, with revenues in excess of $100 million, had a 10% reduction.