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CRTC Communications Monitoring Report

2012

Previous Table of Contents

Appendix 1 - Data collection and analysis

Data collection

Statistics Canada and the CRTC collect data jointly under the authority of the Statistics Act, the Broadcasting Act, and the Telecommunications Act. Statistics Canada uses the data to develop national accounts, and the CRTC uses it to monitor the broadcasting and telecommunications industries’ performance and adherence to regulations.

Broadcasting

Data collected are used to measure the financial performance of broadcasters and their contribution to the Canadian economy. The data collection process targets all broadcasting service providers licensed by the CRTC to operate private, public, and non-commercial radio, television, and broadcasting distribution services, as well as pay, pay-per-view, video-on-demand, and specialty services. Broadcasting licensees file annual returns outlining financial and statistical information for each broadcast year. The key results of the data collection process are used to produce annual financial and statistical summaries of revenues and expenditures, such as expenditures on Canadian and international programming. These summaries are published on the CRTC’s website at http://www.crtc.gc.ca/eng/stats.htm.

The broadcasting regulations require broadcasting service providers to complete an annual survey. Except for a small number of small radio service providers, broadcasting service providers access and submit the survey forms electronically using the CRTC’s secure web‑based DCS. In mid-October each year, the survey is mailed to the small radio service providers that do not have access to the DCS. The survey covers the 12-month period ending 31 August of that year. All broadcasting service providers have until 30 November to complete and submit their respective annual survey forms.

As part of the annual return process, commercial radio broadcasters must report on their contributions to CCD. BDUs must submit information regarding their contributions to the creation and production of Canadian programming. This information enables the CRTC to ensure that radio licensees are complying with their conditions of licence or regulatory requirements relating to CCD contributions and that broadcast distribution licensees are fulfilling their obligations regarding the creation and production of Canadian programming, including contributing to the CMF, LPIF, independent funds, and local expression.

Telecommunications

As part of its monitoring activities, the CRTC uses the data collection process to maintain and update its data on (i) TSP registration lists, (ii) the contribution regime, (iii) telecommunications fees, and (iv) the telecommunications service industry.⁹

TSPs are classified into one of two groups: Group 1 TSPs and Group 2 TSPs. Group 1 TSPs generally (i) have significant telecommunications revenues, (ii) file tariffs, or (iii) have international licences. Group 2 TSPs generally have lower revenues than Group 1 TSPs.

Each TSP is required to complete and submit a registration form to the CRTC annually. The CRTC uses the information contained in the form to update certain basic information about that TSP and to determine which additional forms, if any, are to be issued to the TSP. Group 1 TSPs must access and submit the registration form electronically using the CRTC’s secure web‑based DCS. The CRTC contacts these TSPs by email at the start of the data collection process each year and provides them with (i) the due dates for submitting the registration form and any additional data forms, and (ii) the information needed to access the DCS. Group 2 TSPs, on the other hand, are mailed a registration form for completion. Submission of this form generally marks the end of the data collection process for the Group 2 TSPs.

Group 1 TSPs are required to submit a range of company‑specific information, including financial data (e.g. an income statement, a balance sheet, and capital expenditure information), along with detailed telecommunications information focused on products and geographic markets. Geographic markets are defined on a national, provincial/territorial, regional, local exchange, or city basis. The data submitted are as of 31 December each year.

Data analysis

Broadcasting

The CRTC performs a compliance analysis using the financial data from the annual returns submitted by all broadcasting service providers. The objectives of this analysis are as follows:

• to ensure that the summary of financial data for operations connected to the licensee, included in the annual return, corresponds to the data presented in the financial statements required of broadcasting licensees in accordance with Circular No. 404;
• to reconcile broadcasting licensees’ actual expenditures on Canadian programming with the expenditures required by the licensees’ conditions of licence;
• to reconcile broadcasting licensees’ actual contributions to CCD with the contributions required by the licensees’ conditions of licence; and
• to then proceed with a percentage or ratio analysis of the trends in the major categories of revenue and expenditures listed in the annual forms over a five-year period, particularly with reference to the previous year. 

The CRTC then publishes financial and statistical summaries for the four major broadcasting categories (i.e. commercial radio; conventional television; broadcasting distribution; and pay, pay-per-view, video-on-demand, and specialty services). The data from the annual returns are also used to prepare this report.

Revisions may be made to the financial and statistical summaries, and to this report, after they are published. These revisions are generally the result of late receipt of data, modifications made by broadcasting licensees to previously filed data, or errors detected following data publication. The revisions do not generally have a major impact on the results of the data collection process.

Telecommunications

The CRTC analyzes TSPs’ returns to ensure that the data provided by the TSPs is as anticipated and that the TSPs have provided a complete response. The CRTC then follows up with TSPs as required to resolve or obtain explanations of any anomalies. The CRTC subjects the data to computerized edits designed to ensure accuracy and internal consistency. For large enterprises, the CRTC compares reported data to audited financial information and investigates any major discrepancies. The CRTC then makes a year-over-year comparison to identify any radical or unexplained changes and follows up with TSPs if necessary. Finally, the CRTC determines the data’s validity by performing a time series analysis or by comparing the data or their derivatives (such as average revenues per line or minute) with other established benchmarks.

Certain figures published in the monitoring report from previous years may be restated for consistency. Other figures may change as a result of some companies resubmitting previous years’ data. In addition, certain data may be reclassified to better reflect market segments or industry developments. These changes are identified by a number sign (#).

Most of the tables and figures included in this report are derived from the data submitted via the DCS, while others are derived using data from Statistics Canada and Industry Canada. Inconsistencies in data may arise between data sources given that the companies surveyed, the definitions used, and the level of detail requested may differ for each source. The data source is therefore identified beneath each table and figure in the report.

Appendix 2 - Classification of Canadian TSPs

For regulatory purposes, TSPs operating in Canada are classified into two broad categories, incumbent TSPs and alternative TSPs, as described below. The category into which a given TSP falls may change from one year to the next as a result of consolidation in the industry. The classification of TSPs’ affiliated entities that provide telecommunications services is based on their affiliate relationship with the TSP. For example, if a wireless TSP is affiliated with a TSP, the wireless TSP takes the same classification as the TSP to which it is affiliated. Affiliates of non-TSPs are classified according to the structure set out below.

1. Incumbent TSPs are the companies that provided telecommunications services on a monopoly basis prior to the introduction of competition. For the purpose of this report, these companies’ operations outside their traditional operating territories are included in the alternative TSPs category. Incumbent TSPs are subdivided into large and small TSPs.
   1. Large incumbent TSPs serve relatively large areas, usually including both rural and urban populations, and provide wireline voice, Internet, data and private line, wireless, and other services. The large incumbent TSPs are Bell Aliant, Bell Canada, MTS Inc., Northwestel, SaskTel, Télébec, and TCC.
   2. Small incumbent TSPs serve relatively small geographical areas (mostly municipal areas generally located in less densely populated areas) in Ontario, Quebec, and, in one instance, British Columbia. Due to the limited size of their serving areas, these companies do not typically provide facilities‑based long distance services. However, they provide a range of wireline voice, Internet, data and private line, and wireless services. Examples of small incumbent TSPs are NorthernTel and TBayTel.
2. Alternative TSPs are either i) TSPs that are not incumbent TSPs as described in 1) above or ii) incumbent TSPs conducting out‑of‑territory operations, such as Bell Canada conducting operations in Alberta and British Columbia and Allstream Inc., an affiliate of MTS Inc. conducting operations across Canada. Alternative TSPs are subdivided into facilities-based and non-facilities-based TSPs.
   1. Facilities‑based alternative TSPs own and operate telecommunications networks. This group is further subdivided into facilities-based incumbent TSPs (out-of-territory) and facilities-based non-incumbent TSPs.
      
      Facilities‑based non‑incumbent TSPs are further subdivided into cable BDUs, utility telcos, and other carriers.
      • Cable BDUs are the former cable monopolies that also provide telecommunications services (e.g. wireline voice, Internet, data and private line, and wireless services). These TSPs include such companies as Bragg, Cogeco, Rogers, Shaw, and Videotron.
      • Utility telcos are TSPs whose market entry or whose corporate group’s market entry into telecommunications services was preceded by a group‑member company’s operations in the electricity, gas, or other utility business.
      • Other carriers own physical transmission facilities (e.g. intercity, intra‑city, or local transmission facilities). These TSPs include such companies as Xplornet.
   2. Non-facilities‑based alternative TSPs do not own or operate a telecommunications network. These companies are referred to as resellers, since they generally acquire telecommunications services from other TSPs and either resell those services or create their own network from which to provide services to their customers. Examples of non-facilities-based TSPs are Distributel, Primus, Yak, and independent ISPs.

Appendix 3 - Status of local forbearance - Residential and business exchanges (as of 30 June 2012)

Major centre	Number of local exchanges	Number of forborne exchanges		Number of forborne exchanges as a percentage of total exchanges in the major centre
		Residential	Business	Residential	Business
British Columbia
Vancouver	19	17	16	90	84
Victoria	4	3	3	75	75
Remaining exchanges	259	45	49	17	19
Provincial total	282	65	68	23	24
Alberta
Calgary	8	3	3	38	38
Edmonton	27	10	12	37	44
Remaining exchanges	303	24	26	8	9
Provincial total	338	37	41	11	12
Saskatchewan
Saskatoon	10	1	1	10	10
Regina	5	1	0	20	0
Remaining exchanges	214	8	3	4	1
Provincial total	229	10	4	4	2
Manitoba
Winnipeg	14	1	1	7	7
Remaining exchanges	230	5	0	2	0
Provincial total	244	6	1	3	0
Ontario
Toronto	50	45	20	90	40
Ottawa/Gatineau	28	19	3	68	11
Hamilton	12	9	5	75	42
London	16	9	1	56	6
Kitchener	8	8	2	100	25
St. Catharines/Niagara	13	7	2	54	15
Windsor	11	2	2	18	18
Oshawa	8	7	2	88	25
Remaining exchanges	531	84	27	16	5
Provincial total	677	190	64	28	10
Quebec
Montréal	40	39	11	98	28
Québec	17	10	2	59	12
Remaining exchanges	518	113	31	22	6
Provincial total	575	162	44	28	8
New Brunswick
Fredericton	2	2	1	100	50
Remaining exchanges	86	22	20	26	23
Provincial total	88	24	21	27	24
Nova Scotia
Halifax	16	7	7	44	44
Remaining exchanges	131	44	44	34	34
Provincial total	147	51	51	35	35
Prince Edward Island
Charlottetown	4	1	1	25	25
Remaining exchanges	22	10	9	46	41
Provincial total	26	11	10	42	39
Newfoundland & Labrador
St. John’s	6	1	1	17	17
Remaining exchanges	206	0	0	0	0
Provincial total	212	1	1	1	1
All provinces	2,818	557	305	20	11

Source: CRTC Data collection

Appendix 4 - International pricing assumptions

Below is a summary of the assumptions and methodology used in developing aggregate pricing indices for the international price comparisons shown in Table 6.1.1.

Table A.4.1 Service providers surveyed

City	Service basket	Service providers
Canada
Halifax NS	Wireline	Bell Aliant, EastLink
	Wireless	Bell, TCC, Rogers
	Broadband Internet	Bell Aliant, EastLink
	Mobile Internet	Bell, TCC, Rogers
	Bundles	Bell Aliant, EastLink
Montréal QC	Wireline	Bell, Videotron, Primus
	Wireless	Bell, TCC, Rogers, Primus, Videotron, Public Mobile
	Broadband Internet	Bell, Videotron, Primus
	Mobile Internet	Bell, TCC, Rogers, Videotron
	Bundles	Bell, Videotron, Primus (excluding digital TV)
Toronto ON	Wireline	Bell, Rogers, Primus
	Wireless	Bell, TCC, Rogers, Primus, WIND, Mobilicity, Public Mobile
	Broadband Internet	Bell, Rogers, Primus
	Mobile Internet	Bell, TCC, Rogers, WIND, Mobilicity
	Bundles	Bell, Rogers, Primus (as applicable)
Regina SK	Wireline	SaskTel, Access Communications
	Wireless	SaskTel, TCC, Rogers
	Broadband Internet	SaskTel, Access Communications
	Mobile Internet	SaskTel, TCC, Rogers
	Bundles	SaskTel, Access Communications
Vancouver BC	Wireline	TCC, Shaw, Primus
	Wireless	Bell, TCC, Rogers, Primus, WIND, Mobilicity
	Broadband Internet	TCC, Shaw, Primus
	Mobile Internet	Bell, TCC, Rogers, Primus, WIND, Mobilicity
	Bundles	TCC, Shaw, Primus (as applicable)
United States
Boston MA	Wireline	Verizon, Comcast
	Wireless	AT&T, Verizon, Sprint
	Broadband Internet	Verizon, Comcast
	Mobile Internet	AT&T, Verizon, Sprint
	Bundles	Verizon, Comcast
Kansas City MO	Wireline	AT&T, Time Warner
	Wireless	AT&T, Verizon, Sprint
	Broadband Internet	AT&T, Time Warner
	Mobile Internet	AT&T, Verizon, Sprint
	Bundles	AT&T, Time Warner
Seattle WA	Wireline	Qwest, Comcast
	Wireless	AT&T, Verizon, Sprint
	Broadband Internet	Qwest, Comcast
	Mobile Internet	AT&T, Verizon, Sprint
	Bundles	Qwest/Verizon, Comcast
United Kingdom
London	Wireline	BT, Virgin, Talk Talk
	Wireless	Orange, Virgin, Vodafone
	Broadband Internet	BT, Virgin, Orange, AOL Broadband
	Mobile Internet	Orange, Virgin, Vodafone
	Bundles	Virgin, BT (Orange for wireless)
Australia
Sydney	All service baskets	Telstra, Optus
France
Paris	All service baskets	Orange (France Telecom), SFR (Neuf Cegetel), Numericable
Japan
Tokyo	Wireline	NTT, J:Com
	Wireless	NTT DoCoMo, J:Com (Willcom/Softbank), KDDI, eMobile
	Broadband Internet	NTT, J:Com, KDDI, Yahoo! BB
	Mobile Internet	NTT DoCoMo, J:Com (Willcom/Softbank), KDDI, eMobile
	Bundles	NTT, J:Com (Willcom/Softbank)

 

Table A.4.2 Wireline service baskets

Calling assumptions	Minutes of use/month
	Level 1	Level 2	Level 3
Outgoing (55%)	220	550	880
Incoming (45%)	180	450	720
Total minutes	400	1,000	1,600
Outgoing by time of day/week
Peak (40%)	88	220	352
Off-peak (60%)	132	330	528
Outgoing long distance	10% of total	20% of total	30% of total
National	16	70	150
U.S.	6	30	80
Other (international)	-	10	34
Total	22	110	264
Outgoing to mobile	15% of total	15% of total	15% of total
Local	33	60	100
National	-	22.5	32
International	-	-	-
Total	33	82.5	132
Average call length	3 minutes	3 minutes	3 minutes
Features
Voice mail	-	Yes	Yes
Caller identification	-	Yes	Yes
Other	-	-	Yes (bundled, if available)

• Wireline pricing reflects flat-rate unlimited local calling in Canada and the United States; in the United Kingdom and France, wireline is priced on a per-minute metered basis; in Australia, wireline local calling is priced on a per-call basis but is otherwise unmetered.

Prices were surveyed from the three or four largest service providers in each country as outlined in Table A.4.1, and then weighted by the market share of each provider. Government sales taxes, such as GST or VAT, and one-time service installation charges were excluded. Industry-specific charges (such as 9-1-1 fees, universal service and regulatory charges in the United States, and television licence fees in the United Kingdom) were included. Prices were converted to Canadian dollars using average January 2012 market exchange rates, and were also adjusted for purchasing power parity using January 2012 comparative price level indexes published by the OECD.

Canadian prices were compared to those in the United States, the United Kingdom, France, Australia, and Japan for wireline and mobile wireless services at three separate service levels, designed to reflect typical basic, standard, and high-end Canadian service consumption patterns (service basket Levels 1, 2, and 3). For broadband Internet services, an additional Level 4 basket was added in 2011 for higher-speed broadband service offerings (see Table A.4.5). Prices were also compared for mobile Internet access service in the above-mentioned countries, based on 3G or higher wireless technology, at a Level 1 monthly data usage level of 2 GB. In 2012, a Level 2 data usage of 5 GB per month was added to the mobile Internet category. As well, prices for bundles of three or four services were compared: Bundle 1 (wireline, mobile wireless, and broadband Internet), Bundle 2 (wireline, broadband Internet, and a basic digital television package), and Bundle 3 (wireline, mobile wireless, broadband Internet, and basic digital television).  Level 2 service baskets were used in each of these bundles.

Table A.4.3 Wireless service baskets

Calling assumptions	Minutes of use/month
	Level 1	Level 2	Level 3
Outgoing (60%)	90	270	720
Incoming (40%)	60	180	480
Total	150	450	1,200
Time of day/week
Peak (40%)	60	180	480
Off-peak (60%)	90	270	720
Outgoing long distance	10% of total	10% of total	15% of total
National	9	21	90
U.S.	-	6	18
Other	-	-	-
Total	9	27	108
Outgoing to mobile	50% of total	50% of total	50% of total
On-net (2/3)	30	90	240
Off-net (1/3)	15	45	120
Total	45	135	360
Average call length	3 minutes	3 minutes	3 minutes
Features
Voice mail	-	Yes	Yes
Caller identification	-	Yes	Yes
Other	-	-	Yes
Data
SMS	-	250	250
Data service	-	-	1 GB

• For Level 1 wireless service, both prepaid and post-paid plans were considered, with the selected price reflecting the least expensive option of the two. For Levels 2 and 3, post-paid plans (generally based on two-year contract rates) were assumed to be more economical. Handset costs are not reflected in these price comparisons.

Table A.4.4 Mobile Internet service baskets

Elements	Level 1	Level 2
Download speed	≥ 1.5 Mbps	≥ 1.5 Mbps
Assumed data usage/month	2 GB	5 GB
USB modem	No cost with contract; or rental/24-month amortization

 

Table A.4.5 Broadband (Internet access) service baskets

Elements	Level 1	Level 2	Level 3	Level 4
Download speed	Basic services ≤ 3 Mbps	4 – 15 Mbps (highest available)	16 – 40 Mbps (highest available)	40+ Mbps  (highest available)
Average data usage/month	5 GB	20 GB	50 GB	75 GB
Modem	No cost with contract; or rental/24-month amortization

 

Table A.4.6 Bundled service baskets

Service elements	Bundle 1 Triple-play	Bundle 2 Triple-play	Bundle 3 Quadruple-play
Wireline	Wireline Level 2 usage	Wireline Level 2 usage	Wireline Level 2 usage
Wireless	Wireless Level 2 usage		Wireless Level 2 usage
Broadband	Broadband Level 2 usage	Broadband Level 2 usage	Broadband Level 2 usage
Television		Basic digital TV package	Basic digital TV package

Appendix 5 - Telecommunications market sector description

A) Wireline voice

 

Wireline voice-related telecommunications services can be divided into two broad market segments: (i) local and access services, and (ii) long distance services.

i) Local and access services

The local and access segment is composed of wireline services relating to access and connectivity to the PSTN, and includes services used by both retail and wholesale customers.

Local wireline telephone service enables customers to place unlimited calls within a defined local calling area for a basic monthly fee. This service is either access-dependent or access-independent. Access-dependent service includes managed wireline access from the TSP to the customer, a connection to the PSTN, and a telephone number. Access-independent service does not include the managed wireline access component. Customers of access-independent service must subscribe to broadband Internet service, which serves as the access component.

Local wireline telephone service includes automated call answering, business Centrex, and ISDN services, as well as other ancillary services such as inside wiring, installation and repair, teleconferencing, and miscellaneous local services.

Local and access service revenues include revenues from the sale of local services on a wholesale basis and, with the introduction of local competition, revenues from the sale of access services for interconnection between carriers and other service providers, including switching and aggregation, and from the sale of unbundled network components.

ii) Long distance services

Retail long distance services encompass wireline voice traffic to locations outside the local service calling area. These services are sold in a variety of ways, such as through a standard per‑minute charge, a monthly subscription plan, calling cards, or a bundle with other services.

Wholesale long distance services are services provided a) under connection arrangements, between a facilities‑based TSP and a long distance TSP to transit long distance minutes, or b) on a wholesale bulk long distance minute basis by facilities-based TSPs to resellers of long distance service.

B) Internet

Internet-related telecommunications services can be divided into two broad market segments: (i) Internet access and transport, and (ii) Internet applications and other Internet-related services.

i) Internet access and transport

Internet access involves the provision of an IP connection to an end-user, which enables the end-user to exchange application traffic with Internet hosts and other end-users. Internet access service consists of the following three major components:

1. a data connection between a modem at the end-user’s location (such as a residential dwelling) and the ISP;
2. ISP facilities, which include
   • routers, to switch traffic between ISP end-users and the Internet at large,
   • servers, to provide in-house ISP services, such as email, and
   • network management elements; and
3. a connection from the ISP to the Internet.

Internet access services are available at a variety of speeds. Low-speed, or narrowband, access services operate at speeds of up to 64 Kbps and are typically provided using dial-up access lines. High-speed access services, including wideband (up to 1.5 Mbps) and broadband (faster than 1.5 Mbps), generally operate using DSL, coaxial cables, terrestrial wireless technologies, satellites, or fibre-optic cables.
 
Internet transport service is a type of Internet connectivity service typically sold to ISPs and some larger business customers. Internet transport capacity is provided over Internet backbone facilities that carry aggregated traffic across domestic and international links between Internet traffic switches or routers. Internet transport service provides partial control over the movement of customers’ Internet traffic. In some cases, peering arrangements between Internet backbone service providers substitute for the outright purchase of Internet transport by one ISP from another.

ii) Internet applications and other Internet-related services

A growing number of Internet application services, including email and Web hosting, piggyback on Internet connectivity services. Internet application services are typically bundled together with Internet access services. However, TSPs also participate in emerging stand-alone business Internet application service markets, which include services such as premium Web hosting services, Internet data centre and off-site data storage services, and security and firewall services.

C) Data and private line

Data services include managed LAN and WAN services for data, video, and voice networks within a metropolitan area or on a national or international scale. Data services include legacy protocols such as X.25 (packet switched WAN communication), ATM, and frame relay; newer protocols such as Ethernet and IP-VPN; and the provisioning and management of networks and related 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. These 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 for private line services include copper wire, fibre-optic cable, and satellite facilities.

D) Wireless

Wireless services are composed of telecommunications services provided via mobile wireless access facilities. These services include mobile telephony, mobile data (such as text and multi-media messaging), roaming, wireless Internet access, and paging services. Data related to satellite private line services are included in the “Data and private line” section of this report, while data related to the satellite services associated with mobile telephones are included in the “Wireless” section of this report.

In addition to enabling voice communications over wireless networks, new wireless technologies are enabling users to send text messages and multi-media messages, including photos, graphics, videos, and audio clips, from one device to another and from one carrier to another. Data usage is expected to continue to grow as existing and new carriers forge network agreements, expand and upgrade their networks, and terminal equipment makers introduce new devices.

Mobile wireless services are generally billed on a usage basis for both voice and data services. Subscribers have a choice of two payment plan options: prepaid and post-paid. Under prepaid plans, subscribers must purchase the wireless service prior to use, while under post-paid plans, subscribers must pay monthly after using the service. Customers typically pay a per-minute rate under prepaid plans. However, under post-paid plans, customers pay for a service package that includes defined minutes of use, an overage minute rate, data features, and other optional services such as voice mail, call display, and call-waiting services.

Appendix 6 - List of acronyms used in the report

 

Appendix 7 - List of decisions, public notices, orders, circulars, and regulatory policies referenced in the report

Broadcasting

 

Broadcasting and Telecom

 

Telecommunications

 

Appendix 8 - List of Canadian companies referenced in the report

 

 

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Note:

[9] Telecommunications industry data collection: updating of CRTC registration lists, telecommunications fees, Canadian contribution mechanism fund administration, international licences and monitoring of the Canadian telecommunications industry, Telecom Circular CRTC 2003‑1, 11 December 2003