Communications Monitoring Report 2015: The Communications industry

3.0 The Communications industry

This display presents several key indicators for the communications industry and is divided into 5 sections.  First indicator: revenues: $63.2 billion, an increase of 2% over 2013.  Second indicator: revenue share of incumbent TSPs and cable companies: 90%. Third indicator: wireless revenue share: 35% (the largest sector). Fourth indicator: Internet growth rate: 8.8% (fastest growth sector).  Fifth indicator: pie chart shows the broadcasting and telecommunications revenues as a percentage of total Industry revenues in 2014. Broadcasting: 27%; Telecommunications: 73%; Industry revenues: $63.2 billion.

The Communications industry encompasses both the broadcasting and telecommunications market sectors. In 2014, telecommunications revenues represented 73% of the communications revenues compared to 27% for broadcasting. The communications industry served over 14 million households and over a million businesses in Canada using both landline and wireless facilities.

This section examines key characteristics of the overall communications industry, including revenue growths and financial performances. More detailed market information, including financial performances, ownership landscape data, and the extent to which industry participants offer communications services outside their traditional core markets and operating territory can be found in sections 4 and 5.

As technologies evolved, traditional broadcasting and telecommunications companies started to enter each other’s traditional markets utilizing different delivery platforms and offering enhanced services. Today, 70% of total cable-based carriers’ revenues are from telecommunications services and 9% of incumbent telecommunications service providers (TSP) revenues originate from traditional BDU services. The revenues from telecommunications and BDU services by these two groups, cable-based carriers and incumbent TSPs, together account for 82% of the $63.2 billion communications revenues garnered in 2014. The remaining 18% of revenues were earned by other facility-based service providers, resellers and broadcasting entities.

Over the course of the last 15 years, the wireless market sector emerged as the largest single communications sector, capturing 35% of the $63.2 billion communications revenues in 2014. The BDU market sector is the next largest with 14% of the communications revenues. Broadcasting distribution and Internet services remain particularly reliant on residential subscriptions, which account for 88% of their revenues.

Revenues from top five ownership groups accounted for approximately 84% of total communications revenues in 2014. Of these groups of companies, two are traditional telephone companies (Bell and TELUS) and three are the traditional broadcasting distribution companies (Rogers, Shaw, and Quebecor).

Over the past five years, revenues from the cable-based carriers and the incumbent TSPs, as a percentage of total communications revenues, have remained more or less stable at approximately 32% and 50%, respectively. During this period, cable-based carriers’ telecommunications revenues increased by 3.8% annually from $12.2 to $14.2 billion. Traditional telephone companies, however, increased their BDU revenues 11.9% annually, from $1.9 billion in 2010 to $3.0 billion in 2014.

a) Revenues

Table 3.0.1 Communications revenues ($ billions)
2010 2011 2012 2013 2014 CAGR (%) 2010-2014
Telecommunications 41.6 42.8 43.9 44.8 45.9 2.5
Annual growth (%) 1.7 2.7 2.8 2.0 2.4
Broadcasting 15.7 16.6 16.8 17.0 17.3 2.4
Annual growth (%) 9.1 5.3 1.4 1.4 1.4
Total revenues 57.4 59.3 60.7 61.9 63.2 2.4
Annual growth (%) 3.7 3.4 2.4 1.9 2.1

Source: CRTC data collection

Revenues are one of the principal means to measure the performance of the communications industry. This table shows revenues, growth rates as well as the compound annual growth rate (CAGR) from 2010 to 2014 for telecommunications service providers (TSPs) and broadcasters (including broadcasting distribution undertakings (BDUs)).

Figure 3.0.1 Communications annual revenue growth rates

This line chart shows the broadcasting and telecommunications annual revenue growth rate for each year between 2010 and 2014. Telecommunications: 1.7%, 2.7%, 2.8%, 2.0%, and 2.4%; Broadcasting: 9.1%, 5.3%, 1.4%, 1.4% and 1.4%.

Source: CRTC data collection

Annual revenue growth rates are an indicator of overall broad trends in the communications industry. This graph shows annual revenue growth rates for the telecommunications and broadcasting industries from 2010 to 2014.

Table 3.0.2 Communications revenues, by type of service provider ($ billions)
2010 2011 2012 2013 2014 CAGR (%) 2010-2014
Incumbent TSPs  
Telecommunications 27.2 27.7 28.0 28.3 28.9 1.5
Annual growth (%) -0.1 1.8 1.0 1.1 2.1  
Broadcasting distribution revenues 1.9 2.1 2.4 2.7 3.0 11.9
Annual growth (%) 14.2 12.6 10.3 15.1 9.7  
Subtotal 29.1 30.8 30.3 31.0 31.8 2.3
Annual growth (%) 0.7 5.8 1.7 2.2 2.8  
Other facilities-based service providers 0.7 0.9 1.2 1.2 1.2 14.9
Annual growth (%) -1.3 21.0 34.0 5.6 1.7  
Resellers 1.5 1.5 1.5 1.5 1.6 1.3
Annual growth (%) -3.5 -0.8 2.3 0.9 2.8  
Cable-based carriers 
Telecommunications 12.2 12.7 13.3 13.8 14.2 3.8
Annual growth (%) 7.1 4.0 4.2 4.0 3.0  
Broadcasting distribution revenues 6.2 6.5 6.3 6.3 6.1 -0.6
Annual growth (%) 7.8 3.2 -1.8 -1.7 -2.2  
Subtotal 18.5 19.2 19.6 20.0 20.3 2.4
Annual growth (%) n/a 3.7 2.2 2.1 1.4  
Broadcasting – Radio & TV 7.6 8.0 8.1 8.1 8.2 2.0
Annual growth (%) n/a 5.1 1.6 -0.1 1.4  
Total 57.4 59.3 60.7 61.9 63.2 2.4
Annual growth (%) 3.7 3.4 2.4 1.9 2.1  

Source: CRTC data collection

Canadians receive broadcasting and telecommunications services from a range of types of service providers, through a range of technologies. This table lists each type of telecommunications and broadcasting service provider and shows changes in total annual revenues for each of year between 2010 and 2014.

b) Industry characteristics

Table 3.0.3 Industry convergence – Cable vs. telecommunications
Year Percentage of cable-based carriers revenues from telecommunications services Percentage of incumbent TSPs revenues from television services
2014 70.0 9.3
2013 68.7 8.8
2012 67.7 7.8
2011 66.3 7.2
2010 66.2 6.5
2009 66.4 5.8
2008 66.1 5.3
2007 64.7 4.7

Source: CRTC data collection

This table shows the extent to which cable-based carriers collect revenues from telecommunications services and incumbent TSPs (traditional telephone companies) collect revenues from television services. It illustrates one measure of the state of convergence in the industry between 2007 and 2014. Telecommunications services include local telephone, long distance, Internet, data and private line, and wireless services.

Table 3.0.4 Percentage of broadcasting and telecommunications revenues generated by companies operating in multiple sectors
Number of sectors in which companies offer service Number of reporting groups or entities operating in these sectors Percentage of broadcasting and telecommunications revenues generated in these sectors
2011 2012 2013 2014 2011 2012 2013 2014
11 3 3 3 3 62 61 61# 61
10 0 0 0 0 0 0 0 0
9 1 1 1 1 5 5 5 5
8 4 5 6 5 23 24 25 26
7 1 1 0 0 1 1 0 0
6 6 3 2 2 0 0 0 0
5 11 14 15# 12 0 0 1# 0
4 22 24 31# 28 3 3 2 2
3 35 39 40# 43 1 2 2# 2
2 44 36 41# 40 2 2 1 1
1 217 233 217# 211 2 3 3# 3

Source: CRTC data collection

The data show that three communications service providers offered services in all 11 market sectors (radio, television, BDU, specialty, video-on-demand, pay and pay-per-view in the broadcasting industry, and local and access, long distance, Internet, wireless, data, and private line in the telecommunications industry) generated more than 61% of communications revenues. In contrast, more than 211 providers that offered only one service generated 3% of communications revenues.

c) Financial performance

Figure 3.0.2 Percent of total revenues, by broadcasting and telecommunications ownership groups

This bar chart shows broadcasting and telecommunications revenues for the top 5 group of companies, the next top 5 group and the remaining groups/entities for 2012, 2013 and 2014. Top 5 companies: 83%, 83% and 84%; next 5 companies: 10%, 9% and 8%; remaining companies: 8%, 8% and 8%.

Source: CRTC data collection

Canada’s communications services market is dominated by a small number of large ownership groups. The top five groups, Bell, Quebecor, Rogers, TELUS, and Shaw, account for approximately 84% of total industry revenues. The next five largest groups/entities, Bragg, Cogeco Cable Inc., MTS Allstream, Saskatchewan Telecommunications, and Telesat Canada, gather approximately 8%, and all remaining groups/entities gather 8%. Revenues include those of their affiliates.

Figure 3.0.3 Communications revenues, by type of provider, 2014

This pie chart shows the total broadcasting and telecommunications revenue market share by type of provider in 2014. Data is taken from table 3.0.2. There are five types of providers in this pie chart. Incumbent TSPs: 50%; Broadcasting and other entities: 13%; Cable-based carriers: 32%; Resellers: 3% and other facilities-based service providers: 2%.

Source: CRTC data collection

Figure 3.0.4 Broadcasting and telecommunications revenues (excluding non- programming and exempt services)

This clustered column chart shows the telecommunications, broadcasting, and combined broadcasting and telecommunications revenues in billions of dollars for each year between 2010 and 2014. Telecommunications: 41.6, 42.8, 43.9, 44.8 and 45.9; Broadcasting: 15.7, 16.6, 16.8, 17.0 and 17.3; Combined broadcasting and telecommunications: 57.4, 59.3, 60.7, 61.9 and 63.2.

Source: CRTC data collection

Figure 3.0.5 Cable-based service provider revenues, by service type

This bar graph compares cable-based service provider revenues from two principal sources: basic and non-basic programming services (i.e. revenues from the distribution of television services), and wireline telecommunication services (i.e. local, long distance, data, private line, and Internet) between 2010 and 2014.

This graph excludes revenues from BDU satellite services and mobile wireless services.

This combination of a clustered column and plotted dot chart shows revenues in billions of dollars by cable-based service providers for each year between 2010 and 2014. Revenues from basic and non basic programming services via landline networks: 5.4, 5.6, 5.5, 5.4 and 5.2; Revenues from wireline telecommunications revenues: 4.5, 5.0, 5.5, 6.0 and 6.6; Total wireline telecommunications revenue as a percent of total: 45%, 47%, 50%, 53% and 56%. Source: CRTC data collection

Figure 3.0.6 Canadian communications revenue composition for a select number of large companies, 2014

This bubble chart measures the Canadian broadcasting and telecommunications revenue composition for eight large company groups for 2014. Revenue size of each company group, relative to each other, is reflected by the size of the bubble. The revenue composition is represented by the placement of the bubble.  Company groups with revenues that are telecom centric are placed closer to the y-axis, while company groups that are broadcasting centric are placed closer to the x-axis. Largest to smallest: Bell Group, Rogers Group, Telus Group, Shaw Group, Quebecor Group, MTS Allstream Group, Cogeco Group, SaskTel. Y-axis (telecom centric) to X-axis (broadcasting centric) : Telus Group, MTS Allstream Group, Sasktel Group, Bell Group, Rogers Group, Quebecor Group, Cogeco Group, Shaw Group.

Source: CRTC data collection

Many of Canada’s largest communications service companies offer telecommunications services as well as broadcasting services. This graph plots the total revenues of Canada’s eight largest communications companies by size (the larger the circle, the greater the company’s revenue) and by industry (proximity to an axis indicates a larger share of revenue derived from that industry service).

Figure 3.0.7 EBITDA margins achieved by cable-based BDUs, traditional telephone companies, and other service providers

This line chart shows the EBITDA margins achieved by cable-based BDUs, traditional telephone companies and other service providers for each year between 2011 and 2014.  These margins reflect operating results from all services (programming, exempted programming and non programming services. Cable-based BDUs: 44.6%, 44.6%, 46.3% and 46.1%; traditional telephone companies: 37.9%, 37.5%, 36.6%, and 37.7%; Other service providers: 4.0%, 11.1%, 0.1% and -10.5%.

Source: CRTC data collection

This graph shows earnings before interest, taxes, depreciation, and amortization (EBITDA) margins for cable-based BDUs, traditional telephone companies, and other service providers (including resellers) for BDU and telecommunications services for the period 2011to 2014. Only companies with Canadian communications revenues greater than 80% of their total revenues were included in the calculation of EBITDA.

EBITDA margin is a measure of profitability. Higher EBITDA margins are generally associated with greater profitability.

d) Consumer voices

Table 3.0.5 Number of communications-related contacts received by the CRTC, by type of issue
2009-10 2010-11 2011-12 2012-13 2013-14 2014-15
Broadcasting-related enquiries1 5,747 6,261 5,829 6,358 4,802 4,938
Broadcasting-related complaints1 12,740 10,813 12,419 11,507 11,055 10,115
Telecommunications-related contacts2 N/A N/A N/A N/A 25,153 27,077
  1. For the 12-month period from 1 April to 31 March.
  2. For the 12-month period from 1 January to 31 December.

Source: CRTC correspondence tracking system (the Rapids tracking system counts multiple communications from the same client on the same complaint as separate units; therefore, the actual number of complaints received should be slightly lower).

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