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The Commission wishes to thank all the entities that completed the CRTC Data Collection forms, without which this report would not have been possible. The Commission would also like to acknowledge the assistance provided by Industry Canada in the analysis of broadband deployment as it related to the rural communities in Canada; Statistics Canada for the various supplementary data used in this report; BBM Canada for audience measures; BBM Analytics for Media Technology Monitor (MTM) syndicated reports; and Mediastats.
Interested parties are welcome to provide comments for improvements or additions to future editions of the report. You can send your comments to the attention of the Secretary General, CRTC, Ottawa, K1A 0N2.
I am pleased to present the 2012 Communications Monitoring Report, which provides information on the Canadian communications sector.
Canadians are taking a keen interest in their communications services. This is hardly surprising when you consider that the average household spends over $180 each month on these services. Whether they are watching television, listening to a local radio station, streaming an episode of their favourite show on a tablet, talking to their friends, customers or co-workers, sharing a work they have just created, keeping in touch with their families, reading news online, sending text messages or getting information from their governments, Canadians rely on these services at work, at home and at play.
The Communications Monitoring Report presents data on the financial situation of the industry, the rates of wireless and broadband Internet adoption, the state of competition, the average price of services and many other key indicators. It is an important tool that enables us to gauge whether the industry is meeting the needs of Canadians as citizens, creators and consumers. It also helps us to evaluate whether the CRTC is achieving the objectives entrusted to us by Parliament.
In addition, I hope that this information will assist and inform Canadians’ participation in the CRTC’s proceedings, which are enriched through their involvement.
This document is intended to serve the collective needs of all participants in the Canadian communications system. We welcome suggestions to improve it.
The Canadian communications industry is growing. Revenues from communications services increased 3.3%, rising from $57.4 billion in 2010 to $59.3 billion in 2011. This growth was driven by a 5.5% increase in broadcasting revenues and a 2.5% increase in telecommunications revenues. The communications industry offers services to virtually all Canadian households, which currently number approximately 13.7 million.
Canadians have access to advanced communications services
In 2011, Canadian households spent on average $181 each month on communications services. That figure accounts for approximately 4.1% of total household spending, and is equal to the amount households spend on healthcare. Approximately half of such spending was on mobile and Internet services. The remainder was on television and wireline telephone services.
More than 99% of Canadian households subscribe to a telephone service. However, Canadians are gradually shifting from landline services to wireless services. Over the past four years, the proportion of landline-only subscribers declined from 26.9% in 2007 to 21.1% in 2010. Over the same period, mobile service was adopted by more than 78.2% of households, up from 71.9% in 2007. In 2010, 10.2% of households relied on mobile service only.
The communications industry facilitates such technological growth by continually investing in its infrastructure. For example, by 2011, virtually all Canadian households had access to broadband Internet services of at least 1.5 megabits per second (Mbps), delivered by landline, mobile (HSPA+ and LTE) and satellite facilities. Moreover, the availability of higher-speed broadband services (between 30 and 50 Mbps) has increased from 30% to 75% in the last two years. In 2011, 72% of Canadians had access to four broadband platforms: digital subscriber line (DSL), cable, fixed-wireless/satellite and mobile.
As a result of such high prevalence, more Canadians than ever are actively participating in the digital economy. In 2011, 72% of households subscribed to 1.5 Mbps broadband Internet service, compared to 68% in 2010. Moreover, 54% of households subscribed to services of 5 Mbps or greater (compared to 51% in 2010).
Canadians are also using mobile devices, such as smartphones and tablets, to access broadband services. Forty-eight percent of wireless devices in the marketplace are equipped to provide this access, whether through a handheld or dedicated data device.
Broadcasting revenue increases in all sectors
Broadcasting revenues went from $15.8 billion in 2010 to $16.6 billion in 2011. All sectors of the industry experienced growth:
cable and satellite revenues increased 5.8% from $8.1 billion to $8.6 billion;
pay, pay-per-view, video-on-demand and specialty service revenues increased 7.9% from $3.5 billion to $3.7 billion;
conventional television revenues (including those from the CBC) increased 2.2% from $2.6 billion to $2.7 billion; and
radio revenues increased 3.9% from $1.5 billion to $1.6 billion.
Telecommunications revenue up, but there were declines
Telecommunications revenues increased 2.5%, from $41.7 billion in 2010 to $42.7 billion in 2011. This increase was due to a rise in revenues for newer data services and broadband Internet and wireless services. Collectively, these service revenues increased by 6.8% from $26.6 billion in 2010 to $28.4 billion in 2011. Individually, revenues for newer data services increased 12.2%, from $1.8 billion to $2.1 billion, Internet service revenues increased 6.4% from $6.8 billion to $7.2 billion, and wireless revenues increased 6.2% from $18.0 billion to $19.1 billion.
These increases were partially offset by decreases in long-distance revenues (down 13.1% from $3.4 billion to $3.0 billion), legacy data and private-line revenues (down 2.9% from $2.5 billion to $2.4 billion), and local and access revenues (down 2.1% from $9.1 billion to $8.9 billion).
Consolidation and regulation in the communications industry
In 2011, the five largest companies in the communications industry captured 83% of revenues. The next five captured 10%. Of these 10 companies, three offered service in all 11 communications markets.1 In so doing, these three companies captured 62% of total industry revenues.
Given this level of industry consolidation, the Commission has acted to ensure these companies do not harm their competitors or restrict consumer choice. For example, some businesses both produce programming and distribute content. To address such situations, the Commission issued a vertical integration policy that ensures:
fair treatment for independent broadcasting distribution and programming services that must compete against strong vertically integrated competitors;
protection of commercial information; and
timely resolution of disputes between parties in the Canadian broadcasting system.
The policy also prohibits companies from offering television programming on an exclusive basis to their mobile or Internet subscribers.
In 2011, companies that operated in multiple markets collectively had 9.4 million subscribers (6.4% more than in 2010) who bought discounted ‘bundled’ services.
Competition is increasing
The competitors of incumbent telephone companies increased their share of overall telecommunications revenues.
The share of total wireline revenues claimed by alternative service providers increased from 37.3% in 2010 to 38.4% in 2011. This group’s market share included the incumbent telephone companies operating outside their traditional territories (relatively unchanged at 6.5%), other facilities-based providers such as cable companies and hydro utility companies (up from 24.5% in 2010 to 25.6% in 2011) and resellers (which remained the same at 6.3%).
Overall, competitors experienced strong growth in the number of residential local lines (which increased 5.7% to 4.7 million) and business lines (which increased 24.7% to 1.4 million). Cable companies, in particular, have become important competitors in this market. Since they began providing local telephone service in 2005, these companies have captured 33% of local residential lines.
Voice over Internet Protocol (VoIP) offers an alternative to the traditional circuit-switched telephone system. In 2011, there were 4.4 million retail VoIP local telephone lines, representing 24% of retail local lines. Approximately 350,000 of these lines were access independent, allowing consumers to access local service remotely with an Internet connection.
Cable companies are also major providers of high-speed Internet service. In 2011, they served approximately 57% of high-speed residential Internet subscribers.
New wireless entrants captured approximately 4% of wireless subscribers and 2% of revenues in 2011. Overall, the number of wireless subscribers increased by 6.0% in 2011 compared to 8.5% in 2010. Average per-subscriber revenues increased 0.2% (from $57.86 to $57.98 in 2011) due in large part to increased data usage.
Radio broadcasters offer choice to listeners
In 2011, there were 1,183 radio and audio services in Canada. Of that total, 76% broadcasted to English-language Canadians, 21% to French-language Canadians, and 3% to third-language Canadians. In addition, the Commission approved the operation of 30 new radio stations.
Television viewership statistics are strong
Overall viewing of programs on Canadian English-language services was 83.0% in 2011, while viewing of programs on French-language services remained relatively unchanged at 92.2%. Although Canadians preferred drama and comedy programs, they most often consumed non-Canadian content. In 2011, 81% of English and 70% of French-language drama and comedy programs were non-Canadian, respectively.
Television distributors’ market share is growing: IPTV is making gains
Growth in the television distribution market continues to be strong. In 2011, approximately 90% of Canadian households subscribed to a television distribution service, 2.2% more than in 2010. Among households that had a television subscription, 24.5% subscribed to either a satellite or multipoint distribution provider, 5.6% to an IPTV service and 69.9% to cable.
The availability of IPTV increased from 22% in 2010 to 34% in 2011, resulting in a penetration rate of 14% (compared with a penetration rate of 72% for cable). In 2011, 80% of television subscribers received digital services. The top four television distributors captured 89% of all subscribers in 2011.
In 2011, programming revenues per subscriber per month2 increased by $2.13, or 3.6%, for a total of $61.86.
Digital media revenues come from advertising and subscriptions
In a digital media survey conducted by the CRTC, a subset of Canadian communications companies indicated that 62% of their digital media revenues came from advertising and 35% from subscriptions.
Typical weekly users watched, on average, 2.8 hours of Internet TV per week in 2011, an increase from 1.5 hours in 2008. During the same period, the average time Canadian households spent watching Internet TV rose slightly from 0.3 hours to 0.7 hours.
Based on a 2011 MTM consumer survey, 20% of anglophones and 15% of francophones download music from the Internet. Of these, 62% of anglophones and 59% of francophones paid for the content.
Telecommunications technology uptake is strong
Canadians are rapidly embracing new telecommunications technologies. In 2011, the number of mobile phone subscribers increased 6% from the previous year, while the number of residential subscribers to high‑speed Internet services increased by 4.2%. In 2011, approximately 72% of Canadian households had broadband Internet service (at download speed of 1.5 Mbps and above) and 76% had high-speed Internet service (at download speed of 256 kbps and above).
Newer data services that meet business customer requirements for increased speed, functionality and cost-efficiency now represent 93.4% of data protocol revenues. Combined, revenue for data services such as Ethernet and IP-based private networks grew by 12.2% in 2011.
 The markets consist of five broadcasting markets (radio, television, BDU specialty, and VOD, pay and PPV) and six telecommunications markets (local and access, long distance, Internet, data, private line and wireless)
 Revenues per subscriber per month were derived by dividing total revenues by the number of subscribers and by the number of months in the year.