Communications Monitoring Report 2015: Canada's Communications System: An Overview for Citizens, Consumers, and Creators
2.0 Canada’s Communications System: An Overview for Citizens, Consumers, and Creators
Over the past several years, the CRTC has strengthened its efforts to place Canadians at the centre of the communications system, whether as consumers of communication products and services, creators and distributors of content, or citizens who need access to information to fully engage in a democratic society. To this end, this section provides an overview of subjects of particular importance to Canadians by focusing on key trends in the communications industry landscape, competition, household expenditures, and access to communications services.
For the first time, more Canadians households subscribe exclusively to mobile wireless services (20.4%) than to wireline (i.e., landline) telephone services (14.4%).
While the majority of Canadians still own and use landlines, the data attests to a slow and steady shift away from this technology in favour of wireless services. Indeed, more Canadian households have mobile phones (84.9%) than landlines (78.9%) – a big change from only ten years ago, when just over half of Canadian households subscribed to mobile phones (53.9%) and almost all owned landlines (96.3%).
Yet as Canadians embrace mobile wireless, a more precise picture emerges when examining this trend across income quintiles. For instance, wireless-only households are most prominent among the two lowest income quintiles (see Table 2.0.7). This suggests that the rise of mobile-only households does not solely reflect changing preferences but may also be driven by affordability.
While overall viewing hours have not changed significantly, younger Canadians are watching significantly less traditional television than older cohorts.
Since the introduction of more accurate audience measurement tools in 2009 (such as portable people meters, or PPM), the average number of weekly television viewing hours nationally for Canadians 18 years of age and older has remained fairly steady, ranging from 29.8 (2010-2011broadcast year) to 29.0 (2013-2014 broadcast year). At the same time, the viewing habits of younger and older Canadians reveal a stark contrast. Between 2009-10 and 2013-14, the number of hours older Canadians (65+) spent watching traditional television each week increased by 3.5%, whereas for Canadians 18 to 34 years of age, it declined by 12.3%.
Data from 2013-14 indicate that on average, Canadians 18 to 34 years of age watched less than half the number of hours of traditional television (20.6) as did those 65 and over (41.8). Children (2 to 11 years of age) and teens (12 to 17 years of age) appear to be following a similar course. What this data makes clear is that there is a divide between Canadians under 50 and above – older viewers continue to watch a significant number of hours of traditional television, while younger viewers do not appear to be following suit.
Data from the Media Technology Monitor reveals a similar trend when it comes to digital media: 58% of Anglophones 18 to 34 years of age subscribe to Netflix, compared to 14% of those 65 and over. Among Francophones, the disparity is even more pronounced, at 24% and 1%, respectively.
In 2014, Canadian households paid an average of $203.04 per month for their communications services, an increase of $11.92 from 2013 – roughly 6%.
Canadian households currently spend more on wireless ($79.08) and BDU services ($53.95) compared to Internet ($38.91) and wireline telephone services ($31.10).
At the same time, there are clear differences across household income quintiles. Households in the two highest quintiles spend more than twice as much on mobile wireless than those in the lowest income quintile – a pattern that roughly holds for cable and DTH satellite television and Internet services. In the case of landlines, spending remains relatively evenly distributed across income quintiles.
Broadcasting distribution undertakings (BDUs) provide subscription television service to Canadians. They redistribute programming from conventional over-the-air television and radio stations. They also distribute pay audio and discretionary (i.e., pay, specialty, pay-per-view (PPV) and video-on-demand (VOD)) services. Most BDUs are cable, national DTH satellite, or Internet protocol television (IPTV) service providers.
Nearly all Canadians have access to broadband download speeds of at least 5 Mbps, while subscription rates lag behind.
Over the past five years, the percentage of Canadians with access to the 5 Mbps downstream speed has grown from 86% to 96%, with 77% of households actually subscribing to services offering this speed.
In April 2015, the CRTC launched a review of basic telecommunications services that will address a range of related topics, including upload/download speeds necessary in the digital age, the roles of economic and regulatory players in the public and private sectors, possible funding mechanisms to support telecommunications services and a range of related topics.
In 2014, the Government committed $305 million over five years (2014-2019) to extend and enhance access to broadband Internet for Canadians in rural and remote communities that do not currently have access to service at 5 Megabits per second (Mbps). Industry Canada launched the resulting program, Connecting Canadians, in July 2014. Through Connecting Canadians, the Government is supporting the private sector to construct new high-speed Internet infrastructure, with an initial goal of expanding access for 280,000 households across the country. The program is a key commitment under Digital Canada 150, the Government’s plan to help Canadians take full advantage of the opportunities of the digital age.
a) Industry landscape and competition
Canada’s communications system is composed of two broad categories: broadcasting and telecommunications. In 2014, total communications revenues increased by 2%. However, this overall growth masks important divergences across individual sectors. While detailed financial information can be found in each section of this report, the present section offers a high-level overview of industry revenues and the competitive landscape in broadcasting and telecommunications.
|Revenues ($ billions)||2013||2014||Growth (%)|
|Telecommunications (retail and wholesale)||44.8||45.9||2.4|
Wireline Voice (local and long distance)
Data and Private Line
Wireless (local and long distance)
Source: CRTC data collection
Telecommunications remains dominant
In 2014, telecommunications services continued to capture approximately 73% of all communications revenues, with broadcasting services representing the remaining 27%. This speaks in part to the scale of mobile wireless services, which accounted for nearly half of all telecommunications revenues. Indeed, mobile wireless alone generated more revenues than the entire broadcasting sector.
As noted above, more Canadians now subscribe exclusively to mobile wireless than wireline telephone services. This reflects trends in financial data that demonstrate relatively consistent mobile revenue growth.
A similar phenomenon – one in which certain sectors drive overall growth while others remain flat or shrink – appears to manifest itself across multiple sub-sectors of the communications system. Services introduced in the early-to-mid-20th century, including wireline voice services, conventional television and radio continue to be widely used by many Canadians. At the same time, these services’ revenues have not grown at the same pace as those of newer services; in many cases, they have even declined.
A concentrated market
The competitive landscape in the communications system as a whole remains mostly unchanged from last year. Large vertically and horizontally integrated entities hold dominant market positions. As Figure 2.0.1 indicates, the top five broadcasting and telecommunications group/entities (Bell Canada, Quebecor, Rogers, TELUS, and Shaw) together accounted for approximately 84% of total industry revenues, an increase of 1% from 2013. The next five groups (Bragg, Cogeco, MTS, SaskTel, and Telesat) represented a combined 8% of total revenues.
Figure 2.0.1 Percent of total combined revenues, by broadcasting and telecommunications ownership groups
Source: CRTC data collection
The ten largest entities tend to offer a wide range of services (e.g. wireless, landline, Internet, and broadcasting distribution services). The remaining companies operate in fewer sectors, focusing, for example, on providing retail high speed Internet services as a reseller or operating a small group of regional radio stations. Other sections of this report – notably 5.3 (Internet) and 5.5 (Wireless) – feature information on the extent to which resellers and new entrants have increased their revenues and subscriber base.
This section refers to major broadcasting and telecommunications entities by short-form names rather than formal titles (e.g. Rogers rather than Rogers Communications Inc.) The goals behind this are two-fold. First, it provides clear terms that Canadians can easily recall and relate to through their experience as consumers. Second, these shorter names offer a concise and consistent naming convention. A list of companies referenced in the Communications Monitoring Report, including their official titles, can be found in Appendix 6.
This market concentration plays a role in the rise of bundling, as the largest entities are well-positioned to offer their customers discounts in exchange for subscribing to a range of services. Over the past five years (2010-2014), the number of subscriptions with bundled services rose from 8.8 to 10.4 million. Bundling data for 2014 remained unchanged from 2013 as the rate of growth has slowed over the past several years, which may mean that providers are reaching a ceiling on the number of customers that are willing to bundle their services.
|Number of subscriptions with bundles||8.8||9.4||10.0||10.4||10.4||4.3|
Source: CRTC data collection
b) Communications expenditures and prices
Examining data on the amounts that Canadian households spend on communications services provides an important perspective on how communication services impact the household budget and points, to a certain extent, to national-level shifts in demand and the competitive landscape.
It is important to recognize the limitations of expenditures data. First, it may overlook the fact that certain services, such as over-the-air television and radio services, remain valuable to Canadians. Second, the average expenditure amount takes into account all households, including those that do not subscribe to one or more services. As a result, expenditures for households that purchase services may appear lower than they actually are.
Spending on communication services continues to climb
Over the course of 2014, the average Canadian household spent approximately $203 per month on communication services, an increase of $11.92 (6.2%) from last year. Table 2.0.4 suggests that much like industry revenues, certain service sectors received a larger share of expenditures than others.
This increase was driven in large part by changes in spending on wireless and Internet services, which grew 14.1% and 10.0%, respectively. The increase for the Internet services may be driven by a group of Canadians that have upgraded their speeds.
Canadians continued to allocate less of their household expenditures to landline telephony service, which fell from $32.85 per month to $31.10, a reduction of 5.3%. Beyond a shift towards wireless services, one contributing factor is that households with a second or third landline telephone appear to be eliminating these subscriptions and signing onto additional wireless subscriptions, as Figure 2.0.4 demonstrates. In 2014, wireline telephone services represented 15.3% of household communications expenditures compared to 38.9% for wireless services.
While there is considerable variance between the average amounts spent by Canadians in each income quintile, households tended to devote more of their communications budget to either mobile wireless or cable and DTH satellite services. In 2014, spending was greatest on mobile services across all income quintiles.
Although spending by lower income households on communication services was less than that for higher income households, communications takes up a significantly larger percentage of their total expenditures – as Table 2.0.3 shows.
|Characteristics||First quintile (household income less than $30,668)||Second quintile (household income from $30,669 to $51,804)||Third quintile (household income from $51,805 to $79,722)||Fourth quintile (household income from $79,723 to $121,291)||Fifth quintile (household income over $121,292)||Average of all quintiles|
|Average annual income||$18,582||$41,105||$64,854||$98,634||$199,702||$84,575|
|Members per household||1.49||2.11||2.49||2.95||3.34||2.48|
|Communications expenditures as a percentage of annual income||8.3%||4.9%||3.8%||2.8%||1.7%||2.9%|
Sources: Statistics Canada’s Survey of Household Spending
Based on Statistics Canada’s 2014 Survey of Household Spending (data for 2013), the average household annual income before taxes in Canada was $84,575. The average household annual income before taxes ranged from $68,898 to $79,674 for households east of Ontario and from $77,640 to $118,750 for households in Ontario and west of Ontario. Households in Alberta had the highest average household annual income before taxes at $118,750, followed by households in Ontario at $87,696.
From the perspective of per household income quintiles (each 20% of households by average annual income), the first quintile had an average annual income of $18,582. This quintile had an average of 1.49 members per household. The highest income in this quintile was $30,668. The third quintile had an average annual income of $64,854. It had an average of 2.49 members per household. The highest income in this quintile was $79,722. The top 20% of households had annual incomes in excess of $121,291. The average annual income for this quintile was $199,702. This quintile had an average of 3.34 members per household.
|Service||Year||First quintile||Second quintile||Third quintile||Fourth quintile||Fifth quintile||Average of all quintiles|
|Cable and DTH||2011||37.99||45.76||52.09||59.35||67.11||52.42|
Sources: Statistics Canada’s Survey of Household Spending, CRTC data collection, and staff analysis
The results of Statistics Canada’s Survey of Household Spending (the Survey) are released approximately two years after the data is collected. As a result, the most recently available data is from 2013. Consequently, the data contained in this table was calculated by dividing residential revenues for each sector (wireline excluding equipment sales and retails, mobile wireless, Internet, and cable and DTH satellite) by the average number of households. Next, these revenues per household were proportioned according to the expenditure distribution from the Survey. All expenditures exclude sales tax.
The Telephone Price Index (TPI) reflects the price changes experienced over time by a household for a fixed basket of telephone services. This type of basket reflects a weighted average of consumer expenditures on basic local service, other local telephone services (such as options and features), and long distance, installation, and repair services. The TPI does not include Internet service expenditures.
Cable, DTH satellite, and IPTV basket
The Cable, DTH satellite, and IPTV price index reflects the price changes experienced over time by a household for a basket of cable television services. This basket includes both “basic” and “extended” cable services. Basic cable service is the minimum service to which all customers must subscribe. Extended cable service is the most popular package of additional channels. The BDU index does not account for bundling discounts.
Communication service price levels
Price indices offer a perspective on the extent to which prices for a basket of goods and services change over time. Figure 2.0.2 compares the long-term evolution in prices of three key telecommunications baskets: telephone (TPI); Internet; and cable, DTH satellite, and Internet Protocol television (IPTV) services.
Figure 2.0.2 shows the changes in price for fixed-baskets of telecommunications services (landline telephone, Internet, and cable, DTH satellite, and IPTV) as well as the overall changes in prices as measured by the Consumer Price Index (CPI). By maintaining a consistent basket of goods and services and comparing prices in the current year to the index reference period (2002), these indices measure “pure” price change. As an example, the cable, satellite, and IPTV index indicates that a service basket priced at $50.00 in 2002 would cost approximately $83.30 in 2014.
As measured by the CPI, average annual inflation in Canada was 2.0% in 2014. In comparison, from 2013 to 2014, the prices of key communication services increased by 3.4% (telephone), 2.3% (cable, DTH satellite and IPTV) and 8.0% (Internet).
Figure 2.0.2 Price indices for telephone services, broadcasting distribution services (cable, DTH satellite, IPTV and pay television) and Internet services, compared to the CPI
Source: Statistics Canada
For more information on price indices, see Statistic’s Canada Canadian Consumer Price Index Reference Paper.
Prices for BDU service offerings have increased over the past decade (4.4% per year, on average). Internet price levels began to rise in 2011. Overall cable television and DTH satellite subscriptions declined slightly over the past five years while Internet and IPTV subscriptions have risen steadily.
c) Access and service availability
One of the CRTC’s key goals is to ensure that Canadians have access to a world-class communication system. Achieving this objective requires quality information about the diverse challenges facing communities across the country. To better understand how the communications system is evolving to help Canadians connect with one another and the world, the rest of this section focuses on the availability of communications services in Canada, with a particular regard to Official Language Minority Communities and access to communication services in minority official languages.
Canadians are communicating through many different platforms
As Figure 2.0.3 shows, mobile wireless represents nearly half of all household connections and Internet connections continue to expand. Landline (i.e. wireline telephone) and BDU (e.g. cable, DTH satellite, IPTV, etc.) connections, despite their relative declines, still comprise over one third of all connections via subscription. As a whole, the average household features 4.5 connections. While mobile wireless connections are the most widespread, Canadians clearly use a variety of ways to communicate.
Figure 2.0.3 Residential connections, by percentage of households
Source: CRTC data collection
Mobile wireless connections include residential and business connections, and mobile wireless subscriptions with data plans.
Multi cell phone households behind the rise of wireless
Another way of approaching the issue of availability is to consider the extent to which Canadian households subscribe to key communications services. As Table 2.0.5 shows, nearly all Canadians (99.3%) subscribed to either mobile wireless or landline telephone services. Yet rather than stacking telephone services (i.e. subscribing to both landline and wireless mobile), some Canadians are choosing only one – and for the most part this appears to be mobile wireless. As noted above, the percentage of cell phone only households (20.4%) currently exceeds the percentage of wireline only households (14.4%) – a significant reversal from a decade earlier when these figures stood at 2.5% and 44.9%, respectively.
By organizing this information by province (Table 2.0.6) and income quintile (Table 2.0.7), it is more apparent which groups of Canadians are driving this year-over-year shift. For instance, the four western provinces (Alberta, Saskatchewan, Manitoba, and British Colombia) and Ontario have played a key role in the rise of cell phone only households. In contrast, both Quebec and Eastern provinces (although Nova Scotia to a lesser extent) continue to feature a larger percentage of landline only households. It is worth noting, however, that the percentage of mobile wireless-only households increased in every province between 2012 and 2013.
Figure 2.0.4 suggests that households with multiple landlines are reducing their wireline connections. A significant and growing number of Canadian households feature more than two cell phones.
Figure 2.0.4 Telephone Ownership Rates, by number of phones and type of service
Source: Statistics Canada’s Survey of Household Spending
This table provides the percentage of Canadian households by the number of phones and type of service between 2010 and 2013, the most recent data available through the Survey of Household Spending. Note that landlines include wireline phones for business use.
While this transition to widespread mobile wireless use – partly at the expense of wireline telephone services – reflects a long-term process, the historical data in Table 2.0.5 shows how rapidly Canadian households have embraced this newer technology; only ten years ago, wireline only households (40%) far outpaced their mobile wireless counterparts (2.7%).
The link between income and telephone subscriptions
The data on telephone ownership rates by income quintile (Table 2.0.7) further illustrates this transition to mobile phones. Most noticeably, more lower income Canadian households (first and second quintiles) are cell phone only households as opposed to landline-only households – a shift that already had occurred for households in higher income quintiles. The steady decline in wireline subscriptions from 74.6% to 65.2% suggests that many first quintile households are choosing to forgo these services in favour of mobile technology. Financial resources appear to play a factor in whether households subscribe to wireless and wireline services, or simply one of the two. While only 16.1% of households in the highest income quintile subscribe to only wireline or only wireless services, this rises to 63.0% of households in the lowest quintile. Indeed, the data suggest that the higher a household’s income quintile, the more likely it is that the household subscribes to both types of telephone service.
|Year||Wireline||Mobile wireless||Wireline and/or mobile wireless||Wireline only||Mobile wireless only||Only wireline or wireless|
Source: Statistics Canada’s Survey of Household Spending
|Province||Wireline||Mobile wireless||Wireline and/or mobile wireless||Wireline only||Mobile wireless only||Only wireline or wireless|
|Prince Edward Island||85.8||78.5||99.3||20.8||13.5||34.3|
|Newfoundland and Labrador||87.1||85.9||99.1||13.2||12.0||25.2|
Source: Statistics Canada’s Survey of Household Spending
|Income quintile||Year||Wireline||Mobile wireless||Wireline and/or mobile wireless||Wireline only||Mobile wireless only|
Source: Statistics Canada’s Survey of Household Spending
The results of Statistics Canada’s Survey of Household Spending are released approximately two years after the data is collected. As a result, the most recently available data is from 2013.
The link between income and Internet subscriptions
Mobile wireless devices (such as smartphones and tablets) and technologies (HSPA and LTE) allow many Canadians to access the Internet from nearly any location, however, home computers still play an important role. As Table 2.0.8 shows, most Canadian households have home computers. More Canadian households in the lowest quintile have cell phones (66.8%) (Table 2.0.7) than they do home computers (64.4%) or Internet access at home (59.7%).
While this may be due to a number of factors, one important factor relates to the fact that these households are choosing to devote their resources to a technology that can provide multiple communications services (voice, Internet), rather than to subscriptions for each service individually. It is worth noting that Internet use from the home increased across all quintiles with the sole exception of the highest, which registered a decline of only 0.1%.
|Second quintile||Third quintile||Fourth quintile||Fifth quintile||Average for all quintiles|
|Internet Use From Home||2012||55.9||72.4||87.6||93.1||98.5||81.5|
Source: Statistics Canada
This rise in Internet use across income quintiles is also reflected in overall residential Internet availability and subscription rates. The percentage of households with access to broadband with a download speed of at least 5 Mbps remains at 94% (96% with satellite) (Figure 2.0.5). Similarly, although the CRTC’s target is linked to the availability of 5 Mbps (download) and 1 Mbps (upload) and not subscription, data indicates that Canadians are clearly embracing faster connections as they become more widely available: the majority of households now subscribe to Internet packages with speeds at or above 10 megabits per second, while packages with slower speeds have been declining in popularity.
Figure 2.0.5 Residential broadband availability (5 Mbps or higher downstream speed), by province
Sources: Industry Canada and CRTC data collection
Direct-to-home satellite services are excluded. Since satellite is a service with a national footprint, it is excluded from this figure ; however, it would add approximately 1.5% to the availability of 5 Mbps broadband services.
|High Speed (256 kbps and higher)||73||76||78||79||81|
1.5 Mbps and higher
5 Mbps and higher
10 Mbps and higher
16 Mbps and higher
50 Mbps and higher
|All speeds (including dial-up)||76||78||79#||80#||82|
Source: CRTC Data Collection
2.1 Local Spotlight: Access for official languages minority communities
As a designated institution under section 41 of the Official Languages Act, the CRTC is committed to enhance the vitality of the English- and French-language minority communities in Canada, to support their development and address their needs within the context of its mandate, and to foster the full recognition and use of both languages in Canadian society. To this end, the CRTC focuses on ensuring that official language minority communities (OLMCs) have access to an appropriate and equitable number of quality services and that these communities are adequately represented in the programming of these services.
These objectives find reflection in the policy objectives which the Commission is tasked to pursue. In this regard, the Broadcasting Act specifies that the Canadian broadcasting system should reflect Canada’s linguistic duality through programming and employment opportunities; that a range of broadcasting services in English and French shall be extended to all Canadians as resources become available and that the programming provided by the Canadian Broadcasting Corporation be in English and in French and reflect the different needs and circumstances of English and French linguistic minorities.
|Province/territory||Official-language minority population (% of total population)|
|Prince Edward Island||3.8|
|Newfoundland and Labrador||0.5|
Source: 2011 Census, Statistics Canada
A number of different criteria can be used to identify the language of individuals. These include the first language learned at home, the language spoken at home, and the language of education.
For the purpose of this report, the official-language minority population is defined in terms of the first language learned at home in childhood (i.e., mother tongue) and still understood at the time of the 2011 Census.
The data excludes institutional residents.
This table displays the percentage of the population for whom the mother tongue is an official language in minority status in each province and territory in which they reside, and in Canada as a whole. In all provinces and territories except Quebec, the official language having minority status is French. New Brunswick has the highest percentage of official-language minority population, at 32.0%, followed by Quebec at 8.0%.
Map 2.1.1 Locations of official language minority communities in Canada
Source: Canadian Heritage, Official Languages Branch.
The ability of an OLMC to access content in its mother tongue varies across provinces. Over 72% of OLMC households have access to over-the-air radio service in their first language, compared to 62% who have such access to television services, both are provided mainly by the Canadian Broadcasting Corporation. Households in these communities have access to the following additional communication services: cable distribution, and broadband Internet access, including mobile wireless broadband access services. Through these services, OLMC households can access content and connect with others in their first official language.
One key challenge reported by OLMCs relates to their ability to access local content in their official language. Although this report does not measure local programming, an indicator of the extent to which OLMC households are served in their official language is their access to local radio and television services, which is outlined in the table that follows.
|Province/territory||OLMC population as a percentage of total population||Radio||Over-the-air Television||Cable distribution (excluding DTH satellite)||Broadband Internet||Mobile wireless broadband|
|Prince Edward Island||3.8||64||0||60||86||99|
|Newfoundland and Labrador||0.5||56||0||82||85||95|
Source: 2011 Census, Statistics Canada; CRTC data collection; and CRTC staff analysis
This table displays the percentages of the OLMC households in each province and in the territories that have access to radio services, television services, cable distribution services (excluding DTH satellite service as these services are generally available to all households), broadband Internet services, and mobile wireless broadband services, from which they can be served in their first official language.
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