Communications Monitoring Report 2016: The Communications industry

3.0 The Communications industry

Infographic summarizing section 3.0 – The Communications industry
Infographic summarizing section 3.0 – The Communications industry
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This infographic presents several key indicators for the communications industry and is divided into 5 sections. First indicator: circular chart shows the broadcasting and telecommunications revenues as a percentage of total industry revenues in 2015. Broadcasting: 27%; Telecommunications: 73%; Industry revenues: $65.7 billion. Second indicator: revenues: $65.7 billion, an increase of 2.5% over 2014. Third indicator: revenue share of incumbent TSPs and cable companies: 90%. Fourth indicator: wireless revenue share: 36% (the largest sector). Fifth indicator: Internet growth rate: 10.3% (fastest growth sector).

The Communications industry encompasses both the broadcasting and telecommunications market sectors. In 2015, 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. Over 59% or $35 billion of all communications services revenues, excluding revenues generated from discretionary and on demand television services as well as Direct-to-Home (DTH) BDU services, were generated in the provinces of Ontario and Quebec.

This section examines key characteristics of the communications industry, including overall revenue growth and financial performance. More detailed information, including market financial performance, ownership landscape data, pricing information in rural and urban centres across the country can be found in sections 4 and 5 of the report.

The wireless market sector continue to be the largest single communications sector, capturing 36% of the $65.7 billion communications revenues in 2015. For the first time ever, total Internet revenues surpassed broadcasting distribution by approximately $900 million and has emerged as the second largest market sector with 15% of the communications revenues. Broadcasting distribution and Internet services remain particularly reliant on residential subscriptions, which account for 87% of their revenues.

Revenues from top five ownership groups accounted for approximately 82% of total communications revenues in 2015 compared to 81% in 2011. Of these groups of companies, two are incumbent telephone companies (Bell and TELUS) and three are traditional broadcasting distribution companies (Rogers, Shaw, and Québecor).

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 4.2% annually from $12.7 to $15.0 billion. Traditional telephone companies, however, increased their BDU revenues 10.0% annually, from $2.1 billion in 2011 to $3.1 billion in 2015.

i) Revenues

Table 3.0.1 Communications revenues ($ billions)
Category 2011 2012 2013 2014 2015 Growth (%) 2014-2015 CAGR (%) 2011-2015
Telecommunication 42.8 43.9 44.8 45.9 47.8 4.1 2.8
Broadcasting 17.6 17.9 18.0 18.2 17.9 -1.6 0.4
Total revenues 60.4 61.8 62.8 64.1 65.7 2.5 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 rate as well as the compound annual growth rate (CAGR) from 2011 to 2015 for telecommunications service providers (TSPs) and broadcasters (including all CBC revenues and broadcasting distribution undertakings (BDUs)).

Figure 3.0.1 Communications annual revenue growth rates

Line chart of Figure 3.0.1: Communications annual revenue growth rates
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This line chart shows the broadcasting and telecommunications annual revenue growth rate for each year between 2011 and 2015. Telecommunications: 2.7%, 2.8%, 2.0%, 2.5 % and 4.1%; Broadcasting: 5.2%, 1.4%, 0.7%, 1.1% and -1.6%.

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 2011 to 2015.

Table 3.0.2 Communications revenue distribution by region ($ billions)
Region 2014 2015 Percentage of total (%) Growth (%) 2014-2015
Atlantic 3.8 4.0 6.8 4.2
BC and Territories 7.8 8.1 13.7 4.4
Ontario 22.7 23.0 38.8 1.1
Prairies 11.5 12.1 20.4 4.9
Québec 11.6 12.0 20.3 3.1

Source: CRTC data collection

This table excludes revenues generated from discretionary and on demand television services as well as DTH BDU services as those services are licensed as national services. These services generated $4.3 and $2.3 billion in 2015, respectively. Estimates were made for companies that were not required to provide provincial and territorial telecommunications data.

Table 3.0.3 Communications revenues, by type of service provider ($ billions)
Type Subtype 2011 2012 2013 2014 2015 Growth (%) 2014-2015 CAGR (%) 2011-2015
Incumbent TSPs Telecommunications 27.7 28.0 28.3 28.9 29.7 2.7 1.8
Broadcasting distribution revenues 2.1 2.4 2.7 3.0 3.1 5.3 10.0
Subtotal 30.8 30.3 31.0 31.8 32.8 3.0 2.4
Alternative service providers Other facilities-based service providers 0.9 1.2 1.2 1.2 1.5 19.1 14.4
Resellers 1.5 1.5 1.5 1.6 1.7 5.6 2.9
Cable-based carriers Telecommunications 12.7 13.3 13.8 14.2 15.0 5.4 4.2
Broadcasting distribution revenues 6.3 6.2 6.1 6.0 5.8 -2.8 -2.2
Subtotal 19.0 19.5 19.9 20.2 20.8 3.0 2.2
Other broadcasting Broadcasting – Radio & TV 9.2 9.3 9.2 9.3 9.0 -2.9 -0.5
Total All 60.4 61.8 62.8 64.1 65.7 2.5 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 2011 and 2015.

ii) Industry characteristics

Table 3.0.4 Industry convergence – Cable vs. telecommunications
Year Percentage of cable-based carriers revenues from telecommunications services Percentage of incumbent TSPs revenues from television services
2015 72.1 9.6
2014 70.5 9.3
2013 69.4 8.8
2012 68.1 7.8
2011 66.8 7.2

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 2011 and 2015. Telecommunications services include local telephone, long distance, Internet, data and private line, and wireless services.

Table 3.0.5 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
2013 2014 2015 2013 2014 2015
10 3 3 3 59 60 59
9 0 0 0 0 0 0
8 5 7 7 27 30 30
7 0 0 0 0 0 0
6 4 3 2 2 0 0
5 12 11 17 1 0 1
4 32 28 27 2 1 1
3 44 44 39 5 5 4
2 42 38 45 1 1 2
1 224 215 220 3 3 3

Source: CRTC data collection

The table above shows that three communications service providers offered services in all 10 market sectors (radio (1), television (2), BDU (3), discretionary and on demand television (4), in the broadcasting industry, and local and access, (5) long distance (6), Internet (7), wireless (8), data (9), and private line (10) in the telecommunications industry) and generated 59% of communications revenues. In contrast, 220 providers that offered only one service generated 3% of communications revenues.

iii) Financial performance

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

Bar chart of Figure 3.0.2: Percent of total revenues, by broadcasting and telecommunications ownership groups
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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 2013, 2014 and 2015. Top 5 companies: 81%, 82% and 82%; next 5 companies: 10%, 10% and 10%; remaining companies: 9%, 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, Québecor, Rogers, TELUS, and Shaw, account for approximately 82% of total industry revenues. The next five largest groups/entities gather approximately 10%, and all remaining groups/entities gather 8%. Revenues include those of their affiliates.

Figure 3.0.3 Communications revenues, by type of provider, 2015

Circular chart of Figure 3.0.3: Communications revenues, by type of provider, 2015
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This circular chart shows the total broadcasting and telecommunications revenue market share by type of provider in 2015. Data is taken from table 3.0.2. There are five types of providers in this circular chart. Incumbent TSPs: 50%; Broadcasting and other entities: 14%; Cable-based carriers: 32%; Resellers: 2% 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)

Clustered column chart of Figure 3.0.4: Broadcasting and telecommunications revenues (excluding non-programming and exempt services)
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This clustered column chart shows the telecommunications, broadcasting, and total combined broadcasting and telecommunications revenues in billions of dollars for each year between 2011 and 2015. Telecommunications: 42.8, 43.9, 44.8, 45.9 and 47.8; Broadcasting: 17.6, 17.9, 18.0, 18.2 and 17.9; Total combined broadcasting and telecommunications: 60.4, 61.8, 62.8, 64.1 and 65.7.

Source: CRTC data collection

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 2011 and 2015.

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

Column chart of Figure 3.0.5: Cable-based service provider revenues by service type
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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 2011 and 2015. Revenues from basic and non-basic programming services via landline networks: 5.6, 5.5, 5.4, 5.2 and 5.1; Revenues from wireline telecommunications revenues: 5.0, 5.5, 6.0, 6.6 and 6.8; Total wireline telecommunications revenue as a percent of total: 45%, 47%, 50%, 53% and 56%.

Source: CRTC data collection

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 2011 and 2015.

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

Figure 3.0.6 Canadian communications revenue composition for a select number of large companies, 2015

Bubble chart of Figure 3.0.6: Canadian communications revenue composition for a select number of large companies, 2015
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This bubble chart measures the Canadian broadcasting and telecommunications revenue composition for eight large company groups for 2015. 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 Group, Cogeco Group, SaskTel. Y-axis (telecom centric) to X-axis (broadcasting centric) : Telus Group, MTS Group, Sasktel, 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 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

Line chart of Figure 3.0.7: EBITDA margins achieved by cable-based BDUs, traditional telephone companies, and other service providers
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This line chart shows the EBITDA margins achieved by cable-based BDUs, traditional telephone companies and other service providers for each year between 2012 and 2015. These margins reflect operating results from all services (programming, exempted programming and non-programming services. Cable-based BDUs: 44.6%, 46.3%, 46.1% and 45.1%; Traditional telephone companies: 37.5%, 36.6%, 37.7%, and 38.7%; Other service providers: 11.1%, 0.1%, -10.5% and 37.1%.

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 and other alternative facilities-based providers) for BDU and telecommunications services for the period 2012 to 2015. 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. The figure demonstrates an extreme jump in the EBITDA margins of other service providers; this was mainly due to some companies reporting “extraordinary accounting items” in their income statement in 2015, it does not represent a change in their position in the market.

iv) Consumer voices

Table 3.0.6 Number of communications-related contacts received by the CRTC, by type of issue
Type of contact 2011-2012 2012-2013 2013-2014 2014-2015 2015-2016
Broadcasting-related enquiries1 5,829 6,358 4,802 4,938 4,559
Broadcasting-related complaints1 12,419 11,507 11,055 10,115 8,584
Telecommunications-related contacts2 N/A N/A 25,153 27,077 23,453
  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 CRTC 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.

Enquiries refer to citizens looking for information. Complaints refer to a consumer lodging a complaint, expecting feedback and resolution. Contacts refer to the total of cases (comments, questions, complaints, campaign and petition) that were assigned and dealt by Client Services across Canada.

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