Canada is the world’s second largest country in terms of landmass. But with 81% of the population living in urban areas, such are the vagaries of the Canadian geography that, according to the Canadian Radio-television and Telecommunications Commission (CRTC), Canada’s mobile operators collectively provide services to 99% of the population, although they only provide physical coverage in 20% of the country.
The Canadian fixed market is highly competitive with nine major players vying for customers. Five of these players are traditional fixed-line services: Bell Canada, Telus, Bell Alliant (sister company to Bell Canada), MTS and SaskTel. Bell Canada is the incumbent and market leader followed closely by Telus. The PSTNs are mainly in competition with new entrants, the cablecos; in 2009, PSTNs made a combined loss of 982,000 wireline customers. In the same period, cablecos Rogers, Videotron, Shaw and Cogeco gained a combined net of 505,000 fixed-voice subscribers. In Canada, cablecos and telcos are constantly trying to offer the most competitive bundle packages.
While all these companies offer TV services, Bell took steps this year to become a true multimedia company through its $3.29 billion acquisition of CTV, Canada’s leading private media organisation, and its launch of Bell Media, which will operate CTV and other assets in digital and radio. The integration of a media company with a telco allows Bell to create and deliver its own media content across multiple broadband platforms. George Cope, president and CEO of Bell Canada and BCE, says: "Our acquisition of CTV leverages our strategic investments in broadband networks and services and enables our promise to deliver the content Canadians want most across every screen – smartphone, tablet, computer and TV."
When looking at market figures, what is surprising are Canada’s levels of wireless and broadband penetration. In a report by BuddeComm, in 2001 the OECD recorded Canada as having the second highest broadband penetration; in 2009, it had dropped to tenth position. TeleGeography found that household broadband penetration had only reached 77.3% in December 2010.
In December 2010, wireless penetration had only reached 73.9% according to TeleGeography. Rogers Communications, Bell Mobility and Telus Mobility hold the greatest share of the wireless market with 36%, 29.1% and 28% respectively.
Lawrence Surtees, analyst with IDC Canada, explained that one of the reasons for low penetration in Canada was people’s reluctance to leave fixed services because of the efficiency of the Bell system and because, on this system, they didn’t have to pay for local calls. "When wireless came to Canada there was resistance because people thought ‘I’ve got to pay for all my calls?’ But a major development to the sector, I think, will be a call for wireless data to equal the prices of fixed-line data."
The 2008 AWS spectrum auction created an influx of wireless operators, increasing the number of major players from three to 10. According to Surtees, wireless revenue reached $17.09 billion last year, accounting for a third of the entire market. Another 700MHz is to be auctioned in 2012 with telcos testing and planning to deploy 4G and LTE services over the next year. During 2009, there was an average 35% growth to data across the main operators as smartphone and 3G upgrades gained popularity, according to BuddeComm. Over the next two years, there will be more significant growth with the implementation of 4G LTE.
In October 2010, Rogers announced the first LTE technical trial in Canada. Bob Berner, EVP, network and chief technology officer at Rogers Communications, explained the trial: "We will validate how LTE technology will perform in real world situations across a variety of spectrum frequencies in urban, suburban and rural environments." Telus is testing 4G wireless LTE with plans to begin deploying the network in the latter half of this year. BuddeComm anticipates that half of all mobile voice traffic in Canada will come from VoIP within 10 years.
The potential growth in wireless is only set to benefit Canadian companies, due to the strict regulations regarding foreign ownership. This was most recently seen when Globalive, a company backed by Egyptian telco Orascom, entered the Canadian market in 2009 after much debate over whether it agreed with the country’s regulations. In February 2011, Globalive appealed a decision that overturned the government’s initial decision to give Globalive a licence to operate in the country. The development of this case will determine the entry of foreign businesses into Canadian telecoms.
As the Canadian market develops, its fixed-line operators will begin to feel the effect of wireless. "Carriers are resilient now but I can see in the next three to five years that the dynamics of pricing and everything will be turned on its head, not because of IP itself but because of wireless IP," says Surtees.
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