Communications Monitoring Report 2013

September 2013

Revisions to the Communications Monitoring Report – January 2014

Table 2.2.7
Incumbent monthly service rate and percentage change for the level 1 basket in Vancouver are revised from $33.38 to 30.38, and from -3.3% to -12.0% respectively.
Table 4.3.16
Amounts for Canadian programming expenditure and annual growth rate for sports in 2011 are revised from 8,482 to 848, and from -94.0% to -99.4% respectively; and the 2012 annual growth rate revised from 707.4% to 7,974.0%.
Figure 5.3.5
Due to rounding, the percentages in the figure displaying the residential Internet access subscriber technology mix 2012 exceeded 100%. The figures are revised as follows: Cable: from 56% to 54%, DSL: from 41% to 40% and Other: from 5% to 4%.
Section 5.5 Wireless market sector at a glance table
The average capex per user is revised to indicate that the figure is a monthly figure.
Figure 7.1.8 Mobile Broadband Average Measured Speeds
Explanatory text is inserted below the graph:

A minimum of 1,000 unique IP addresses connecting to Akamai from the network in the third quarter of 2012 was required for inclusion in the list. In countries where Akamai had data for multiple network providers, only the top three are listed, based on unique IP address count. The names of specific mobile network providers have been made anonymous, and providers are identified by a unique ID. Data is included only for networks where Akamai believes that the entire Autonomous System (AS) is mobile — that is, if a network provider mixes traffic from fixed/wireline (DSL, cable, etc.) connections with traffic from mobile connections on a single network identifier, that AS was not included in the source data set. Akamai’s EdgeScape database was used for the geographic assignments.

Source: Akamai

This publication can be made available in alternative format upon request.

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Acknowledgements

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.

Chairman’s message

I am pleased to present the 2013 Communications Monitoring Report. This edition provides the most comprehensive view to date of the Canadian communication sector and how it compares with other countries.

The average Canadian household spends more than $185 each month on communications services, including wireline, wireless, television and Internet services. By supervising and monitoring the broadcasting and telecommunications sectors, the CRTC seeks to ensure that these services meet the needs of Canadians as citizens, creators and consumers.

As illustrated throughout the Communications Monitoring Report, Canadians are generally well-served by their communications system. They have access to a wide array of programming and services that enable them to participate in Canada’s democratic life, create high-quality Canadian content that can be shared with audiences on multiple platforms, and choose from different service providers, both large and small.

This report also suggests that certain segments of the communications market require regulatory attention to achieve Parliament of Canada’s social, cultural and economic objectives. We will therefore be targeting many of these areas, such as the telecommunications services available in Canada’s North, through the activities listed in the CRTC Three-Year Plan 2013-2016.

The Communications Monitoring Report continues to evolve as we work to ensure that Canadians remain at the centre of a world-class communications system. This edition has been reorganized to present information on the CRTC’s three pillars: create, connect, and protect. In addition, certain sections have been expanded to provide additional details. All participants in the Canadian communication system are invited to use this information to contribute to our public proceedings.

Jean-Pierre Blais

Chairman and CEO

Executive summary

The Communications Monitoring Report provides a window to the broadcasting and telecommunications sectors and is intended to foster an open and informed public discussion of broadcasting and telecommunications regulatory policies and issues. The CRTC invites Canadians to use this report to enrich their participation in the regulatory process.

Canadians at the heart of their communications system

Communications plays an important part in the daily lives of Canadians. The communications system provides a means for Canadians – as consumers, citizens, or creators – to participate in the economic, cultural and social aspects of their country. In 2012, the amount that Canadian households allocated to communications services increased by 2.5% from $181 to $185 per month.

That year, telecommunications services accounted for 72% of communications expenditures. In particular, Canadians spent 3.6% more on telecommunications services, which include wireline (local and long-distance), Internet, and wireless services. On the other hand, expenditures on television distribution services decreased by 0.8%.

Approximately 44% of all connections were made by wireless services, followed by television distribution and local telephone services at 19% each, and Internet services at 18%.

Guided by its legislative mandate, the CRTC seeks to ensure that Canadians have access to a world-class communications system. This overarching objective is supported by the Commission’s three pillars: create, connect, and protect. This report is structured around activities relating to these pillars.

Create

In 2011-2012, the Canadian broadcasting sector invested $3.4 billion on Canadian content.

Commercial radio broadcasters contributed over $55 million to the development of Canadian content, an increase of 2% from the previous broadcast year. This represents 3.4 cents out of every dollar that these broadcasters earned in revenue.

Television broadcasters spent $2.9 billion on Canadian programming, representing 68% of all programming expenditures and an increase of 9.6% from the previous year. As a broadcaster’s largest expense, the production and acquisition of programming accounted for 64 cents out of every dollar earned in revenue.

In 2011-2012, cable and satellite companies directed 6% of the revenues collected from subscribers toward the creation and production of Canadian programming. Of this percentage, 41% was directed to the CMF; 24%, to cable community channels and other sources of local expression; 22%, to the LPIF and 13% to independent funds.

Canadians in English-language markets have been spending less time watching Canadian television services, which has resulted in a decline in viewing shares from 87.9% in 2009-2010 to 86.7% in 2010-2011, to 86.0% in 2011-2012. The opposite trend has been occurring in French-language markets, where viewing of Canadian television services increased from 98.4% in 2009-2010 to 98.5% in 2010-2011, to 98.6% in 2011-2012.

Average weekly viewing hours of Canadian programs for English-language services, excluding the Quebec francophone market, increased from 43% in 2009-2010 to 43.8% in 2011-2012, while viewing of French-language services in the Quebec francophone market declined from 64.5% to 63.2% over those years.

Connect

Canadians have been using a number of means to access content and to connect with each other in Canada and around the world. In 2012, 86% of Canadian households subscribed to a cable or satellite television service and 78% subscribed to high-speed Internet service. In that year, 81% of Canadians subscribed to a wireless service, of which 52% used smartphones, tablets and/or other advanced handheld devices to communicate. In 2012, over 55% of Canadians read online news and over 20% watched Internet TV on their landline or mobile devices. On average, there were 4.5 connections per household in 2012, a statistic relatively unchanged from the previous year. In 2012, Canadians continued to adapt to wireless services, albeit at a slower pace than in previous years, as the number of subscribers increased by 1.8%, compared to increases above 6% in previous years.

Household subscription data

Household subscription data is based on the Survey of Household Spending performed annually by Statistics Canada. 2011 data was the most recent data available at the time that this report was prepared.

In 2011, the amount of Canadian households subscribing to wireline and/or wireless telephone services remained unchanged at 99.3%. However, households have been gradually increasing their reliance on wireless services, as evidenced by the fact that households subscribing to local wireline services declined by 2.9% from 89.1% in 2010 to 86.5% in 2011, while those subscribing to wireless service increased over those years by 1.5% from 78.2% to 79.4%. This increased reliance on wireless services was more pronounced for households with annual incomes below $28,000. The percentage of these households subscribing to wireline services decreased by 7.5% from 82.2% in 2010 to 76% in 2011, while the percentage subscribing to wireless service increased over those years by 4.4% from 54.9% to 57.3%.

The average monthly price of basic residential local telephone service in the major centres that the Commission has forborne from price regulation increased from $22.90 in 2005 to $28.25 in 2012, resulting in an average annual price increase of 2.9%. Over this period, inflation, as measured by the change in the CPI, averaged 1.9%. Companies using VoIP technology generally offered local telephone services at 2005 prices or lower. In 2012, approximately 700,000 households subscribed to this type of service.

In 2012, there were approximately 10 million subscriptions with bundled services that provided discounts to the service package. On average, these bundles reduced the price of basic residential local telephone service. A number of incumbent telephone companies only bundled basic local service if the service was “upgraded” to include additional features such as call display or call forwarding. This essentially matched the service offerings of their competitors as most of them did not offer basic local telephone service on its own. They generally included additional calling features.

A decreasing number of payphones are available to Canadians. Payphone service revenues and connections declined by 17% and 4%, respectively. The number of payphones per 1,000 households declined by 5.6% from 5.4 in 2011 to 5.1 in 2012.

Almost all Canadians have access to basic (i.e., 1.5 Mbps) broadband Internet service. In 2011, the Commission set a download speed target of at least 5 Mbps. It expects all ISPs to offer this speed by 2015. Since that time, availability of 5 Mbps broadband service has increased from 87% to 94%. In general, Canadians living in large population centres have access to broadband speeds in the 50 Mbps to 99 Mbps range, whereas only 12% of Canadians in rural areas can access these speeds.

Protect

The CRTC uses consumer contacts and complaints to assess the effectiveness of its regulatory frameworks and to determine whether the industry is serving the needs of Canadians. In the 12-month period ending 31 March 2013, the Commission received 31,300 enquiries and complaints. Of these, 55% concerned broadcasting issues and 45% pertained to telecommunications issues. Broadcasting complaints generally focused on offensive comments.

On the other hand, telecommunications complaints, including the 12,000 complaints received by the Commissioner for Complaints for Telecommunications Services, related to wireless (39%), telemarketing (20%), Internet services (13%). The underlying issues in these complaints consisted of billing errors (42%), contract disputes/terms of service (16%), and service delivery/provision of service (12%).

Communications revenues on the rise

In 2012, revenues for the communication sector reached $60.7 billion, 2.3% higher than in 2011. The sector was dominated by five large companies that collectively generated 82% of the communications revenues. The next five companies generated 10% of these revenues, with the remaining companies accounting for 8%. Only three companies offered every service in every sector of the communications market. These three companies generated 61% of the communications revenues.

Broadcasting

In 2011-2012, broadcasting revenues totaled $16.8 billion, a 1.4% increase from the previous year. In that sector, the radio market sector was the smallest, accounting for 10% of broadcasting revenues. Radio revenues increased by 0.4% from $1.61 billion to $1.62 billion. The television market was the second largest, accounting for 39% of the revenues. Television revenues increased by 1.9% from $6.39 billion to $6.51 billion. In that market, private conventional television broadcasters experienced a 5% decline in revenues. However, this decline was offset by a 5.9% increase in pay, pay-per-view, video-on-demand, and specialty service revenues. The cable and satellite market was the largest sector, capturing 52% of the broadcasting revenues. That market’s revenues increased by 1.1% from $8.60 billion to $8.70 billion. Three companies operating in each of these broadcasting markets captured 66% of the broadcasting revenues.

Canadians had access to 1,141 OTA radio stations in 2011-2012. Approximately 50% of these consisted of private commercial FM stations, while around 12% were AM stations. The national public broadcaster, the Canadian Broadcasting Corporation, operated 8% of the OTA stations. The remaining 30% generally consisted of community (10%), campus (4%), and aboriginal (5%) stations. The Commission also authorized 28 new FM stations for broadcast.

In 2011-2012, Canadians had access to 228 discretionary television services. Their revenues amounted to approximately $4 billion and represented 61% of the television sector revenues. The top 10 discretionary services, based on revenues, consisted of three sports services, two movie services, two youth-oriented services, two educational services, and one news service. These services averaged $148 million in revenues and captured 37% of the discretionary service revenues. The remaining discretionary services averaged $12 million in revenues.

Telecommunications

In 2012, telecommunications revenues rose to $43.9 billion, an increase of 2.7% from the previous year. The five largest companies captured 85% of these revenues, followed by the next five at 9%. Companies operating in all of the markets accounted for 87% of the revenues.

The wireless market was the largest and fastest growing sector, capturing 46% of the telecommunications revenues and sustaining an annual growth revenue of 6.5%. Although revenues increased from $19.1 billion in 2011 to $20.4 billion in 2012, the number of subscribers increased by only 1.8% from 27.4 million to 27.9 million. Wireless data and roaming services were the key drivers in wireless revenue growth, increasing by 22% from $6.4 billion to $7.8 billion.

Almost all retail telecommunications revenues (93%) were earned by forborne services, compared to 76% for wholesale services.

Wholesale services generated $3.7 billion in revenues, 0.5% more than in 2011. Local telephone and access services represented 33% of wholesale service revenues, followed by private line and Ethernet service revenues at 27%, respectively.

Communications Monitoring Report 2013

September 2013

Revisions to the Communications Monitoring Report – January 2014

Acknowledgements

Chairman’s message

Executive summary

Canadians at the heart of their communications system

Communications revenues on the rise

Table of Contents

List of charts

List of tables

List of figures

List of maps