The telecommunications industry had another banner year in 2008, with revenues totalling $40 billion – up 5.5 per cent over the previous year – pushed by growth in wireless and home high-speed Internet.
However, as it has in a number of industrialized countries, the growth in the number of wireless subscribers here has slowed in recent years, as has the growth in operator revenues.
These were among the figures were released Wednesday by the Canadian Radio-television and Telecommunications Commission in its second annual overview of the broadcast and communications industries.
The vast majority of the $2.1 billion increase in telecommunications revenues last year was directly due to the 11 per cent revenue growth in mobile phone and 9 per cent growth in residential high-speed Internet services, the commission concluded.
Here are some of the wireless industry observations in the report:
The number of mobile phone subscribers increased by 9 per cent in 2008. Some 74 per cent of Canadian households are wireless subscribers, or 22.1 million people. Still, the commission said that puts Canada’s wireless penetration rate behind many of countries in the Organization for Economic Co-operation and Development.
The penetration of smartphones nearly doubled in one year, from 12 per cent to 21 per cent.
Revenue per user (ARPU), a key industry measurement, increased approximately 3 per cent from $59 per month in 2007 to $60 per month in 2008. Wireless data revenues alone grew at an annual rate of 35.2 per cent in 2008.
The mobile wireless sector, excluding paging, had revenues of approximately $15.9 billion in 2008, a 10.5 per cent increase over the previous year.
However, as the wireless market matures its growth has been slowing. Since 2005, for example, operator revenue growth has declined from a robust 16.5 per cent in 2005 to a mere 10.5 per cent in 2008. Over the same period annual subscriber growth has declined more quickly, from 13.3 per cent to 9 per cent.
The commission noted that for low-use wireless subscribers, fees charged by the leading operators – Bell Canada, Rogers Communications and Telus Corp., who owned 94 per cent of the market – are below those in the United States. But our rates tend to be higher than in other countries surveyed.
On the other hand, wireless fees for medium and heavy-duty users are within the middle of the group of countries examined by the commission.
That situation may change when four new wireless entrants who won spectrum at last year’s AWS auction – Globalive Wireless, DAVE Wireless, Videotron and Public Mobile – open for business sometime over the next five months. All four have denounced the rates charged by the incumbents and vow to offer better value and more flexibility in their plans, which have not been detailed yet.
As for that auction, it had a dramatic effect on total wireless capital expenditures in 2008. Thanks to the $4.26 billion participants spent on buying licences, the average capital expenditure by cellphone companies per user (ACEU) soared in 2008 from $7 to $23 a subscriber. Had that auction not been held, the ACEU would have been flat for the year.
The ACEU for this year and 2010 should be higher than $7 a subscriber thanks to the spending by the new entrants on their new networks, plus millions being spent by Rogers, Bell and Telus upgrading their networks.
As for DSL and cable Internet access, the number of residential subscribers to high-speed Internet services increased by 9 per cent. To a lesser extent, the report added, overall industry revenues continued to benefit from the revenue growth of the newer data services that meet business customer requirements for increased speed, functionality, and cost-efficiency. These services now represent over 76 per cent of the data protocol revenues, with data services such as Ethernet and IP-based virtual private networks having a combined revenue growth of 19 per cent.
A growing number of Canadians, both anglophone and francophone, used the Internet to watch videos last year, the report noted (42 per cent and 37 per cent, respectively). More Canadians are watching television programming online. The percentage of Canadians watching television programming in a typical week, including clips from television programs, increased 29 per cent for Anglophones and 23 per cent for Francophones.
Perhaps because of music buying and swaping, the streaming of AM and FM radio stations over the Internet continues to decline. The percentage of anglophones who streamed a radio station in a given month dropped from 23 per cent in 2005 to 16 per cent in 2008. Similarly, the percentage of francophones who engaged in the same online activity decreased from 16 per cent to 13 per cent during the same period.
However, between 2007 and 2008, podcasts saw an increase in usage of 46 per cent among anglophones and 40 per cent among francophones.
Finally, the report notes the continuing loss of market share by traditional phone companies to voice over IP providers, including cablecos. In 2008, there were 13 million residential telephone lines. Cable companies held a 22.5 per cent share of these lines, which represented 2.9 million lines. A year earlier, they held a 17.9 per cent share, or 2.3 million lines. Cable companies increased their share of these phone revenues from 13.6 per cent to 18.6 per cent last year.