Communications Monitoring Report 2016: Canada’s Communication System: An Overview for Canadians
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2.0 Canada’s Communication System: An Overview for Canadians
The CRTC continues to strengthen its efforts to place Canadians at the centre of the communication system, whether as consumers of communications products and services, creators and distributors of content, or citizens who need access to information, products and services to fully engage in a democratic society. This section focuses on Canadians’ use of communication services, competition, household expenditures, and access to communications services.Footnote 1
More Canadian households subscribe exclusively to mobile wireless services (23.7%) than exclusively to wireline telephone services (13.6%). Subscriptions to wireline telephone services continue to decrease each year, while mobile wireless service subscriptions are increasing.
While the majority of Canadians still own and use wireline phones, the data confirms the slow and steady shift away from this technology in favour of wireless services. Indeed, more Canadian households have mobile phones (85.6%) than landlines (75.5 %) – a big change from only ten years ago, when just over half of Canadian households subscribed to mobile phones (62.9%) and almost all subscribed to landlines (94.0%).
Canadians embrace mobile wireless services, 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.
In 2014, Canadian households paid an average of $214.75 per month for their communications services, an increase of $3.00 (or 1.4%) from 2013.
Canadian households currently spend more per month on wireless services ($82.67) and BDU services ($56.33) compared to Internet services ($42.42) and wireline telephone services ($33.33).
There are clear differences across household income quintiles. Households in the two highest income quintiles spend more than twice as much on mobile wireless services 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.
i) Industry landscape and competition
Canada’s communication system is composed of two broad sectors: broadcasting and telecommunications. Total communications revenues increased by 2.5% since 2014. However, this overall growth masks important divergences across individual types of services. While detailed financial information can be found in separate sections of this report, this section offers a high-level overview of industry revenues and the competitive landscape in the broadcasting and telecommunications industries.
|Categories||2013||2014||2015||Growth 2014-2015 (%)|
|Telecommunications (retail and wholesale)||44.8||45.9||47.8||4.1|
Wireline voice (local and long distance)
Data and private line
Wireless (local and long distance)
Source: CRTC data collection
Broadcasting distribution undertakings (BDUs) provide subscription television services to Canadians. They redistribute programming from conventional over-the-air television and radio stations. They also distribute pay audio and discretionary services (i.e. pay, specialty, pay-per-view (PPV) and video-on-demand (VOD)). Most BDUs are cable, national DTH satellite, or Internet protocol television (IPTV) service providers.
Telecommunications services remain dominant
In 2015, revenues from telecommunications services continued to capture approximately 73% of all communications service revenues, with broadcasting service revenues representing the remaining 27%. This speaks in part to the scale of revenues from mobile wireless services, which accounted for nearly half of all telecommunications service revenues. Indeed, mobile wireless services alone generated more revenues than the entire broadcasting sector.
As noted above, more Canadians now subscribe exclusively to mobile wireless services than to wireline telephone services. This reflects financial data trends that demonstrate relatively consistent mobile service revenue growth.
A similar phenomenon – one in which certain services drive overall sector growth while other services remain flat or shrink – has emerged across multiple subsectors of the communication system. Services introduced in the early-to-mid-20th century, including wireline voice services, conventional television services, and radio services continue to be widely used by many Canadians. However, 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 communication 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 groups/entities (Bell Canada, Québecor, Rogers, TELUS, and Shaw) together accounted for approximately 82% of total industry revenues, consistent with 2014.
Figure 2.0.1 Percentage of total combined revenues, by broadcasting and telecommunications ownership groups
This market concentration plays a role in the rise of bundling, since the largest entities are well positioned to offer their customers discounts in exchange for subscribing to a range of services. The table below shows the number of subscriptions to two or more services with one company. From 2011 to 2013, the number of subscriptions to bundled services increased from 9.4 million to 10.4 million. Following a stagnation of the number of bundled subscriptions from 2013 to 2014, a slight -1.9% decrease in the number of bundled service subscriptions occurred in 2015, showing that the market might have reached its saturation point in 2014.
CAGRFootnote 2 (%)
|Number of subscriptions with bundles||9.4||10.0||10.4||10.4||10.2||2.1|
Source: CRTC data collection
ii) Communications service expenditures and prices
The amounts that Canadian households spend on communications services provide an important perspective on how communications services impact the household budget. These data also point, to a certain extent, to national shifts in demand and the competitive landscape.
However, it is important to recognize the limitations of expenditure data. First, it may overlook the fact that certain free 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 or higher than they actually are.
Spending on communications services continues to riseFootnote 3
Throughout 2014, the average Canadian household spent $214.75 per month on communications services, an increase of $3.00 (1.4%) over 2013. Table 2.0.3 demonstrates that much like it is the case for telecom industry revenues, mobile and internet services are driving household expenditures growth.
The increase in overall communications spending was led by spending on wireless and Internet services which increased 4.8% and 4.3%, respectively. These increases reflect the observed trends in subscriptions to higher internet speeds and mobile plans with more data.
Canadians continued to allocate the smallest proportion of their household communications service expenditures to landline telephony service, which fell from $35.58 per month in 2013 to $33.33 per month in 2014, a reduction of 6.3%. Overall, cellphone ownership rates rose from a total of 84.7% in 2013 to 85.6% in 2014, compared to only 75.5% of Canadians who owned a landline in 2014, down from 79.1% in 2013 (see Figure 2.0.7).
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 services or cable IPTV and DTH satellite services. In 2014, spending was greatest on mobile wireless services across all income quintiles.
Although spending on communications services by lower-income households was less than that by higher-income households, as shown in Table 2.0.3, expenditures on communications services take up a significantly larger percentage of their annual incomes – as Table 2.0.4 shows.
|Service||Year||First quintile||Second quintile||Third quintile||Fourth quintile||Fifth quintile||Average of all quintiles||CAGR of average of all quintiles 2010-2014|
|Growth 2013-2014 (%)||-8.60||-7.21||-9.93||-5.24||-1.63||-6.32|
|Growth 2013-2014 (%)||3.54||8.05||4.64||9.45||0.66||4.75|
|Growth 2013-2014 (%)||15.31||5.44||4.95||1.56||0.48||4.30|
|Cable, IPTV and DTH||2012||39.50||49.50||54.67||63.58||75.75||56.58||2.14%|
|Growth 2013-2014 (%)||5.18||0.17||-1.30||-3.61||-0.45||-0.44|
|Growth 2013-2014 (%)||3.60||2.35||0.63||2.10||0.03||1.42|
Sources: Statistics Canada’s Survey of Household Spending
All data in Table 2.0.3 was collected and analyzed to show the growth percentages between 2013 and 2014. The expenditure data presents per household expenditure average and excludes sales tax.
On average, for all income quintiles, spending on wireline services have continuously declined from 2010 to 2014, at a compound annual growth rate (CAGR) of -5.98%. In opposition, average wireless service expenditures for all income quintiles grew by 4.75% between 2013 and 2014 and have a 2010 to 2014 CAGR of 7.93%. Although household spending on communications services increased across all income quintiles, households in the highest quintiles are spending more on communications services compared to those in the lower quintiles. Nevertheless, the growth rate is generally higher in the lower income quintiles. For example, Internet service spending in the first income quintile grew 15.31% since 2013.
Table 2.0.3 also shows a declining growth rate for cable and DTH service expenditures in the higher income quintiles, more specifically, in the third, fourth, and fifth quintiles. Overall, total spending grew 1.42% between 2013 and 2014, and the overall CAGR between 2010 and 2014 was 3.43%.
|Characteristics||Household income less than $30,519 (First quintile)||Household income from $30,520 to $53,274 (Second quintile)||Household income from $53,275 to $81,294 (Third quintile)||Household income from $81,295 to $124,838 (Fourth quintile)||Household income over $124,839 (Fifth quintile)||Average of all quintiles|
|Average annual income||$19,664||$42,122||$67,083||$101,177||$201,752||$86,360|
|Members per household||1.50||2.05||2.51||2.91||3.40||2.47|
|Communications expenditures as a percentage of annual income||6.6%||4.1%||3.1%||2.4%||1.5%||2.4%|
Source: Statistics Canada’s Survey of Household spending
Based on Statistics Canada’s Survey of Household Spending (data for 2014), the average household annual income before taxes in Canada was $86,360. The Canadian provincial average household annual income before taxes ranged from $71,164 to $118,680. Alberta had the highest average household income before taxes followed by Ontario at $89,217.
From the perspective of per-household income quintiles (each 20% of households by average annual income), the first income quintile has an average annual income of $19,664. This quintile had an average of 1.50 members per household. The highest income in this quintile was $30,519. The third income quintile had an average annual income of $67,083 and an average of 2.51 members per household. The highest income in this quintile was $81,294, an increase since last year’s highest income of $79,722. The top 20% of households had annual incomes over $124,839. This income quintile had an average annual income of $201,752 and an average of 3.40 members per household.
Compared to data from 2013, the average number of members per household decreased by 0.01. However, there was a significant increase in incomes per quintile. The first quintile range was the only one to decrease from $30,668 to $30,519. The second, third, and fourth quintile ranges increased by $1,470, $1,572, and $3,541, respectively.
Figure 2.0.2 Monthly household expenditures, by service and by age of reference person ($/month/household), 2014
Communications 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 2.0.3 shows the price changes for fixed baskets of telecommunications services (telephone services, Internet services, and BDU services (cable, DTH satellite, and IPTV services)), as well as overall price changes 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 price changes accurately.
The telephone services index reflects the price changes experienced over time by a household for a fixed basket of telephone services, including both landline and mobile wireless services. This type of basket reflects a weighted average of consumer expenditures on basic local services, as well as other local telephone services, such as options and features, long distance services, installation, and repair services. This index does not include Internet service expenditures.
The BDU services index includes cable, DTH satellite, and IPTV (including pay television) services and reflects the price changes experienced over time by a household for a basket of subscription based television services. This basket includes both “basic” and “extended” television distribution services. Basic service is the minimum service to which all customers must subscribe. Extended service is the most popular package of additional channels. This index does not account for bundling discounts.
The internet services index reflects the price changes experienced over time by a household for a constant quantity and quality of internet services. This basket includes monthly internet access services subscription through a wired line to the household’s residence. This index does not include access to the internet bundled with voice calls over a cellular network.
Figure 2.0.3 Price indices for telephone services, BDU services and Internet services compared to the CPI
Figure 2.0.4 Broadband, wireline and wireless pricing comparison in rural communities, per province/territory, 2015
Figure 2.0.5 Broadband, wireline, and wireless service pricing comparison in urban communities, per province/territory, 2015
iii) 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 faced by communities across the country. To better understand how the communication 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 particular regard to official language minority communities and access to communications services in minority official languages.
Canadians are communicating through many different platforms
As Figure 2.0.6 shows, connections to mobile wireless services represent nearly half of all household connections, and Internet connections continue to expand. Landline (i.e. wireline telephone service) and BDU (e.g. cable, DTH satellite, and IPTV) connections, despite their relative declines, still comprise over one third of all subscriptions. As a whole, the average household features 4.4 connections. While mobile wireless service connections are the most widespread, Canadians clearly use a variety of ways to communicate.
Figure 2.0.6 Total residential connections distribution by service type (%)
Multiple cellphone households behind the rise of wireless service subscriptions
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 (99.2%) subscribed to either mobile wireless or landline telephone services in 2014. Yet, rather than stacking telephone services (i.e. subscribing to both landline and wireless mobile services), some Canadians are choosing only one service – and for the most part, this appears to be mobile wireless service. As noted in Table 2.0.5, the percentage of mobile-only households (23.7%) currently exceeds the percentage of wireline-only households (13.6%). Over the last decade, the wireline-only household percentage continuously decreased while the mobile-only household percentage steadily increased.
While the transition to widespread mobile wireless service use – partly at the expense of wireline telephone services – is a long-term process, the historical data in Table 2.0.5 shows how rapidly Canadian households have embraced this newer technology. In 2005, wireline-only households (36.0%) far outpaced their mobile-only counterparts (4.8%).
By organizing this information by province (see Table 2.0.6) and income quintile (see Table 2.0.7), it is more apparent which groups of Canadians are driving this year-over-year shift. For instance, consumers in the four western provinces (Alberta, Saskatchewan, Manitoba, and British Columbia) and Ontario have played a key role in the rise of mobile-only households. In contrast, both Quebec and the Eastern provinces continue to feature a larger percentage of landline-only households. Nevertheless, all provinces have decreasing wireline-only percentages, except Newfoundland and Labrador, whose wireline-only households increased from 13.2% in 2013 to 14.0% in 2014 (Figure 2.0.6). This may be the reason why their mobile-only households decreased to 10.2% in 2014 from 12.0% in 2013 (Figure 2.0.6). Finally, New Brunswick and Newfoundland and Labrador are the only provinces in which a decrease in mobile-only households was observed.
Figure 2.0.7 shows the rate of cellphones and landlines owned by Canadians. 99.2% of Canadian households own either a cellphone or a landline. While 85.6% of households have cellphones in 2014, from 2011 to 2014, the percentage of household owning more than one cellphone increased from 42.8% to 49.6%. During the same period, Landline ownership decreased gradually from 86.6% in 2011 to 75.5% in 2014, as seen in Figure 2.0.7.
Figure 2.0.7 Cellphone and landline ownership rates
The link between income and telephone service subscriptions
The data on telephone ownership rates by income quintile (see Table 2.0.7) illustrate the transition to mobile phones. As opposed to 2013, when the percentage of wireless only households surpassed the percentage of wireline only households in the first quintile, the percentage of mobile only and wireline only households remained relatively stable in 2014 for this quintile.
A greater change is seen within the second, third, and fourth quintiles. The exclusive use of cellphones has increased significantly (42.3% growth in the third income quintile). The overall steady decline in wireline service subscriptions shows that households are choosing to forgo wireline services in favour of mobile wireless services.
Contrary to the trend seen throughout income quintiles one to four, the exclusive subscription to wireline services has increased from 3.6% of these households to 4.8%, while the use of only mobile wireless services has decreased (8.0%) in the fifth income quintile.
Financial resources appear to play a role in whether households subscribe to wireless and wireline services, or only one of the two. While only 16.3% of households in the highest income quintile subscribe to only wireline or only wireless services, there is a significant difference in the percentage of households in lower income quintiles that subscribe to only wireline or only wireless services (62.9% in the first quintile). Indeed, the data suggest that the higher a household’s income, the more likely it is that the household subscribes to both types of telephone services.
|Year||Wireline||Mobile wireless||Wireline and/or mobile wireless||Wireline only||Mobile wireless only||Only wireline or only 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||82.9||82.7||99.9||17.2||17.0||34.2|
|Newfoundland and Labrador||89.3||85.5||99.5||14.0||10.2||24.2|
|All of Canada||75.5||85.6||99.2||13.6||23.7||37.3|
Source: Statistics Canada’s Survey of Household Spending
|Service||Year||First quintile||Second quintile||Third quintile||Fourth quintile||Fifth quintile|
|Growth 2013-2014 (%)||0.2||-7.9||-9.6||-5.3||0.9|
|Growth 2013-2014 (%)||0.9||4.4||1.0||0.3||-1.5|
|Wireline and/or mobile wireless||2012||97.4||99.5||99.7||99.8||99.7|
|Growth 2013-2014 (%)||0.3||-0.3||-0.5||-0.1||-0.2|
|Growth 2013-2014 (%)||-1.0||-19.0||-12.5||-6.0||33.3|
|Mobile wireless only||2012||22.8||19.2||16.9||12.4||7.3|
|Growth 2013-2014 (%)||0.6||22.7||42.3||29.5||-8.0|
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. Consequently, the most recently available data is from 2014.
The link between income and Internet subscriptions
Mobile wireless devices (such as smartphones and tablets) and technologies (HSPA and LTE) enable 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. Households in the lower income quintiles (first, second, and third) have more cellphones than home computers. For example, 67.4% of Canadian households in the lowest income quintile own cellphones (see Table 2.0.7), compared to 64.3% of those households that own home computers and 63.5% that have Internet access at home (see Table 2.0.8).
While this may be due to a number of factors, one important factor could be that low-income households are choosing to devote their resources to a technology that can provide multiple communications services (voice and Internet), rather than subscribing to each service individually. It is worth noting that the use of home computers, for the first time, has declined across all income quintiles, with the largest decrease of 3.1% in the second quintile.
|Technology||Year||First quintile||Second quintile||Third quintile||Fourth quintile||Fifth quintile||Average for all quintiles|
|Internet use from home||2013||59.7||77.6||89.0||94.9||98.4||83.9|
Source: Statistics Canada
The rise in Internet service use across income quintiles is also reflected in overall residential Internet service availability and subscription rates. The percentage of households with access to broadband services with a download speed of at least 5 Mbps is 96% (see Figure 2.0.8). Similarly, although the CRTC’s target service speeds are linked to the availability of 5 Mbps (download) and 1 Mbps (upload) service and not subscriptions to these service speeds, the data indicates that Canadians are clearly embracing faster connections, which are becoming more widely available: the majority of households now subscribe to Internet service packages with download speeds at or above 10 Mbps, while packages with slower service speeds have been declining in popularity.
Figure 2.0.8 Residential broadband service availability (5 Mbps or higher download speed), by province/territory (% of households), 2015
|Advertised download speed||2011||2012||2013||2014||2015|
|256 kbps and higher||76||78||79||81||83|
|1.5 Mbps and higher||72||75||77||80||82|
|5 Mbps and higher||54||62||71||77||80|
|10 Mbps and higher||19||29||45||55||61|
|16 Mbps and higher||7||21||25||34||41|
|50 Mbps and higher||0||3||4||8||16|
|All speeds (including dial-up)||78||79||80||82||84|
Source: CRTC data collection
2.1 Local spotlight: Access for official language minority communities
As a designated institution under section 41 of the Official Languages Act, the CRTC is committed to enhancing the vitality of the English- and French-language minority communities in Canada, supporting their development and addressing their needs within the context of its mandate, and fostering the full recognition and use of both official languages in Canadian society. To this end, the CRTC focuses on ensuring that official language minority communities 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 reflect the Canadian broadcasting policy objectives, which the Commission is tasked to pursue. In this regard, the Broadcasting Act specifies that the Canadian broadcasting system should demonstrate 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. the mother tongue) and still understood at the time of the 2011 Census.
This table displays the percentage of the population for whom the mother tongue is an official language in minority status in the province or 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%. This data excludes institutional residents.
Map 2.1.1 Locations of official language minority communities in Canada
|Province/territory||Official language minority population as a percentage of total population||Radio||Over-the-air
|Cable distribution (excluding DTH satellite)||Broadband
|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, and CRTC data collection
This table displays the percentages of the official language minority community households in each province and in the territories that have access to radio services, television services, cable distribution services (excluding DTH satellite services since 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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