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Communications Monitoring Report 2017: The Communications industry

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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. The first section is a donut chart and the last 4 are data points.

  1. Donut chart showing the broadcasting and telecommunications revenues as a percentage of total industry revenues in 2016. Split into:
    • Broadcasting: 27%;
    • Telecommunications: 73%;
    • Industry revenues: $66.6 billion.
  2. Revenues: $66.6 billion, an increase of 1.3% over 2015.
  3. Revenue share of top 10 companies: 92%.
  4. Wireless revenue share: 37% (the largest sector).
  5. Internet growth rate: 9.8% (fastest growth sector).

The communications industry encompasses both the broadcasting and telecommunications market sectors. In 2016, 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 60% or $36 billion of all communications services revenues, excluding revenues generated from discretionary and on-demand television services, as well as direct-to-home (DTH) broadcast distribution undertaking (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, and pricing information for 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 37% of the $66.6 billion in communications revenues in 2016. Internet revenues surpassed broadcasting distribution revenues by approximately $2.1 billion, and the Internet sector has emerged as the second largest market sector, with 16% of communications revenues. Internet service providers remain particularly reliant on residential Internet access services, which account for 75% of their total Internet revenues.

Revenues from the top five ownership groups accounted for approximately 83% of total communications revenues in 2016, compared to 81% in 2013. Of these groups of companies, two are incumbent telephone companies (Bell and TELUS) and three are traditional broadcasting distribution companies (Rogers, Shaw, and Quebecor).

Over the past five years, revenues from the cable-based carriers and the incumbent telecommunications service providers (TSPs), as a percentage of total communications revenues, have remained more or less stable at approximately 33% and 49%, respectively. During this period, cable-based carriers’ telecommunications revenues increased by 5.1% annually, from $13.3 to $16.2 billion. Traditional telephone companies, however, increased their BDU revenues 8.2% annually, from $2.4 billion in 2012 to $3.2 billion in 2016.

i) Revenues

Table 3.0.1 Communications revenues ($ billions)
Category 2012 2013 2014 2015 2016 Growth (%) 2015-2016 CAGR (%) 2012-2016
Telecommunications 43.9 44.8 45.9 47.8 48.7 2.0 2.6
Broadcasting 17.9 18.0 18.2 18.0 17.9 -0.5 -0.04
Total revenues 61.8 62.8 64.1 65.8 66.6 1.3 1.9

Source: CRTC data collection

Revenues are one of the principal means to measure the performance of the communications industry. This table shows revenues, the growth rate from 2015 to 2016, and the compound annual growth rate (CAGR) from 2012 to 2016 for telecommunications service providers (TSPs) and broadcasters (including all Canadian Broadcasting Corporation (CBC) revenues and broadcasting distribution undertakings (BDU) revenues).

Figure 3.0.1 Annual communications revenue growth rates

Line chart of 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 2012 and 2016.

Year Telecommunications Broadcasting
2012 2.8 1.4
2013 2.0 0.7
2014 2.5 1.2
2015 4.1 -1.4
2016 2.0 -0.5

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 2012 to 2016.

Table 3.0.2 Communications revenues by region ($ billions)
Region 2014 2015 2016 Percentage of total (%) Growth (%) 2015-2016
Atlantic 3.8 4.0 4.0 6.7 0.5
BC and Territories 7.8 8.1 8.2 13.6 0.8
Ontario 22.7 23.0 24.0 40.0 4.7
Prairies 11.5 12.1 11.8 19.7 -2.4
Quebec 11.6 12.0 12.0 19.9 -0.3

Source: CRTC data collection

This table excludes revenues generated from discretionary and on-demand television services as well as DTH BDU services, because those services are licensed as national services. These services generated $4.4 billion and $2.2 billion in 2016, respectively. Estimates were made for companies that were not required to provide provincial and territorial telecommunications data. Growth rate variance is calculated from exact amounts and may not be apparent in the rounded revenue numbers reported in this table.

Table 3.0.3 Communications revenues, by type of service provider ($ billions)
Type Subtype 2012 2013 2014 2015 2016 Growth (%) 2015-2016 CAGR (%) 2012-2016
Incumbent TSPsFootnote 1 Telecommunications 28.0 28.3 28.9 29.7 29.1 -1.7 1.1
Broadcasting distribution 2.4 2.7 3.0 3.1 3.2 3.1 8.2
Subtotal 30.3 31.0 31.8 32.8 32.4 -1.3 1.7
Alternative service providers (excluding cable-based carriers)Footnote 2 Other facilities-based service providers 1.2 1.2 1.2 1.5 1.7 12.3 9.5
Resellers 1.5 1.5 1.6 1.7 1.7 2.9 3.0
Cable-basedFootnote 3 carriers Telecommunications 13.3 13.8 14.2 15.0 16.2 8.2 5.1
Broadcasting distribution 6.2 6.1 6.0 5.8 5.5 -4.9 -3.0
Subtotal 19.5 19.9 20.2 20.8 21.7 4.5 2.8
Other broadcasting Broadcasting – Radio & TV 9.3 9.2 9.3 9.0 9.1 1.0 -0.5
Total All 61.8 62.8 64.1 65.8 66.6 1.3 1.9

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 year between 2012 and 2016.

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
2016 74.6 10.0
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 2016. 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
2014 2015 2016 2014 2015 2016
10 3 3 3 60 59 60
9 0 0 0 0 0 0
8 7 7 7 30 30 29
7 0 0 2 0 0 0
6 3 2 2 0 0 0
5 11 17 18 0 1 2
4 28 27 35 1 1 1
3 44 39 43 5 4 5
2 38 45 42 1 2 1
1 215 220 212 3 3 2

Source: CRTC data collection

The table above shows that three communications service providers offered services in all 10 market sectors in the telecommunications industry: 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), and generated 60% of communications revenues. In contrast, 212 providers that offered only one service generated 2% of communications revenues.

The communications industry is still highly integrated, with the vast majority of revenues generated by companies operating in eight or more sectors.

iii) Financial performance

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

Bar chart of 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 2014, 2015 and 2016.

Year Top 5 Groups Next 5 groups Remaining groups/entities
2014 82 10 8
2015 82 10 8
2016 83 9 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, Quebecor, Rogers, Shaw, and TELUS, account for approximately 83% of total industry revenues. The next five largest groups/entities account for approximately 9%, and all remaining groups/entities account for 8%. Revenues include those of their affiliates.

Figure 3.0.3 Communications revenues by type of provider, 2016

Donut chart of Figure 3.0.3: Communications revenues, by type of provider, 2016 Donut chart of Figure 3.0.3: Communications revenues, by type of provider, 2016
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This donut chart shows the total broadcasting and telecommunications revenue market share by type of provider in 2016. Data is taken from table 3.0.2. There are five types of providers in this donut chart.

Provider Communications revenue
Incumbent TSPs 49%
Other facilities-based service providers 2%
Resellers 2%
Cable-based carriers 33%
Broadcasting – other entities 14%

Source: CRTC data collection

Figure 3.0.4 Broadcasting and telecommunications revenues

Clustered column chart of Figure 3.0.4: Broadcasting and telecommunications revenues Clustered column chart of Figure 3.0.4: Broadcasting and telecommunications revenues
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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 2012 and 2016.

Year Broadcasting Telecom Total
2012 17.9 43.9 61.8
2013 18.0 44.8 62.8
2014 18.2 45.9 64.1
2015 18.0 47.8 65.8
2016 17.9 48.7 66.6

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 telecommunications services (i.e. local, long distance, data, private line, and Internet) between 2012 and 2016.

Overall, revenues have been stable in broadcasting, although they declined slightly from 2014 to 2016, while telecommunications revenues have consistently grew during the five-year period from 2012-2016.

Figure 3.0.5 Cable-based carriers’ revenues, by service type

Column chart of 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 2012 and 2016.

Year Basic and non-basic programming services via landline networks (billions) Wireline telecommunications revenue (billions) Wireline telecommunications revenue as a percent of total
2012 5.5 5.5 50
2013 5.4 6.0 53
2014 5.2 6.6 56
2015 5.1 6.8 57
2016 4.8 7.1 60

Source: CRTC data collection

This bar graph compares cable-based carrier revenues from two principal sources: basic and non-basic programming services (i.e. revenues from the distribution of television services), and wireline telecommunications services (i.e. local, long distance, data, private line, and Internet) between 2012 and 2016.

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 service providers, 2016

Bubble chart of Figure 3.0.6: Canadian communications revenue composition for a select number of large companies, 2016. Bubble chart of Figure 3.0.6: Canadian communications revenue composition for a select number of large companies, 2016.
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This bubble chart measures the Canadian broadcasting and telecommunications revenue composition for eight large company groups for 2016. 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 providers offer telecommunications services as well as broadcasting services. This graph plots the total revenues of these providers 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 carriers, incumbent TSPs, 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 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 2013 and 2016. These margins reflect operating results from all services (programming, exempted programming and non-programming services.

Type 2013 2014 2015 2016
Traditional telephone companies 36.6 37.7 38.7 39.1
Cable-based companies 46.3 46.1 45.1 43.5
Other service providers 0.1 -10.5 37.1 16.7

Source: CRTC data collection

This graph shows earnings before interest, taxes, depreciation, and amortization (EBITDA) margins for cable-based carriers, incumbent TSPs, and other service providers (including resellers and other alternative facilities-based service providers) for BDU and telecommunications services for the period from 2013 to 2016. EBITDA margin is a measure of profitability. Higher EBITDA margins are generally associated with greater profitability. Only companies with Canadian communications revenues greater than 80% of their total revenues were included in the calculation of EBITDA.

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 statements in 2015; it does not represent a change in their position in the market. The drop in 2016 was mainly due to the reclassification of companies as a result of mergers and acquisitions activities.

iv) Consumer voices

Table 3.0.6 Number of communications-related contacts received by the CRTC, by type of issue
Type of contact 2012-2013 2013-2014 2014-2015 2015-2016 2016-2017
Broadcasting-related contacts1 17,701 16,015 15,111 13,254 10,862
Broadcasting-related complaints1 11,206 11,138 10,158 8,669 7,104
Telecommunications-related contacts2 N/A 25,153 27,077 23,453 18,243
Telecommunications-related complaints2 N/A 18,624 19,818 16,613 11,724
Electronic commerce-related submissions (Spam Reporting Centre)1, 3 N/A N/A 264,821 291,145 373,943
Telecommunications-related complaints (Unsolicited Telecommunications Rules)1, 4 136,622 113,641 107,293 129,984 79,417
  1. For the 12-month period from 1 April to 31 March.
  2. For the 12-month period from 1 January to 31 December.
  3. The Spam Reporting Centre (SRC) began collecting data in July 2014.
  4. For detailed info on Unsolicited Telecommunications Rules (UTR) complaints, please see the National Do Not Call List (DNCL) report.

Source: CRTC correspondence tracking system, Spam Reporting Centre, and Unsolicited Telecommunications Rules database

The CRTC tracking system counts multiple communications from the same client regarding the same complaint as separate units; therefore, the actual number of complaints received may be slightly lower.

Contacts refers to the total number of cases (comments, questions, complaints, campaigns, and petitions) that were assigned to and dealt with by Client Services across Canada. Complaints refers to a consumer lodging a complaint, expecting feedback and resolution. Submissions refers to the total number of reports Canadians sent to the Spam Reporting Centre.

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