Canada telecoms market
Canada is the second-largest country in the world. It is made up of three territories and 10 provinces, each with its own separate capital city.
The North (or Canadian Arctic) is comprised of Nunavut, Yukon and the Northwest Territories. These are characterised by relatively small populations living in communities spread over vast distances.
Most of Canada’s 35 million people (80%) live in towns and cities in the southern areas of the country, within 250km of the US border. This regional concentration is reflected in the make-up of Canada’s communications infrastructure.
For example, although cellular operators cover 99% of the population with their combined networks, the total network footprint includes only 20% of the geographic area, according to the Canadian Radio-television and Telecommunications Commission (CRTC).
“One of the big challenges for Canada is the nature of its geography,” states Michael Bisaha, analyst, TeleGeography. “It is a large country to maintain a network on if you are a national provider, especially when the population density is relatively low.”
Many rural and remote areas in Canada have internet speeds that lag significantly behind the CRTC’s goal of ubiquitous download speeds of 5Mbps by 2015. In parts of the North, current speeds stand at around 1.5Mbps.
Although the lack of broadband infrastructure is often portrayed as an urban versus rural issue, there are also pockets within major cities in Canada without access to either cable or DSL broadband service because they are deemed uneconomic.
In its April 2014 budget, the Canadian government said it would commit $305 million in funds over five years to provide or improve broadband to 280,000 households and businesses in underserved areas. Several telecoms sector amendments were also touted in Canada’s 2014 budget speech, including granting the CRTC authority to impose greater penalties on operators violating telecoms laws, plus measures giving the regulator more direct powers over non-facilities based telecoms service providers, alongside a clampdown on unfair domestic mobile roaming rates.
While the roaming issue was addressed in draft amendments in March 2014, other budgetary measures are still pending. Industry Canada is the ministry responsible for telecoms policy, spectrum management and licensing submarine cables, satellite and wireless services.
“Most of the regulatory activities are based on the fact that there are only a handful of region-centric providers. There are often instances where these providers are using pricing or roaming measures targeted at a specific competitor, so a lot of regulatory activities come back to that issue,” says Bisaha.
The Canadian telecoms market is dominated by ten heavyweights: Bell Canada; Telus; Bell Aliant; Shaw Communications; Videotron; Rogers Communications; Manitoba Telecom Services (MTS Allstream); Cogeco Cable; Saskatchewan Telecommunications (SaskTel); and Eastlink. It also included 65 competitive local exchange carriers (CLECs) as of June 2014.
According to TeleGeography, the CLECs have taken sizeable chunks out of the incumbents’ market shares, especially in urban areas. The cellular market remains dominated by the three well-established nationwide players, all of which have quadruple-play fixed, broadband, wireless and pay-TV empires – Rogers, Bell (including the former Aliant Mobility) and Telus.
However, there are two upcoming wireless spectrum auctions – one in early 2015, and one in April 2015 – that include spectrum only available to new entrants in order to try and increase the number of competitive providers. Meanwhile, ISPs continue to focus on penetrating the lucrative business sector, as they attempt to become less reliant on residential customers. According to TeleGeography’s Bisaha, the key factors shaping Canada’s wholesale market include globalisation, peering and Ethernet.
“A growing number of companies need connectivity into Canada, which presents Canadian providers with the opportunity to be that on-ramp,” he says. “However, a lot of western companies are moving their facilities to other locations, so Canadian providers are not necessarily seeing all that growth on their own network.”