App business thriving within Canada’s wireless industry: CWTA report

A recent study on the wireless industry's effects on the Canadian economy in 2013 showed a shift favouring businesses involved in applications and content, and against those involved in devices and other hardware. The study was done for the Canadian Wireless Telecommunications Association (CWTA) by research company Nordicity, and quietly released in October. Outlining the economic contributions of different aspects of the wireless industry, the report showed an economic benefit of $438 million from content and application developers in 2013, and $24 million from application stores, which include online outlets such as Apple Inc.'s App Store and Google Inc.'s Google Play. Those benefits represented increases of 42.3 per cent and 47.7 per cent for content-and-app developers and app stores, respectively, over each component's impact in 2012, according to the report. "The growth in apps is, I think, very close to the growth in data," Kurt Eby, the CWTA's director of regulatory affairs, said in a phone interview. "Apps drive data usage. Smartphone adoption drives both app usage and data usage." A report from Cisco Systems Inc., released in June, said the amount of data transmitted on Canadian mobile networks would increase ninefold between 2013 and 2018. The CWTA study found that the economic contribution from device suppliers declined 28.4 per cent to $169 million last year, the contribution from network-equipment suppliers fell 2.7 per cent to $517 million and there was a 2.7 per cent drop in the category of hardware and component suppliers to a value of $128 million. Eby said the contraction of BlackBerry Ltd.'s operations between 2012 and 2013 was likely a factor in lower numbers in the category of device suppliers. The report said device suppliers' employment numbers fell 32.9 per cent to 1,138 full-time equivalents last year. Eby added that network-equipment suppliers and hardware suppliers can be subject to surges in activity following the acquisition by carriers of significant amounts of wireless spectrum as infrastructure building tends to follow. Deployment related to this year's 700 MHz auction would not have been factored into this report. "In the next study, (a spike in network upgrades) might be somewhat noticeable," Eby said. "The one after, it should be very noticeable." Overall, the study found the wireless industry's total contribution to GDP was up 2.3 per cent annually to $22.4 billion in 2013. Part of the overall economic impact came from what the study categorized as "direct" effects from the wireless industry, where activity was up 4.2 per cent to $12.6 billion. The biggest portion of this was from wireless network operators, where activity increased 4.3 per cent to $12.3 billion. The contribution from dealers and distributors fell four per cent to $221 million. Application stores were also considered part of the direct impact of the wireless industry. Eby said operations of major wireless carriers, such as Telus Corp, BCE Inc. and Rogers Communications Inc., were factored into multiple categories, such as network operators, and dealers and distributors in relation to their retail outlets. "Indirect" economic impacts of the wireless industry were worth $4.4 billion last year, the study said, which was down 2.9 per cent from 2012. Suppliers of support services made up the biggest part of the indirect category and had a GDP impact of $2.7 billion, down 5.8 per cent from the previous year, it said. The support-services component ranges from companies that provide legal and accounting services for the wireless industry to those operating call centres, Stuart Jack, a partner with Nordicity, said in an email. Content-and-app developers, network-equipment suppliers and device suppliers were also included in the indirect category. The study also considered the "induced impact" of the wireless industry, which it said was worth $5.4 billion. It derived at this figure by using formulas from Statistics Canada to determine the effect on other parts of the economy from the re-spending of income generated directly and indirectly from the wireless industry. The study said the wireless industry was responsible for the equivalent of 126,300 full-time jobs in 2013. That included 51,100 positions resulting from the industry's "induced" effect. It also factored in 33,896 jobs directly within the wireless industry, which was up 4.2 per cent from a year earlier, plus 41,214 indirect jobs, which was down six per cent from 2012. — With reporting by Derek Abma at dabma@thewirereport.ca and editing by Peter Henderson at phenderson@thewirereport.ca

App business thriving within Canada’s wireless industry: CWTA report

News | December 9, 2014

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