Facilities-based competition fuels Canadian telecom’s $77B contribution to GDP: CTA

MISSISSAUGA, Ont.— The Canadian telecommunications sector has contributed nearly $77 billion in direct GDP and the support of 724,000 jobs in 2022, according to a report commissioned by the Canadian Telecommunications Association released Monday. Robert Ghiz, president of the association presented the report in an address at the 2023 edition of the Canadian Telecom Summit while making the case for facilities-based competition. Ghiz argued how this competition benefits consumers in terms of network coverage, quality, and pricing. "Compared to most other countries, Canada has a more diverse blend of national and regional facilities-based service providers who compete for customers not only on price but also on service quality and coverage," Ghiz noted. He cited the Competition Bureau's 2019 study, which emphasized that facilities-based competitors engage in dynamic competition to introduce better networks through investments in new technologies. This dynamic form of competition not only leads to improved networks and customer experiences but also incentivizes companies to compete vigorously to attract customers and recoup their investments, he said. Ghiz underlined how the competitive landscape in Canada has contributed to broad network coverage, high-quality service, and declining prices. He further argued that Canada is well-positioned with a significant number of wireless networks, providing resilience during critical failures. Ghiz mentioned that the industry has established protocols for emergency roaming and mutual assistance, further enhancing network resiliency in emergency situations. In regards to the report, it estimates that the adoption of use cases supported by the deployment of enhanced connectivity, such as 5G, has the potential to contribute an incremental $112 billion to Canada’s GDP by 2035. The report was prepared by PwC as part of the associations’ annual series examining the economic impact of the telecom sector. The report sheds light on the sector's contributions to the Canadian economy in 2022 and the challenges and investments required to meet the evolving demands of connectivity and climate resiliency. (Analysis performed on Shaw Communications considers figures from prior to its merger with Rogers Communications Inc., and Quebecor Inc.’s purchase of Freedom Mobile, in April 2023.) According to the report, over the years, the average annual download and upload traffic per mobile data subscriber has shown a significant increase, rising by 4.6 GBs since 2016. A similar trend is seen in the average monthly download traffic per internet access subscriber, which has increased by 189.6 GB since 2019. The report found that consumers and businesses have higher expectations for data quality and availability, all while cellular and internet access service prices have been declining. Between Sept. 2022 and Sept. 2023, cellular and internet access service prices decreased by 17.2 per cent and 7.8 per cent, respectively, providing deflationary price pressure and increased value to Canadian consumers, according to the report. In 2021, 99.7 per cent of Canadians had access to mobile network coverage where they live or conduct business, and 93.5 per cent of households had access to 50/10 Mbps high-speed broadband internet in 2022. Over the past five years, the Canadian telecom sector has invested an average of $12.1 billion annually in capital to expand and enhance network infrastructure, representing approximately 18.6 per cent of average revenue. According to the report, this investment is higher than the average across peer telecoms in the USA, Japan, Australia, and Europe, and has enabled the sector to advance the coverage of 5G connectivity across Canada, reaching 87.8 per cent of the population in 2021. “If we look back even further, the four largest telecom providers in Canada have invested $147 billion in capital expenditures and spectrum between 2010 and 2022,” Ghiz said. “These consistently high levels of annual capital investment are the result of two main factors: the high cost of building networks in Canada and competition.” The president also highlighted unique challenges facing the Canadian telecom sector due to factors specific to population dispersion, extreme weather conditions, high spectrum costs, economies of scale, and rising interest rates. These factors make network investments more expensive and contribute to the higher capital intensity of the sector in comparison to international peers “The result is a widely dispersed network infrastructure that is more expensive to deploy and service than smaller and more densely populated countries that require fewer towers and less fibre,” he said. “Even though Australia also has a low population density, we have a higher dispersion of population, resulting in Canadian telecom operators building approximately 50% per cent more cell towers per capita than operators in Australia.” The report noted that Canada's climate is warming twice as fast as global averages, leading to a rise in frequent severe weather events that can damage telecom infrastructure. Severe weather events have already cost the sector millions of dollars, necessitating ongoing investments in network resiliency. “Telecom infrastructure also must be built to withstand cold temperatures and account for ice buildup and other cold weather phenomena. Maintaining and servicing telecom equipment in the winter season is also more difficult and expensive,” Ghiz said in his speech. — Reporting by Jenna Cocullo at jcocullo@thewirereport.ca and editing by Paul Park at ppark@thewirereport.ca.

Facilities-based competition fuels Canadian telecom’s $77B contribution to GDP: CTA

News | November 6, 2023

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Facilities-based competition fuels Canadian telecom’s $77B contribution to GDP: CTA

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