This section provides an overview of the major participants in the Canadian data/Internet market. Specifically, this section focuses on the revenues, subscribers and services offered by telecom, cable and independent Internet providers, with particular attention paid to dial-up versus high-speed Internet access and telecom versus cable Internet provision.
Data revenues have become an increasingly important source of revenue for telecommunications service providers. Growth of 2.9 percent during 2003 allowed these revenues to reach $6.2 billion (Figure 4.2-1). On a company level, Bell Canada generated data revenues of $3.7 billion, an increase of 6.5 percent as compared to 2002. TELUS' data revenues remained relatively flat at $1.4 billion, while Aliant enjoyed robust revenue growth as its data revenues increased by nearly 17 percent to $107 million. Likewise, the other ILECs, including MTS and SaskTel, had data revenue growth to $214 million, an increase of 8.1 percent from 2002. The competitive service providers, including Allstream and Call-Net, have recently seen the data and Internet market decline by 9.8 percent to $793 million.
d
The majority of the data revenues in Canada were earned by Bell Canada which held approximately 60 percent of the data market. TELUS, the other ILECs, and Aliant respectively had 22 percent, 3.5 percent, and 1.7 percent of the data market. Wireline competitors collectively earned nearly 13 percent of the data revenues as Allstream had 9.6 percent and Call-Net had 3.2 percent of the market. The respective company shares of the data market changed in 2003. Bell increased its market share by 2.0 percentage points, when compared to 2002. Aliant and the other ILECs both saw gains of less than a percentage point, which came at the expense of both Allstream and Call-Net, who collectively decreased 1.8 percentage points, and TELUS, which fell 0.6 percentage points.
The rapid growth of the Internet and its expanding applications have transformed it from a specialty service with a limited market to a mass-market service targeting a wide audience. The use of Internet has grown considerably in recent years. In 1999, 29 percent of households (3.3 million connected households) had either dial-up or high-speed Internet access at home. (Footnote 1) As of December 2003, there were approximately 8.0 million subscribers of dial-up, DSL or cable Internet access in Canada, of which over 65 percent (Footnote 2) had a high-speed connection.
At year-end 2003, there were approximately 2.4 million cable high-speed Internet subscribers and 2.2 million DSL subscribers, served primarily by the incumbent cable and telephone companies, respectively. An average annual growth rate of 569 percent in DSL subscribers since the beginning of 1999 has increased the market share of DSL from 11 percent in the first quarter of 1999 to 48 percent five years later. Although the market share for cable high-speed Internet continued to be higher than DSL, at 52 percent, the average annual growth rate of cable Internet subscribers has been a more modest 88 percent (Figure 4.2-2).
d
There were approximately 8.0 million residential and business subscribers using dial-up, cable or DSL Internet services at the end of 2003. The ILECs, including Bell Canada, TELUS, Aliant, MTS and SaskTel, provided Internet access or communication paths to 44 percent (3.5 million) of all Canadian Internet subscribers. The cable companies provided 32 percent (2.6 million) of the Internet access connections and the other Internet Service Providers (Footnote 3) (ISPs) serviced 24 percent (approximately 2.0 million) of the market (Figure 4.2-3).
d
At the end of September 2003, there were approximately 480 ISPs in Canada. (Footnote 4) Figure 4.2-4 shows the geographic distribution of Canadian ISPs. While a majority of these 480 companies serve a specific area, there are a number of ISPs who serve nearly the whole country. Examples of these national ISPs are AOL Canada and Sprint Canada (THE MOST™ online).
d
Nearly all of the 480 ISPs in Canada provide dial-up Internet access allowing for a connection over a regular phone line at 56.6 kbps (kilobits per second) or less. The majority of these ISPs also provide some form of high-speed Internet access, employing DSL, cable or wireless technologies. The larger telecommunications and cable companies are able to supply high-speed access via the telephone line (e.g. Sympatico), or high-speed Internet cable modems (e.g. Shaw High-Speed Internet) by using their existing infrastructure, combined with minor modifications. Many of the independent ISPs also provide similar high-speed Internet access at competitive rates (e.g. Cyberus Online and Magma Communications). While offering various forms of Internet access, more than two-thirds of ISPs also provide additional services, including Web site hosting, e-commerce applications, and general consulting services, among others.
Table 4.2-1
|
Internet Access |
Percentage of ISPs Offering Service |
|---|---|
| Dial-up | 91% |
| DSL | 53% |
| Cable | 11% |
| Wireless | 21% |
| ISDN | 32% |
| Source: Canadian Association of Internet Providers, The Canadian ISP Count, 2003. | |
Dial-up continued to be the most common Internet access technology as 91 percent of ISPs offered the service in 2003 (Table 4.2-1). (Footnote 5) DSL was the preferred means of supplying high-speed Internet access; 53 percent of all ISPs offered the service while only 11 percent offered high-speed cable Internet. As well, 33 percent of ISPs provide Internet access via an Integrated Services Digital Network (ISDN) access line, a high-capacity digital line which may be used for telephone, data, e-mail and facsimile services. Wireless Internet access was offered by approximately 21 percent of ISPs.
Growth in the number of Internet connections provided by the ILECs over the past five years increased by an average annual rate of 37 percent. Bell Canada's Internet subscriber base increased from 216,000 at the beginning of 1999, to over 2.0 million at year-end 2003, representing an average annual growth rate of 62 percent. Similarly, TELUS and Aliant achieved average annual growth rates of 34 percent and 20 percent, respectively. The other ILECs, including MTS and SaskTel, had a combined average annual growth rate of 24 percent over this period (Figure 4.2-5).
d
High-speed Internet was the predominant access technology used by the ILECs' Internet subscribers, with over 2.2 million high-speed subscribers at year-end 2003, compared to slightly less than 1.4 million dial-up subscribers. The growth in Internet subscribers serviced by the telecommunications companies was driven by the tremendous growth rates for their high-speed Internet access services. Over the previous four years, the ILECs have had an average annual growth rate of 136 percent in the number of high-speed Internet subscribers. Conversely, the number of dial-up subscribers for ILECs has only grown by 19 percent over the same period. Consequently, dial-up subscribers made up only 38 percent of the ILECs subscriber base in 2003, compared to 99 percent at the beginning of 1999 (Figure 4.2-6).
Bell Canada's high-speed Internet service enjoyed an average annual subscriber growth rate of 165 percent from the beginning of 2000 to year-end 2003. Likewise, TELUS' and the other incumbent operators' high-speed Internet subscriber base also experienced tremendous annual growth of 128 percent and 101 percent, respectively. Aliant had a combined average annual increase in high-speed subscribers of 75 percent over this period.
Cable companies have undertaken massive system upgrades to enable the provision of new communication paths such as high-speed Internet access to homes and businesses, as well as other interactive services. Overall, the cable industry's investment in high-speed networks has resulted in nearly 10.7 million homes being high-speed Internet ready. (Footnote 6)
The cable television companies provide Internet access to approximately 32 percent (2.6 million subscribers) of the residential Internet subscribers in Canada. While there are over 50 companies providing cable Internet access, the four largest cable companies, Rogers, Shaw, Cogeco, and Vidéotron, have over 91 percent of the high-speed cable Internet market. At the end of 2003, these companies had nearly 2.4 million high-speed cable Internet subscribers, representing a collective growth rate of 22 percent from the year-end of 2002, and an average annual growth rate of 88 percent since 1999 (Figure 4.2-7).
d
All four of the largest cable companies have experienced tremendous growth in their cable Internet subscriber bases over the past few years. From 1999 to 2003, Shaw had an average annual growth rate of 85 percent, aided in part by the acquisition of Moffat Communications in late 2000. Rogers Cable and Cogeco had similar growth rates of 84 percent and 72 percent per year, respectively. Likewise, Vidéotron had a growth rate of 201 percent in its Internet subscriber base over this period.
In addition to wireline delivery systems, wireless technologies, such as Direct-to-Home (DTH) and Multipoint Distribution Systems (MDS), offer Internet access as well. With additional equipment, Bell ExpressVu offers DirecPC, an asymmetric, high-speed Internet service via satellite with download speeds of up to 400 kbps, and the uplink provided via telephone lines. MDS technology can also provide dial-up and high-speed Internet services; more specifically, Look Communications offers dial-up asymmetric high-speed Internet access (i.e. uplink via telephone and downlink via wireless). SkyWeb and YourLink (formerly Image Wireless) have rolled out similar communication paths.
However, competition from other providers of Internet services has been arduous for this segment. For example, Look's dial-up and high-speed Internet services subscribers decreased from 96,500 at year-end 2002, to 84,100 one year later. High-speed fixed terrestrial wireless access is still in its infancy with limited service rollout, primarily in the urban centres of Ontario, Quebec, Manitoba, Saskatchewan and British Columbia. In late 2003, Inukshuk Internet, a wholly-owned subsidiary of Microcell Telecommunications, along with Allstream and NR Communications announced plans to introduce a Multipoint Communications System (MCS) network that would offer high-speed Internet using broadband wireless access technology to selected markets across Canada. The partnership began commercial launch of its wireless high-speed Internet service in Richmond, British Columbia and Cumberland, Ontario in March 2004.
In recent years, enhanced services, such as mobile Internet access and fully functional remote e-mail, have been introduced to wireless customers. Most mobile wireless providers offer low-speed Internet access on specialized handsets, using technologies such as Wireless Application Protocol (WAP). 2.5G technology (Footnote 7) was first introduced by the national wireless service providers in late 2001 and early 2002, when Microcell and Rogers Wireless began to offer enhanced data services employing General Packet Radio Services (GPRS) in limited urban areas. Over the same period, Bell Mobility and TELUS Mobility began to commercially introduce 2.5G CDMA (1XRTT) technology in major centres around Canada. These technologies operate between speeds of 30 and 55 kbps.
More recently, Rogers Wireless completed the deployment of EDGE (Enhanced Data Rates for GSM Evolution) technology across its entire GSM/GPRS network in July 2004. EDGE is a 3G radio technology that provides wireless data speeds that are up to three times faster than those provided by GPRS, to maximum speeds of between 100 kbps and 130 kbps. Furthermore, in December 2004, Bell Canada announced plans to roll out its next generation EVDO (Evolution, Data Optimized) network in major Canadian urban centres in late 2005. The EVDO network is capable of delivering wireless data transmission rates of up to 2.4 megabits per second (Mbps). With the prevalence of 2.5G and the arrival new wireless technologies, mobile Internet access is beginning to prove to be an increasingly important method of connecting to the Internet.
1. Statistics Canada, The Daily, "Household Internet Use", May 19, 2000.
2. Statistics Canada, The Daily, "Household Internet Use Survey", July 8, 2004.
3. Other ISPs includes Allstream Canada, Call-Net (Sprint Canada), Independent ISPs and others.
4. Canadian Association of Internet Providers (CAIP), The Canadian ISP Count, 2003, October 8, 2003. The full report is available at http://www.caip.ca/issues/infrastr/main.htm.
5. Canadian Association of Internet Providers (CAIP), The Canadian ISP Count, 2003, October 8, 2003.
6. Statistics Canada, Broadcasting and Telecommunications, Vol. 34, no. 4, September 2004, 56-001-XIE2004004.
7. G refers to "generation".
 |
Updated: 2005-06-15 |
