Telecommunications Service in Canada: An Industry Overview

Section 1: Contribution to Overall Economy

1.1 Gross Domestic Product (Value Added (Footnote 2) )

Figure 1-1 shows that the communications service industries produced $26.8 billion of value added in 2004, a 2.4 percent increase from the previous year. (Footnote 3) Communications services' share of total economy GDP had steadily increased prior to 2001, but since then has remained stable at 2.6 percent of the total economy's GDP. In 2004, telecommunications services produced $24.8 billion of value added, a 2.3 percent increase from the previous year, while broadcast distribution saw a 2.9 percent year-over-year increase in value added to $2.0 billion. Between 1997 and 2004, the Compound Annual Growth Rate (CAGR) for communications services was 7.3 percent per year, resulting in a total increase of $10.4 billion or 64 percent (Figure 1-1).

Figure 1-1
d

Between 1998 and 2002, GDP growth in telecommunications services consistently outperformed that of the Canadian economy, while growth in broadcast distribution GDP fluctuated around the rate of the overall economy. In 2004, however, overall economic growth continued to exceed growth in both telecommunications services and broadcast distribution. The overall economy's GDP growth outperformed that of telecommunications services by 0.8 percentage points, despite an increase in the telecommunications services sector's GDP growth rate from 1.7 percent in 2003 to 2.3 percent. Similarly, broadcast distribution growth was 2.9 percent in 2004, 0.2 percentage points less than the overall economy (Figure 1-2).

Figure 1-2
d

Footnotes

2. Value added is the term used to describe the net value of production by an industry group. It is equivalent to the difference between the value of an industry's output and the value of the inputs of materials, energy and services purchased and used by the industry in the production of its output.

3. Constant dollar GDP was used to calculate the communications services' share of total Canadian GDP. The preferred methodology uses GDP in current dollars which is not available.