Communications Monitoring Report 2014

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ISSN 2290-7866

Acknowledgements

The Commission wishes to thank all the entities that completed the CRTC Data Collection forms, without which this report would not have been possible. The Commission would also like to acknowledge the assistance provided by Industry Canada in the analysis of broadband deployment as it related to the rural communities in Canada; Statistics Canada for the various supplementary data used in this report; Numeris (formerly BBM Canada) for audience measures; BBM Analytics for the Media Technology Monitor (MTM); and Mediastats.

Interested parties are welcome to provide comments for improvements or additions to future editions of the report. You can send your comments to the attention of the Secretary General, CRTC, Ottawa, K1A 0N2.

Chairman’s message

I am pleased to present the 2014 Communications Monitoring Report, which provides a comprehensive overview of the Canadian communication sector.

The data in the following pages give us our clearest indication yet of how Canadians are using communication services and how competition is faring in key areas, such as the provision of wireless services. On average, Canadian households spend $191 each month on communications services—including television, home telephone, wireless and Internet services. Their expectations regarding the services they pay for are evolving as the consumer price index continues to rise and new products and services are introduced in the marketplace.

This report also serves as a useful indicator of emerging trends and issues in the communication sector. The CRTC regularly consults with the public and the industry as it works to ensure Canadians—as citizens, creators and consumers—have access to, and are at the centre of, a world-class communication system. All participants in the communication system are invited to use the information in this report to contribute to our public proceedings.

Several changes were made to this year’s edition of the Communications Monitoring Report to make it more reader-friendly. For the first time, the telecommunications section presents data separately for the retail and wholesale markets and helpful explanations accompany certain tables, graphs and charts. Pricing information for communication services is also broken out for major urban centres and rural areas to better monitor the effects of competition on prices.

The feedback of those who consult this report is important to us. I would invite readers to help us improve future editions by sharing their thoughts and suggestions.

Jean-Pierre Blais

Chairman and CEO

Executive summary

The Communications Monitoring Report provides a wealth of both financial and performance information on Canada’s communications market sectors that is intended to support an open and informed public discussion of broadcasting and telecommunications regulatory policies and issues. The CRTC invites Canadians to use this report to enrich their participation in the regulatory process.

Canadians at the heart of their communications system

The communications system, which includes broadcasting and telecommunications, is an important feature in the lives of all Canadians. It provides a means for Canadians – as consumers, citizens, and creators – to participate in the economic, cultural, and social life of their country. In 2013, the amount that Canadian households spent on communications services increased by 3.2%, from $185 to $191 per month. They spent more on all communications services except home telephone service, which declined by 5.8%, from $34.86 to $32.85.

Of their expenditures on communications services, Canadians spent most on mobile wireless services (36%), followed by home television service (28%), Internet service (19%), and home telephone service (17%).

On average in 2013, Canadian households were able to perform four to five simultaneous communications activities. For example, they were able to have a conversation on their home telephone service, watch television on their home television subscription service, surf on the Web using their home broadband connection, and use their mobile wireless device.

Guided by its legislative mandate, the CRTC seeks to ensure that Canadians have access to a world-class communications system. This overarching objective is supported by the Commission’s three pillars: create, connect, and protect.

Create

In 2012-2013, the Canadian broadcasting sector invested $3.2 billion in Canadian content, 5.5% less than in the previous broadcast year.

Commercial radio broadcasters contributed over $52 million to the development of Canadian content, a decrease of 5% from the previous broadcast year. This represents 3.2 cents of every dollar that these broadcasters earned in revenue.

Television broadcasters spent $2.7 billion on Canadian programming, representing 66% of all programming expenditures and a decrease of 5.5% from the previous year. As a broadcaster’s largest expense, the production and acquisition of programming accounted for 62 cents of every dollar earned in revenue.

In 2012-2013, cable and satellite companies directed 5% of the revenues collected from subscribers toward the creation and production of Canadian programming. Of this percentage, 46% was directed to the Canada Media Fund; 27%, to cable community channels and other sources of local expression; 16%, to the Local Programming Improvement Fund, and 11% to independent funds.

In 2012-2013, Canadians in English-language markets spent more time viewing Canadian services and decreased their viewing hours of non-Canadian programming by 1.1%, resulting in an overall decline in viewing hours of 1.1%.

In the French-language markets viewing hours of Canadian television services increased 0.3% and viewing hours of non-Canadian programming decreased 2.7%, resulting in an overall increase in viewing hours of 2.5%.

Average weekly viewing hours of Canadian programs for English-language services, excluding the Quebec francophone market, decreased from 43.8% in 2011-2012 to 43.4% in 2012-2013, while viewing of French-language services in the Quebec francophone market declined from 63.2% to 61.4%.

Connect

Canadians have been using a number of means to access content and to connect with each other in Canada and around the world. In 2013, 85% of Canadian households subscribed to a cable or satellite television service, a decline from 86% in the previous year, and 79% subscribed to high-speed Internet service, an increase from 78% in the previous year. In 2013 83% of Canadians 18 years or older used cell phones, 62% used smartphones, and 39% used tablets to communicate.

Household subscription data Household subscription data is based on the Survey of Household Spending performed annually by Statistics Canada. 2012 data was the most recent data available at the time that this report was prepared.

In 2012, the percentage of Canadian households subscribing to wireline and/or wireless telephone declined from 99.3% to 99.2%. However, households have been gradually increasing their reliance on wireless services, as evidenced by the fact that households subscribing to local wireline services declined by 3.0%, from 86.5% in 2011 to 83.5% in 2012, while those subscribing to wireless service increased over those years by 2.0%, from 79.4% to 81.4%. This increased reliance on wireless services was more pronounced for households with annual incomes below $28,000. The percentage of these households subscribing to wireline services decreased by 1.4%, from 76.0% in 2011 to 74.6% in 2012, while the percentage subscribing to wireless service increased over those years by 4.4%, from 57.3% to 61.7%.

Canadians living in rural communities generally spent up to $25 more per month for communications services than those in urban centres. Basic home telephone and basic broadcast distribution undertaking (BDU) services generally cost up to $9 more per month in rural communities. Internet (5 Mbps) service and mobile wireless services generally had higher price variances. Canadians living in Northern communities paid the highest prices for these services, between $63 and $370 per month. In addition to price variations, service offerings also varied between rural and urban centres and across the country.

The prices Canadians paid in rural communities ranged between $21 and $35 per month for home telephone service, whereas Canadians living in urban centres paid between $21 and $30 per month.

Almost all Canadians have access to basic (i.e., 1.5 Mbps) broadband Internet service. In 2011, the Commission set a download speed target of at least 5 Mbps by 2015. Since that time, the availability of 5 Mbps broadband service has increased from 87% to 95%. In general, Canadians living in large population centres have access to broadband speeds in the 50 Mbps to 99 Mbps range, whereas only 25% of Canadians in rural areas can access these higher speeds.

Protect

The CRTC uses consumer contacts and complaints to assess the effectiveness of its regulatory frameworks and to determine whether the industry is serving the needs of Canadians. In the 12‑month period ending 31 March 2014, the Commission received 41,010 enquiries and complaints. Of these, 39% concerned broadcasting issues and 61% pertained to telecommunications issues. Of the broadcasting complaints, 63% generally focused on offensive comments broadcast on radio or television and the remaining 37% related to BDU issues, of which 26% were billing related, and 35% concerned quality and delivery of service.

Telecommunications complaints, including the 19,297 complaints received by the Commissioner for Complaints for Telecommunications Services, related to wireless services (43%), telemarketing (15%), and Internet services (10%). The underlying issues in these complaints consisted of billing errors (38%), contract disputes/terms of service (14%), and service delivery/provision of service (13%).

Communications revenues on the rise

In 2013, revenues for the communications sector reached $61.9 billion, 1.9% higher than in 2012. The sector was dominated by five large companies that collectively generated 85% of communications revenues. The next five companies generated 9% of these revenues, with the remaining companies accounting for 6%. Only three companies offered every service in every sector of the communications market. These three companies generated 63% of the communications revenues.

Broadcasting

In 2012-2013, broadcasting sector revenues totaled $17.1 billion, a 1.3% increase from the previous year. In that sector, the radio market sector was the smallest, accounting for 9% of broadcasting revenues. Radio revenues increased by 0.2% to $1.6 billion. The television market was the second largest, accounting for 38% of revenues. Television revenues decreased by 0.2%, from $6.51 billion to $6.50 billion. In that market, private conventional television broadcasters experienced a 4.6% decline in revenues, and pay, pay-per-view, video-on-demand, and specialty service revenues increased 3.1%. The cable and satellite market was the largest sector, capturing 53% of broadcasting revenues. That market’s revenues increased by 2.7%, from $8.8 billion to $9.0 billion. Three companies operating in each of these broadcasting market sectors captured 71% of broadcasting revenues.

In 2013, 1,161 over-the-air radio stations were authorized to broadcast. Approximately 50% of these consisted of private commercial FM stations, while around 11% were AM stations. The national public broadcaster, the Canadian Broadcasting Corporation, operated 8% of the over-the-air stations. The remaining 30% generally consisted of community (10%), campus (4%), and aboriginal (5%) stations. The Commission also authorized 25 new FM stations for broadcast.

In 2013, 251 discretionary television services were authorized to broadcast. Their revenues amounted to approximately $4.1 billion and represented 63% of television sector revenues. The top 10 discretionary services, based on revenues, consisted of three sports services, two movie services, two youth-oriented services, one educational service, one lifestyle and entertainment service, and one news service. These services averaged $150 million in revenues and captured 37% of discretionary service revenues. The remaining discretionary services averaged $12 million in revenues.

Telecommunications

In 2013, telecommunications sector revenues rose to $44.8 billion, an increase of 2.0% from the previous year. The five largest companies captured 86% of these revenues, followed by the next five at 9%. Companies operating in all of the markets accounted for 85% of revenues.

The retail wireless market was the largest and fastest-growing sector, capturing 49% of retail telecommunications revenues and sustaining an annual growth in revenues of 5.4% over the 2009 to 2013 period. Although revenues increased 3.4%, from $19.5 billion in 2012 to $20.2 billion in 2013, the number of subscribers increased 2.3% from 27.7 million to 28.4 million. Wireless data and roaming services were the key drivers in wireless revenue growth, which increased by 20%, from $7.2 billion to $8.7 billion.

Almost all retail telecommunications revenues (95%) were derived from forborne services, compared to 75% for wholesale services.

Wholesale services generated $3.7 billion in revenues, essentially unchanged from 2012. In 2013, local telephone and access services represented 19% of wholesale service revenues, compared to 23% in 2009. Private line and Ethernet service revenues were 24% in 2013 and 27% in 2009.

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