Executive Summary

The telecommunications market in Canada in 2004 and 2005 has showed some signs of renewed growth after the previous year’s slowdown in revenue growth. The mobile and broadband markets are fuelling new growth, whilst the large incumbents struggle with declining margins on legacy voice products.

The impact of emerging products and services such as iTV, VoD are also beginning to make an impact on the local market. The natural bundling of voice, Internet and TV has transformed the telecommunications and TV broadcasting industries, bringing players in both industries together as direct competitors in the triple-play market.

By 2005, FttH was just starting to be more seriously considered in Canada. While fibre services to business in metro areas have been a standard service offering by most telecom companies and ISPs operating in the Canadian business segment, deployment of FttH is still in its very early stages, with only a limited number of residential communities being connected to fibre networks. In February 2005, Aliant announced plans to conduct Atlantic Canada’s first FttH trial during 2005.

BPL is not widely used in Canada. There have been some initial forays into the use of this technology including the implementation of BPL for high-speed internet access to a Canadian hotel chain. Organisations, government bodies, communities and even condominiums are teaming up to build their own Next Generation Networks (NGNs) and are linking this network to the CA*net 4 network for high-speed networking capabilities.

By mid 2005, different forms of VoIP service have reached the market with a variety of pricing and price packages. The market is expected to leap in coming years as the technology evolves and becomes more familiar to consumers. In May 2005, the CRTC reached a decision that the national incumbent phone operators, will face the same regulation for their new VoIP services as for their traditional landline voice services. This includes incumbents TELUS and Bell Canada.

As a result of Canada’s early development of a national broadband infrastructure, it is now among the leading broadband markets in the world, with the fourth highest penetration of broadband services per 100 people – behind only South Korea and Hong Kong. By mid 2005, over 67% of Canadians who accessed the Internet from home were using a high-speed connection. In June 2005, The Canadian Wireless Telecommunications Association (CWTA), in conjunction with a group of mobile operators comprising: Bell Mobility, Rogers Wireless, Microcell and TELUS announced the formation of an inter-carrier WiFi service alliance.

There are an estimated 400+ independent ISPs operating in Canada. The industry however, is condensing with many of the smaller providers merging or being purchased. As competitive pressure mounts on independent ISPs, many are facing financial problems and going out of business.

Video-on-demand is one of the real growth markets for iTV providers and this market will become an important source of revenue for many of the major operators by 2006. A number of major operators such as Rogers Cable, Shaw Communications and Bell Canada Enterprises have begun to trial iTV services with their current subscribers.

The Canadian broadcasting distribution industry is now firmly in transition from analogue to digital and competition is intense. Analog broadcast transmission is not scheduled to be switched off in Canada until 85% of a distributor’s subscribers can receive digital signals. In 2004 approximately 1.6 million Canadian households subscribed to a digital cable service, and the introduction of applications such as interactive program guides, VoD and e-mail are likely to encourage more consumers to do so.

Mobile services have grown quickly, with access to networks now available to over 95% of Canada’s population, and more than one third of Canadians using a mobile service. Although demand is expected to remain strong for the foreseeable future, the market is moving towards saturation as in many other developed countries. By 2005, the Canadian mobile market had reached approximately 16 million subscribers. In terms of future wireless developments, the key issue facing both current Second generation (2G) and potential Third generation (3G) mobile telephone licences is a lack of capital for network expansion.

1. TELECOMS, MOBILE & BROADBAND OVERVIEW AND ANALYSIS 2005
1.1 Key highlights – 2005
1.2 Telecommunications market
1.2.1 Overview
1.2.2 Regulatory environment
1.3 Telecommunications infrastructure
1.3.1 National telecom network
1.3.2 International infrastructure
1.3.3 Fibre-to-the-Home (FttH)
1.3.4 Telecom developments on Cable TV networks
1.3.5 Involvement of utilities (BPL)
1.3.6 Next Generation Networks (NGNs)
1.3.7 Voice over Internet Protocol (VoIP)
1.4 Broadband and Internet market
1.4.1 Wireless broadband (WiFi)
1.4.2 Internet market
1.5 Convergence
1.5.1 Overview
1.5.2 Digital television
1.5.3 Digital Terrestrial TV
1.5.4 iTV
1.5.5 Video-on-Demand (VoD)
1.5.6 Satellite TV
1.5.7 Digital Cable
1.5.8 Pay TV
1.6 Mobile communications
2. KEY STATISTICS
3. TELECOMMUNICATIONS MARKET
3.1 Overview of Canada’s telecom market
3.2 Industry transformation
3.3 Teledensity
3.4 Industry revenues
3.5 Internet and e-commerce market
3.6 Broadband market
3.7 Mobile market
3.8 Broadcasting market
4. REGULATORY ENVIRONMENT
4.1 Overview
4.2 Regulatory authorities
4.2.1 Industry Canada
4.2.2 Canadian Radio-television and Telecommunications Commission (CRTC)
4.3 Liberalisation
4.4 Foreign ownership
4.5 Convergence policy
4.6 WTO agreement on basic telecom services
5. MAJOR TELCOS
5.1 Telecommunications operating environment
5.1.1 Overview
5.1.2 Industry structure
5.1.3 Growing competition
5.1.4 Foreign ownership controls
5.2 Incumbent Local Exchange Carriers (ILECs)
5.2.1 Bell Canada Enterprises (BCE)
5.2.2 Bell Canada
5.2.3 Teleglobe
5.2.4 Aliant
5.2.5 Telus Corporation
5.2.6 Manitoba Telecom Services (MTS)
5.2.7 Saskatchewan Telecommunications (SaskTel)
5.3 CLECs and other operators
5.3.1 Overview
5.3.2 Rogers Communications
5.3.3 FCI Broadband (Formerly Futureway Communications)
5.3.4 Primus Telecommunications Canada
5.3.5 Look Communications
5.3.6 Microcell PCS
6. INFRASTRUCTURE – FTTH, NGNS AND IP
6.1 National Telecom network
6.1.1 Overview
6.1.2 Wireline networks
6.1.3 Wireless networks
6.2 International infrastructure
6.2.1 Satellite networks
6.2.2 Submarine cable networks
6.3 Infrastructure developments
6.3.1 Overview
6.3.2 Fibre-to-the-Home (FttH)
6.3.3 Telecom developments on Cable TV networks
6.3.4 Involvement of utilities (BPL)
6.3.5 Next Generation Networks (NGNs)
6.3.6 IP and Voice over Internet Protocol (VoIP)
7. BROADBAND MARKET
7.1 Industry overview and analysis
7.1.1 Broadband deployment
7.1.2 Government strategy
7.2 Infrastructure development
7.2.1 CANARIE Corporation
7.3 Canadian Advanced Technology Alliance
7.4 Broadband statistics
7.5 Cable modems
7.5.1 Major high-speed cable providers
7.6 Digital Subscriber Line (DSL)
7.7 Fibre-to-the-Home (FttH)
7.7.1 Overview
7.7.2 Aliant trials
7.8 Wireless broadband
7.8.1 Local Multipoint Communication Systems (LMCS)
7.8.2 Wireless Local Area Networks (WLANs)
7.8.3 WiFi
7.9 Internet via satellite
8. CONVERGENCE – TRIPLE PLAY AND DIGITAL TV
8.1 Media convergence
8.1.1 Key general trends
8.1.2 Regulatory issues
8.2 Digital TV
8.2.1 Digital Terrestrial TV
8.2.2 Regulatory overview
8.3 iTV
8.3.1 Rogers Cable
8.3.2 Shaw Communications
8.3.3 Bell Canada Enterprises (BCE)
8.3.4 Aliant Telecom
8.3.5 AOL
8.4 Video-on-Demand (VoD)
8.4.1 Rogers Cable
8.4.2 Cogeco Cable
8.4.3 Shaw Communications
8.4.4 SaskTel
8.4.5 Manitoba Telecom Services (MTS)
8.5 Broadband TV, TV-over-DSL (IPTV)
8.6 Satellite TV
8.6.1 Bell ExpressVu
8.6.2 Star Choice Communications
8.7 Cable TV
8.7.1 Digital Cable
8.7.2 Rogers Cable Inc
8.7.3 Shaw Cablesystems Ltd
8.7.4 Vidéotron ltée
8.7.5 Cogeco Cable Inc
8.7.6 EastLink
8.7.7 Persona Inc (formerly Regional Cablesystems)
8.8 Pay TV
8.8.1 Linkage rules
8.9 Consumer electronics
8.9.1 High definition televisions
8.9.2 Mobile Television
9. MOBILE COMMUNICATIONS
9.1 Overview of Canada’s Mobile market
9.1.1 Launch of Inter-carrier WiFi service – June 2005
9.1.2 Canadian Wireless Carriers launch inter-carrier multimedia messaging
9.1.3 Mobile statistics
9.2 Regulatory issues
9.2.1 Early Spectrum auctions
9.2.2 Lifting of the spectrum cap
9.2.3 Licensing the 40MHz of PCS spectrum
9.2.4 Number portability
9.2.5 2300MHz and 3500MHz Auctions
9.2.6 Wireless spectrum auction
9.2.7 Rural digital roaming
9.3 Mobile technologies
9.3.1 Personal Communications Services (PCS)
9.3.2 Global System for Mobiles (GSM)
9.3.3 Third generation mobile (3G)
9.4 Major mobile operators
9.4.1 Overview
9.4.2 Rogers Wireless
9.4.3 Bell Wireless Alliance (BWA)
9.4.4 Telus mobility
9.5 Prepaid services
9.5.1 Virgin Mobile Canada
9.6 Short Message Service (SMS)
10. GLOSSARY OF ABBREVIATIONS


Exhibit 1 – Number of Operators in Service – 2004
Exhibit 2 – Registered CLECs – 2005
Exhibit 3 – Aliant operating divisions – 2005
Exhibit 4 – Telesat’s current and planned fleet of satellites
Exhibit 5 – Submarine cables serving Canada
Exhibit 6 – Registered CLECs – 2005
Exhibit 7 - FibreWired Network
Exhibit 8 - FibreWired Network
Exhibit 9 – TV-over-DSL (IPTV)
Exhibit 10 – New licences and spectrum covered – 2001
Exhibit 11 – 3G licence awards – January 2001




Table 1 – Residential broadband Internet subscribers – 2001 - 2006
Table 2 – VoIP subscriber forecast – 2005 - 2008
Table 3 – Residential broadband Internet subscribers – 2001 - 2005
Table 4 – Broadband household penetration by country – 2004
Table 5 – Major cable modem subscribers by operator – 2002 - 2004
Table 6 – DSL subscribers by operator – 2002 - 2004
Table 7 – Total television and digital households – 2001 - 2003*
Table 8 – Mobile subscribers and annual change – 1997 - 2005
Table 9 – Mobile subscribers by provider and market share – 2004 - 2005
Table 10 – Country statistics Canada – 2005
Table 11 – Telecom revenue and investment statistics – 2004
Table 12 – Telephone network statistics – 2004
Table 13 – Internet provider statistics – 2005
Table 14 – Internet user statistics – 2004
Table 15 – Broadband statistics – 2005
Table 16 – Mobile statistics – 2005
Table 17 – National telecommunications authorities
Table 18 – Canadian teledensity statistics (fixed-line and mobile) – 1997 - 2003*
Table 19 – Total telecommunications services revenues – 1998 - 2003*
Table 20 – Fixed-line telecom operating revenues by segment – 2002 - 2004
Table 21 – Internet and IT statistics – 2004
Table 22 – Residential broadband Internet subscribers – 2001 - 2005
Table 23 – Mobile subscribers and annual change – 1997 - 2005
Table 24 – Mobile subscribers and market share – 2004 - 2005
Table 25 – TV delivery statistics – 2000 - 2003*
Table 26 – BCE ownership (percentage) in 2005
Table 27 – BCE operating statistics – December 2004
Table 28 – Bell Canada – Operating statistics per market segment – April 2005
Table 29 – Bell Canada – revenue summary - 1997 - 2004
Table 30 – Aliant operating statistics per market segment – 2004
Table 31 – Telus operating statistics per market segment – 1999 - 2004
Table 32 – MTS operating statistics per market segment – 2003 - 2004
Table 33 – MTS operating revenues by division – 2003 - 2004
Table 34 – SaskTel operating statistics – 2004
Table 35 – Rogers Cable basic statistics – 2000 - 2004
Table 36 – Rogers’s AT&T Wireless basic statistics – 2000 - 2004
Table 37 – Rogers Media basic statistics – 2000 - 2004
Table 38 – Fixed lines in service and teledensity – 1995 - 2004
Table 39 – VoIP subscriber forecast – 2005 - 2008
Table 40 – Residential broadband Internet subscribers – 2001 - 2005
Table 41 – Broadband household penetration by country – 2004
Table 42 – Broadband household growth and penetration in W. Europe and N. America – 2004
Table 43 – Broadband access amongst Internet households – 2001 - 2005
Table 44 – Major cable modem subscribers by operator – 2002 - 2004
Table 45 – Rogers Cable basic statistics per market segment – 2000 - 2004
Table 46 – DSL subscribers by operator – 2002 - 2004
Table 47 – TV delivery statistics – 2000 - 2003*
Table 48 – Total television and digital households – 2001 - 2003*
Table 49 – Composition of digital households – 2003*
Table 50 – Multi-channel video customers – 2000 - 2003*
Table 51 – DTH and MDS TV revenue and expenses – 1998 - 2003*
Table 52 – ExpressVu DTH subscribers – 1998 - 2005
Table 53 – Star Choice digital TV subscribers – 1998 - 2005
Table 54 – Major cable modem subscribers by operator – 2002 - 2004
Table 55 – Cable TV market statistics (millions) – 2002 - 2003*
Table 56 – Cable TV subscribers (basic and non-basic) – 1998 - 2003*
Table 57 – Cable TV revenue and expenses – 1998 - 2003*
Table 58 – Reasons for subscribing to digital cable – 2004
Table 59 – Rogers Cable basic statistics per market segment – 2000 - 2004
Table 60 – Shaw Cablesystems statistics per market segment – 2002 - 2004
Table 61 – Vidéotron ltée statistics per market segment – 2003 - 2004
Table 62 – Cogeco Cable statistics per market segment – 2002 - 2004
Table 63 – Persona Inc statistics per market segment – 2002 - 2004
Table 64 – Speciality TV revenue and expenses – 1998 - 2004
Table 65 – Pay TV revenue and expenses – 1998 - 2004
Table 66 – Mobile subscribers and annual change – 1997 - 2005
Table 67 – Mobile subscribers by major operator – December 2004
Table 68 – Mobile subscribers and market share – 2004 - 2005
Table 69 - Licence winners of 2300MHz and 3500MHz Auctions - Feb 2004 & Jan2005
Table 70 – Rogers’s AT&T Wireless basic statistics – 2000 - 2004
Table 71 – Roger Wireless Communications – mobile statistics - 2004 - 2005
Table 72 – Bell Mobility – mobile statistics – 2004 - 2005
Table 73 – Aliant Telecom Wireless – mobile statistics – 2004 - 2005
Table 74 – SaskTel Mobility – mobile statistics – 2004 - 2005
Table 75 – Telus Mobility operating statistics – 1999 - 2004
Table 76 – Telus Mobility – mobile statistics – 2004 - 2005
Table 77 – Prepaid subscribers by operator – 2004 - 2005
Table 78 – Prepaid subscribers by major operator – 2001 - 2004
Table 79 – Mobile subscribers by postpaid, prepaid – 2004 - 2005
Table 80 – SMSs sent per month – 2002 - 2004