How concentrated is Canada’s communications market? I guess the answer depends on answering “compared to what”?
If we want to examine how concentrated Canada’s market is compared to other countries, there is a reasonable way to measure that, known as the Hirschman-Herfindahl Index (HHI). To calculate a Herfindahl-Hirschman Index, take the percentage market share of each firm in a sector (measured as a whole number), square that number, and then add all of those squares together. You end up with a number between 1 and 10,000.
If there is one player in the market, with 100% share, the HHI is 100×100 = 10,000. If there are 3 players with say, 40%, 30% and 30% share respectively, then the HHI is calculated as 402 + 302 + 302 = 1600 + 900 + 900 = 3400
As described by the Economist Intelligence Unit, HHI views the concentration of global telecom markets as:
- HHI < 3,000 âunconcentratedâ;
- HHI 3,000-4,000 âmoderately concentratedâ;
- HHI > 4,000 âhighly concentratedâ
So, let’s look at the question from that perspective. Compared to our peers, how concentrated is Canada’s telecom market? Here is what the Economist Inclusive Internet Index is reporting:
| Country | Wireless HHI | Broadband HHI |
|---|---|---|
| Canada | 2627 | 1416 |
| Australia | 4006 | 2724 |
| France | 2604 | 2684 |
| Germany | 3378 | 2704 |
| Italy | 2796 | 2518 |
| Japan | 3353 | 2031 |
| New Zealand | 3465 | 2448 |
| Sweden | 2731 | 1958 |
| South Korea | 3538 | 3003 |
| United Kingdom | 2807 | 2020 |
| United States | 3231 | 1613 |
As can be seen in this table, Canada’s wireless and wireline communications markets are less concentrated than our international peers. Indeed, of the 100 countries examined this year, the Economist Inclusive Internet Index ranked Canada’s Broadband market as the least concentrated and ranked the Wireless market concentration as the 90th of 100.
As I mentioned two weeks ago, a review of the worldâs LTE deployments shows that there are 10 LTE networks operating in Canada compared to 9 in the US, 3 or 4 in most European countries (Russia has 9; Sweden has 6; Denmark has 5).
These are important factors when considering network diversity for overall resilience of Canada’s communications infrastructure.
Interesting, I’m trying to understand this in the context of the differences in the telecom markets in Canada and the US. In Canada, the fixed and wireless segments are dominated by the same companies (Bell wirleline and Bell Mobility, Rogers wireline and Rogers mobile, Videotron etc). In the US it’s more segmented is it not? You have the dominant national mobile carriers and the more regional wireline market segmentation. I wonder if the Canadian pre-occupation with the Olies is that they dominate the fixed and mobile space (as single entities) whereas in the US that is not the case, or is it? And does the HHI factor in that difference?
Taking Tom’s comment further: the 10 LTE networks in Canada (according to https://www.5gamericas.org/wp-content/uploads/2022/08/USCanada_8-15-2022.pdf) seem to vary in terms of coverage size, number of towers, and number of customers.
About 90% or so of mobile line marketshare is captured by the three large mobile operators: Bell, Rogers, and Telus. This fact alone says a lot, even if 10 LTE networks do exist in Canada.