In 2022, Canadian carriers were investing in telecom infrastructure at an accelerated pace.

That is one of the findings of a new report prepared by PwC. “Connecting Canadians through resilient networks: The impact of the telecom sector in 2022 and beyond” [pdf, 4.5MB] found that Canada’s six largest telecom companies invested $13.3 billion in capital expenditures in 2022. Over the past five years, the Canadian telecom sector has invested an annual average of $12.1 billion in capital on network infrastructure, expanding, enhancing, and strengthening Canada’s wireless and broadband networks. This represents approximately 18.6% of average revenues, which is 30% higher than the 14.2% average across peer telecom carriers in the US, Japan, Australia, and Europe. Canada’s elevated capital intensity is similar to what was found in another recent study.

As I have reported in my monthly analysis of Statistics Canada data, PwC confirmed that for the year ending September 2023, cellular and internet access service prices declined by 17.2% and 7.8%, respectively, while the Consumer Price Index for All-Items increased by 3.8% over the same period.

PwC says the telecom sector contributed nearly $77B to Canada’s GDP, and supported nearly three quarters of a million Canadian jobs in 2022. It estimates that by 2035, the telecom sector’s delivery of enhanced connectivity, including 5G, has the potential to contribute an additional $112B to Canada’s GDP.

Key findings:

• Direct GDP contribution and jobs supported by the telecommunications sector in 2022 is estimated to be $76.7 billion and 724,000 jobs (versus $74.9 billion (+2.4%) and 650,000 jobs in 2021 (+11.3%)*);
• Enhanced connectivity, including 5G, has the potential to contribute an additional $112 billion to Canada’s GDP by 2035
• Telecom’s direct GDP contribution includes $24.7 billion from the sector’s value chain and up to $52 billion in direct impact from increased sales and other outputs from other Canadian industries through the incremental addition of additional wireless and broadband connections;
• The six largest Canadian telecommunications operators invested $13.3 billion in capital expenditures in 2022 to continue expanding and enhancing their wireless and broadband internet networks;
• Over the past five years, Canada’s telecom sector has invested an average of $12.1 billion annually on network expansion and enhancements. This represents a capital intensity that is approximately 18.6% of average revenues. That is higher than the 14.2% average across peer telecom operators in the US, Japan, Australia and Europe;
• Continued investments in Canada’s telecom sector connect more Canadians to advanced wireless and broadband internet networks, supporting increased data consumption, powering the digital economy, and providing a range of other social and environmental benefits:
  • 99.7% of Canadians had access to mobile network coverage where they lived or conducted business in 2021, including 87.8% who had access to 5G connectivity;
  • 93.5% of households had access to high-speed internet with speeds meeting the CRTC’s 50/10 Mbps targets in 2022. The CRTC estimates that services providers are on track to meet its broadband targets for 98% of households to have access to 50/10 Mbps unlimited services in 2026, and 100% by 2030;
• The price of telecommunications in Canada has fallen over the past year, with cellular service prices down 17.2% and internet access service prices down 7.8% between September 2022 and September 2023, while the all-items Consumer Price Index increased by 3.8%;
• The telecommunications sector has already suffered millions of dollars in damages to Canadian network infrastructure as a result of severe weather events and other natural disasters. Canadian service providers are investing in building resilient networks to manage future risks.

The bottom line? Maintaining incentives for investing in telecom infrastructure is key to Canadian economic growth.

STAC 2024, Canada’s premier tower industry event, will be taking place March 26 – 27, 2024 at the Sheraton Vancouver Wall Centre.

I am a long time supporter of the annual STAC Conference. The event is the annual gathering of the Structure, Tower and Antenna Council, a group administered within the Canadian Telecommunications Association.

STAC 2024 brings together the people who physically construct Canada’s telecommunications networks. As I have written before, I have frequently been jealous of people who work in construction. At the end of a shift, those workers can see what they accomplished. That is a huge advantage over the kinds of longer range jobs that I have had.

The event is dedicated to tower safety in Canada. The annual STAC conference is a vibrant forum for sharing crucial insights and best practices that are vital to maintaining Canada’s renowned tower safety record. Located at Vancouver’s downtown Sheraton Wall Centre, STAC 2024 is expected to unite more than 300 professionals from across Canada’s communications and tower industry, spanning wireless carriers, broadcasters, engineers, contractors, manufacturers, landowners, safety equipment suppliers, and safety trainers, among others.

We have clearly seen the essentiality of these dedicated telecommunications professionals:

• as the communications industry continues to extend service to rural and remote areas;
• communications services providers reinforce network resilience in the face of changing weather patterns; and
• carriers enhance and expand 5G networks in urban, rural and private applications.

STAC 2024 represents an opportunity for them to convene, interact, celebrate successes, and learn from each other.

STAC and the STAC 2024 Conference & Exhibition are administered by the Canadian Telecommunications Association, which is dedicated to building a better future for Canadians through connectivity. Through its advocacy initiatives, research, and events, the Association works to promote the importance of telecommunications to Canada’s economic growth and social development and advocate for policies that foster investment, innovation, and positive outcomes for consumers. In additiona to STAC, the Association also facilitates industry initiatives, such as the Mobile Giving Foundation Canada, Canadian Common Short Codes, and wirelessaccessibility.ca.

What is the cost of misinformation?

We know that there is a real societal cost associated with viral misinformation, but what price do purveyors pay to spread their messages?

It turns out, it is pretty cheap. according to a recent article in Fortune, “For as little as $7, TikTok users can garner thousands of views on TikTok, opening a low-cost pathway to spread propaganda on hot-button topics.” The article discusses a surge in social media misinformation triggered by the Middle East conflict.

In Canada, we have seen senior politicians spreading misinformation in poorly informed social media messages, with the Prime Minister, Foreign Minister and Minister of Innovation all implicating Israel in killing hundreds by bombing a Gaza hospital, when in fact the explosion was caused by a misfired terrorist rocket that didn’t hit the hospital.

It is shameful that none of these three senior politicians have deleted their posts or issued an online clarification. The closest we had was a late night post by Canada’s National Defense Minister (more than 4 days later), absolving Israel from blame. With nearly 7 million followers, the quick-to-tweet politicians didn’t have to pay for their false messages to go viral. The Prime Minister’s post has been viewed more than 2.6 million times, and it was reposted by more than 5,000 other users. The Foreign Minister’s post was seen more than 2.2 million times. By way of contrast, the Defense Minister has only 41,500 followers, less than 1% of the Prime Minister’s 6.5 million. By the time his post was issued, the damage was done.

So, how do we measure the cost of misinformation, especially when the misinformation is spread by people who are supposed to know better?

I have written about government regulation of online harms a number of times in the past. A few weeks ago, in “Regulating misinformation”, I asked “What should be the role of government in regulating misinformation?”

The article in Fortune indicates TikTok “has had its share of criticism for propagating problematic content. It has faced multiple lawsuits for surfacing suicide, self-harm and disturbing content to kids, leading to mental health consequences.”

The BBC writes that “TikTok and Meta have been formally told to provide the EU with information about the possible spread of disinformation on their platforms relating to the Israel-Gaza conflict.” Under the terms of the EU’s Digital Services Act, companies must respond by set deadlines.

Recently, the Government of Canada announced that it plans to move forward with a bill addressing “online hate speech and other internet-related harms.” The Government of Canada’s website on Online Safety says “Now, more than ever, online services must be held responsible for addressing harmful content on their platforms and creating a safe online space that protects all Canadians.”

How will the legislation deal with the possibility that the online harms originate with the government itself?

As it turns out, the speed of a household internet connection isn’t what is driving broadband traffic. The amount of data used by a household is more closely correlated to demographic factors than the subscribed data rate.

That finding was reported in the October issue of Telecommunications Policy, based on studying usage data from Ofcom, the UK telecom regulator. “What drives broadband traffic?” found demographic factors appear to be the key drivers of traffic volumes. For example, “areas with larger households, younger population, and higher percentages of those able to speak English are all associated with higher use.”

The paper has interesting implications for rural broadband investment. The authors suggest that data traffic is not constrained by households using mid-speed services. “The benefits of policy interventions to support higher speeds remain somewhat speculative.”

The abstract for the paper notes:

Worldwide there is an ongoing policy and regulatory push to make very high speed broadband available as widely as possible. Underlying the policy interventions to support higher speeds is an implicit assumption that higher speeds will enable different (and socially valuable) use. In this paper we empirically test whether higher speed lines are associated with greater household data usage in the UK. We find that after allowing for demographic factors, higher speed in fact has a very limited relationship to traffic.

Early into the COVID pandemic lockdown, I looked at the relatively modest speed requirements for various business collaboration applications and streaming video.

I have been told the CRTC is about to update its Communications Monitoring Report data. According to the latest published data, by year end 2021, 91.4% of Canadians had access to the national objective of 50Mbps down, 10 Mbps up with unlimited data. More than three quarters of Canadian households (77.4%) have access to gigabit speeds. Among rural households, 62.0% had access to the service objective, while 36.9% had gigabit service available by year end 2021.

This isn’t to say that gigabit access isn’t useful. Depending on the household characteristics, ultra high speed broadband may deliver a better user experience. From a policy perspective, the report suggests the speed of the connection doesn’t seem to be driving household broadband traffic. Traffic appears to be more dependent on the characteristics of who is using the service.

If Canada chooses to revisit its broadband objective, similar studies could be important contributors to the discussion.

Cross subsidies cost consumers real cash.

Based on a number of recent CRTC decisions, it appears the Commission wants consumers to pay inflated prices for internet and mobile services in order for the CRTC to fund other projects.

A couple months ago, in “Ending regulated cross subsidies”, I wrote about the CRTC setting wholesale fees paid by Videotron to Rogers at rates below cost, saying that the financial shortfall can be made up “through other telecommunications services,” all of which are competitive.

Let’s be clear what that means. In the eyes of the CRTC, Videotron, a multi-billion dollar vertically integrated national telecommunications company, should be subsidized by Rogers consumers paying more for their mobile and internet services.

Does that seem right?

Last week, the CRTC sent a letter proposing to grant special dispensation to Corus noting “Corus’ unique position as Canada’s largest non vertically integrated private broadcaster.” Under the proposed Order, Corus would not have to spend as much on Canadian programming. Scotiabank estimates that this could represent around $30 million in savings annually.

Let’s focus on the language in the letter that characterizes Corus as having a “unique position” as a non vertically integrated private broadcaster. There are other private broadcasters that have been seeking relief as well. Bell (CTV and Noovo), Rogers (CityTV), and Quebecor (TVA) have all sought relief, but they are integrated companies. The CRTC has decided “the that it is appropriate to give immediate consideration to Corus’ application on an exceptional basis”, presumably because it believes the integrated companies can sustain financial losses, propped up by profits in other segments.

This makes no sense from a business perspective. Effectively, the CRTC is now depending on profits from other lines of business – internet and mobile services – to prop up money losing broadcast business units. It is an unsustainable business model, punishing shareholders and consumers alike. As I have written before, “A rational business will restructure, or shut down those units that have no opportunity to climb out of the red.”

Bell has filed an application with the Federal Court of Appeal over the CRTC’s automatic broadcast license renewals, concerned the Commission will delay hearing broadcasters appeals for regulatory relief on Canadian program expenditures.

This Commission has now provided numerous instances where it indicates a belief in a system of regulated cross subsidies from unregulated business segments. At the end of the day, these cross subsidies cost consumers real cash.

As Dvai Ghose wrote in the Globe and Mail, “While the CRTC may have good intentions, it demonstrates naiveté when it comes to the private sector, and the consequences could be incredibly destructive for wireless investment and quality in Canada, risking our ability to compete globally.”