State of the Canadian wireless industry 2018

Speaking notes for Robert Ghiz, President & CEO
Canadian Telecom Summit 2018, Tuesday, June 5, 2018

It’s a pleasure to be back on this stage for a second time as President and CEO of CWTA.

Last year, I spoke about wireless technology being the backbone of innovation. I evoked a bright future for all industry sectors, good jobs for Canadians, and increased coverage across all provinces and territories.

A future I described as being built on innovation and continued investment, a future that is only possible when we have stable policies that recognize facilities-based competition as the driver of wireless innovation.

Over the last year, it’s become increasingly obvious to me that we are one of the most important industries in Canada. Every other industry in Canada depends on our world-class infrastructure.

Our industry has been shaped by some of the greatest innovators in Canadian history, whose efforts to deploy world-class wireless networks all across our vast nation serve not only the needs of consumers, but also vertical industries too numerous to list. Virtually every sector in our economy depends on Canada’s wireless industry for its continued growth and success.

We have world-class wireless networks in every province and territory, built for Canada, by Canadians. Our industry employs more than 138,000 people, and drives billions of dollars of investment into Canadian communities every year.

Let me go over the current state of wireless

Our industry is an industry that works – for the Canadian economy, and for consumers.

Just look at the numbers.  More and more Canadians are turning to wireless devices – and using wireless services in more and more aspects of their lives – every single year.

Today, more than 30 million Canadians are wirelessly connected. According to the most recent CRTC numbers, more Canadian households have mobile phones than land lines,[1]  and more than one quarter of them rely exclusively on wireless services.[2] 

And most impressively, not only are Canadians high adopters of wireless services they are also high adopters of the latest wireless products.  According to Cisco, 83% of Canadian mobile subscribers are using smartphones.  This ranks Canada ahead of most other countries, and first amongst the G7.    

Consumption of mobile data – through all kinds of apps and every flavour of streaming content – continues to grow at an astounding rate in Canada. Mobile data traffic in our country increased by 41% between 2015 and 2016 alone.

And forecasts show this trend will continue: with Cisco forecasting that Canadian mobile data traffic will grow 500% from 2016 to 2021, which amounts to a compound annual growth rate of 38%.

This growing demand is incredible when you think about it. Very few industries — if any — can look ahead and forecast a growth in demand of 500%.

High adoption of wireless services, high penetration rates for the latest wireless devices, and ever-growing demand for mobile data all point to Canada’s leadership in wireless, and a Canadian innovation success story for which all Canadians can be proud.

And yet, there remain those who wish to convince us otherwise.  Who want Canadians to believe that they pay more for wireless services than anyone else in the world and yet receive poorer quality service.

To address these myths, I would like to present a few facts.

Regarding international price comparisons, to suggest they show that Canadians get poor value for their dollar is false and misleading.

Take for instance the oft-cited Nordicity Report commissioned by the Government of Canada.  To the authors’ credit, they acknowledge the limitations of the methodology they use for their study. 

They acknowledge that prices are constantly evolving and that their study is just a “snapshot” in time, limited to a few select service level baskets, in a few select international cities, and that it is not meant to be a statistical representation of any of the countries covered by the study.

In fact, they don’t even use the least expensive plans available in each service level category, but rather use a weighted average, thus overstating the actual prices offered to consumers by as much as 40%.

But even with these limitations, the Nordicity Report shows that in Canada, prices for most of the service levels surveyed are falling, even while the quality and availability of Canada’s wireless networks is improving.

For example, the average price of a plan offering 1200 voice minutes, 300 texts and 1 GB of data has declined 37% from 2008 to 2017, while inflation has increased 14% over that same time period.  

Now, I’m not trying to suggest that Canadians pay the lowest prices in the world.  The Nordicity Report, and others like it, typically find that Canadian prices are comparable to, and in many cases better than, countries such as the United States and Japan, while many European countries tend to have lower prices. 

But what these studies ignore is that service in lower priced countries is often inferior, and that Canadians get more for their mobile broadband dollar than most of the countries to which Canada is compared.

As anyone who has travelled outside of Canada knows, there is little comfort in having slightly cheaper service only to discover that the service is slower and often not available. 

This is not a minor inconvenience.  It has serious effects on a country’s economy and its population’s ability to keep up with the global pace of innovation.

Fortunately, Canadians enjoy some of the best 4G wireless networks in the world, surpassing most other countries in terms of download speeds and reliability.

For example, according to OpenSignal, Canadian average mobile download speeds are the fastest in the G7, and twice as fast as the United States. 

Canadian network 4G availability is also much higher than in Europe, and amongst the best in the world, with advanced LTE networks accessible by 99% of Canadians, and in every province and territory. 

This is no small feat given that Canada has a relatively small user base spread over a vast territory and also has relatively high government-imposed costs.[3]  To put it in simple terms, the cost of building wireless networks from coast to coast in Canada is very high.

And yet, with each new generation of wireless technology, our facilities-based carriers, and the vendors and suppliers who partner with them, have stepped up to overcome the uniquely Canadian set of challenges.

According to the OECD, Canadian facilities-based operators’ investment in telecommunications as a percentage of revenue is 4th amongst OECD economies and 1st in the G7.[4]

Not counting spectrum costs, our facilities-based carriers have invested approximately$50 billion to build Canada’s leading wireless networks.

According to OpenSignal, these investments have made Canada, and I quote, an “LTE powerhouse”, adding, and I quote again, “There’s no question Canada is a global 4G superpower today. That likely means there are few other countries better prepared than Canada to deploy the 5G networks of the future.”[5]

The Government of Canada has acknowledged this. Minister Bains, in the speech he made to mark the launch of the ENCQOR 5G corridor initiative, said, quote, “as we enter the next phase of the digital revolution, I am proud to say we are well positioned to lead again.”[6]

Wireless is a strategic global sector. And Canada is a leader.

This is no small feat, given Canada’s challenging climate and geography, its low population density, and the high cost of building, maintaining and enhancing networks in every province and territory. But we still outperform the overwhelming majority of developed countries on quality and coverage.

Now, I understand that, as humble Canadians, it’s hard for us to accept we’re leading the world in anything other than hockey. But facts are facts. Canadians get more value for their wireless dollar than consumers in most other countries, and there is hard evidence out there to prove it.

Now, did we get here?

While we can and should take great pride in what we have achieved so far, now is not the time for us to sit still. We cannot be complacent. 

Canadian leadership in wireless didn’t happen by accident.  It happened because of sustained investment and innovation required to deploy the advanced wireless networks we all count on. 

A stable regulatory environment that recognizes the importance of facilities-based competition has paved the way for Canadian carriers to make those investments, so that Canada could lead the world in wireless.

As I said earlier, we are a global wireless success story.  We are a leader right now. But if we want an innovative economy for the future, we need to stay the course. We need to maintain a regulatory environment that will not stand in the way of investment. 

If we want future generations of Canadians to enjoy the benefits of wireless leadership that we enjoy today, we need to move forward, and do it together.

CWTA highlights at every opportunity the importance of facilities-based competition for essential public policy goals such as bridging the urban/rural digital divide, maintaining network security and reliability, and stimulating research and innovation in the field of telecommunication.

That’s why in my opinion, the CRTC’s decision not to reverse its position on Wi-Fi first MVNOs was indeed in the best interest of Canadians.

By maintaining its long-standing position, as reflected in its original decision on the matter, the Commission recognized the importance of ongoing investment by facilities-based carriers for ensuring Canadians can continue to enjoy some of the best wireless networks in the world.

Predictable and evidence-based public policy will smooth the path for continued growth and innovation.

So where are we going?

Where will this path forward lead us? The answer is obvious: 5G.

The whole world is now on the cusp of this next great wireless revolution and staying the course will ensure Canada is well poised to maintain its leadership status through the coming transition.

As this audience knows better than most, 5G networks will offer incredible speeds and almost zero latency.

Smart cities, remote medicine, and advanced agriculture and manufacturing are just a few of the applications that 5G will further enable, and with them deliver the innovation, economic growth and well-paying middle-class jobs that the Government of Canada has identified as cornerstones of its agenda.

To do its part, CWTA has established the 5G Canada Council.

The Council hosted its latest event in Ottawa last February. We heard from a wide range of stakeholders that the smooth rollout of 5G infrastructure in Canada may require streamlining regulations and approval processes. CWTA is doing its part in that regard by meeting with relevant authorities at all levels of government.

We also heard that continued collaboration and ongoing dialogue between all stakeholders will be key.

All levels of government, all facilities-based carriers, and all network equipment and handset manufacturers need to have a collective understanding of the evolving challenges and opportunities in 5G, and collaboratively tackle issues as they emerge to ensure Canada remains among the global leaders in wireless.

I was reminded of all this when I was in Austin a few weeks ago for a 5G North America conference. There, I also heard from experts who came from all over the world to explain how they are preparing for 5G.

This drove home the point that we must work together –  industry, regulators, and government –  to ensure that Canada remains a leader in wireless services.

And as a complement to our work through the 5G Canada Council, CWTA has also commissioned a study on the predicted economic impacts of 5G in Canada, which we hope to release in the not too distant future.

And before I leave, I want to say one more thing about network coverage. Here’s a map of LTE coverage in PEI. We’ve got 99.9% LTE coverage on the Island. I would say that’s at least as good as in Muskoka. And getting to PEI from Toronto on a Friday afternoon is just a two-hour flight compared to six hours on the 400. I won’t go as far as to compare golf courses, because that wouldn’t be fair.

Thanks again to Mark and Michael for giving me the opportunity to address you again. Here’s to another great year.

[1] 86.2% have mobile phones; 71,9% have land lines.

[2] 27% of households are mobile only.

[3] e.g. Canadian operators pay among some of the highest prices in the world for spectrum licenses

[4] OECD Digital Economy Outlook, October 2017.

[5] OpenSignal, State of Mobile Networks: Canada (February 2018). https://opensignal.com/reports/2018/02/canada/state-of-the-mobile-network

[6] Speaking points for the Honourable Navdeep Bains, PC, MP, at the Strategic Innovation Fund—ENCQOR Investment launch, Ottawa, Ontario, March 19, 2018. https://www.canada.ca/en/innovation-science-economic-development/news/2018/03/strategic-innovation-fundencqor-investment.html