Incumbents still kings of telephony castle, CRTC study on competition maintains

Consumers have benefited from competition in the telephone market, even as the competitors are taking a financial beating. That is the overriding message of a report on the state of the market released by the CRTC. Late last month the commission released Status of Competition in Canadian Telecommunications Markets. The 100-page study is loaded with facts and figures about the role telephony plays in Canada’s financial world. By 1999, telecom firms had invested over $7.6 billion in capital equipment and assets, and had a workforce of more than 95,000 people. Gross revenues for the industry have been growing at a nine per cent rate each year, moving from $20.5 billion in 1996 to $28.7 billion last year. Those numbers are heavily weighted in favour of the established telcos. Figures included in the report show that for the last two years incumbents brought in billions of dollars in net income, while competitors, both wireline and wireless, suffered losses. Much of this is attributable to the decline in LD revenues. New entrants do not have the history of local service to offset the fall. "Local and long distance service revenues (including data) make up over 75 per cent of industry gross revenues and continue to be generated largely by the incumbent telephone companies," the report notes. "Over 50 per cent of industry wireline revenues are accounted for by one entity, Bell Canada." Accompanying data show that competitors garnered no more than 26 per cent of business revenue share over the past six years. For a similar period, the share of residential revenue going to new entrants never rose above 15 per cent. The CRTC figures show that incumbents held two-thirds of the total LD minutes share. Resellers controlled 19 per cent of the market, while facilities-based competitors registered at 15 per cent. Consumers have been the beneficiaries of the competitive situation, the commission believes. "Marketing plans have allowed customers to increase their long distance calling without increased spending. Also, competition has brought significant reductions in prices in many of the markets, the most notable being long distance, Internet, data and private line, mobile and international." Savings in LD rates offset increases in local rates in every province. The big winners were residents of British Columbia, where urban dwellers saved an average of $324 over six years and rural residents pocketed $297. The least generous return was in Saskatchewan, where city residents saved $136 and their country cousins saved $133. One area where competition is rampant is in the Internet market. Commission data show non-incumbents hold 41 per cent of the market, while established telcos are limited to 32 per cent. Cablecos are at 19 per cent with others at eight percent.

Incumbents still kings of telephony castle, CRTC study on competition maintains

News | October 10, 2001

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