Cable and satellite television

The battle for market share between cable operators and their wireless competitors continued in 2001, as a growing number of Canadians subscribed to television services using satellite and multipoint distribution systems.

As of August 31, 2001, wireless operators had captured 17% of the market, up significantly from about 11% in 2000, and more than double the level of about 6% in 1999.

Wireless television services had 1.6 million subscribers on August 31, 2001, up 66.3% from 2000. Cable companies had 7.9 million subscribers, down 1.4%.

Data show that the battleground for market share in 2001 reached metropolitan areas. The number of subscribers to cable services in census metropolitan areas declined in 2001 for the first time in the industry's history.

Cable companies had almost 5.7 million subscribers in census metropolitan areas on August 31, 2001, down 0.2% from 2000. Subscriptions fell in 16 of the 25 largest urban areas. In 2000, the number of subscribers to cable services had increased in 13 of these metropolitan areas.

Cable operators in small and medium-sized communities continued to lose customers in 2001. The decline in subscriptions was fastest in small communities (-6.3%). Cable services now account for less than 70% of market penetration in small and medium-sized communities.

Cable operators offering Internet access services and digital cable fared better in this competitive environment. They maintained a higher penetration rate and generated 17% more revenue per subscriber than those who did not provide these services.

The introduction of competition in an industry often results in a decline in profitability for the incumbent firms. This has been the case in the cable and satellite industry. The profit margin (before interest and taxes) of cable operators was 16.1% in 2001, down from 19.5% in 2000 and 21.7% in 1999.

Wireless operators have not yet achieved profitability, but their losses are declining. In 2001, their loss (before interest and taxes) was $293 million or $182 per subscriber, considerably less than in 2000. This was largely because of high promotion and technical expenses to attract and connect new customers.

The cable and satellite industry's customer base and revenues grew significantly in 2001. The number of subscribers to programming services increased 5.9%, and revenues 14.2%. Revenue per subscriber was up in both the cable and wireless segments. In the case of cable operators, the growth in revenue per subscriber is largely explained by the provision of new services, in particular Internet access services. Revenues from these services accounted for 12% of the revenues of the systems offering them in 2001.

The technology for program distribution is evolving at a fast pace. Analogue distribution is gradually being replaced by digital distribution. More than 25% of the 9.5 million subscribers to programming services were receiving their service in digital mode in 2001, up from 15% in 2000. The popularity of direct-to-home satellite television largely explains this change, but digital cable is also gaining ground. There were close to 812,000 subscribers to digital cable on August 31, 2001, more than double the number in 2000.

Service bulletin, broadcasting and telecommunications, Vol. 32, no. 3 (56-001-XIE, $10/$32), will be available soon.

For more information, or to enquire about the concepts, methods or data quality of this release, contact Daniel April (613-951-3177; daniel.april@statcan.gc.ca), Science, Innovation and Electronic Information Division.