Telecommunications statistics

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The upward momentum in the wireless market continued in the first quarter while the decline of the traditional telephone services market accelerated.

There were 16.8 million wireless subscribers at the end of the first quarter, up 11.9% compared to the first quarter of 2005. This rate of year-over-year growth is comparable to those observed over the past three years.

While the wireless market is growing rapidly, traditional wireline telephone services are continuing to lose ground to the competition in the residential market. The year-over-year drop of 5.3% was the largest observed since the erosion of this market began in 2001. There were 11.8 million traditional residential lines at the end of the first quarter.

Despite the sustained growth of wireless telecommunications, they are being adopted much less quickly in Canada than in a number of other countries. There were just under 52 subscribers per 100 habitants in Canada at the end of the first quarter, a level reached by the United States in the second half of 2003. Canada's lag in this regard is even more evident when compared to other Organisation for Economic Co-operation and Development countries, where there was an average of 53.5 subscribers per 100 habitants as long ago as the end of 2001.

Most of the customers giving up their traditional residential lines are turning to wireless or cable telephone services.

According to the most recent data from the Residential Telephone Service Survey, close to 615,000 households were using only cellular services at the end of 2005, approximately 285,000 more than a year earlier.

Along the same lines, a recent report by the Canadian Radio-television and Telecommunications Commission indicated that competitors (excluding wireless services) of the incumbent telephone companies had attracted 963,000 residential clients by the end of 2005, more than double the corresponding figure for the end of 2004, when there were 418,000. The major portion of this leap of 545,000 customers (59%) can be explained by the strong growth of telephone services offered by the major cable companies.

This turbulence in the industry is reflected in the financial performance of its major segments.

For the past several quarters there has been a very clear downward trend in the revenues of traditional wireline operators. This trend continued in the first quarter of 2006, when they dropped 3.8% from the first quarter of 2005 to $5.5 billion. The situation was entirely different in the wireless market, where revenues have been steadily increasing. For the first three months of the year, revenues shot up 17.2% over the same period in 2005 to reach $2.9 billion.

In terms of profits, the earnings before interest and taxes of traditional wireline network operators were $1.1 billion in the first quarter, down 10.1% from 2005, while those of wireless network operators rose 32.2% to $854.2 million. The 29.5% profit margin realized by wireless service providers was 10 points higher than those of wireline service providers.

Note: The quarterly survey of telecommunications that underlies this release is undergoing a redesign. During the transition period between the old and new surveys, the main results of the survey will continue to appear in The Daily. However, the publication Quarterly Telecommunication Statistics (56-002-XIE) will no longer be produced.

Definitions, data sources and methods: survey number 2721.

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

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