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Report: Canada Telecom Will See “Limited Growth” In 2016

February 3, 2016 - Written By Cory McNutt

Like the rest of the world, Canada is feeling the financial ‘pinch’ across its vast land mass and its over 32 million wireless subscribers.  However, the overall slowdown in the economy is not helping matters – there is an uncertainty in the Canadian economy caused by high consumer debt and inadequate job prospects in certain market sectors.  The Conference Board of Canada bases this on a recent study that examines the short and medium-term economic and profitability outlook of Canada’s Telecommunications Industry.  The report does highlight the fact that “Despite the challenges, the industry’s financials remain exceptionally strong.”

In a statement sent to our source, MobileSyrup, Kristelle Audet, senior economist at Canadian Industrial Outlook said, “Canadian consumption will grow only modestly in 2016. This, combined with sharp telecom price increases seen in the past couple of years, will likely prompt Canadians to review their telecom services and eliminate unnecessary options along the way.”  In other words, Canadians will be very selective in the service plans and options they choose, cutting costs wherever they can.

According to the document highlights, with weak job prospects and consumers already in debt, they are finding it hard to spend money on telecommunication services.  They may have enough money to keep their smartphone going, but no extra money for data, which limits their spending beyond the basics.  Providers want subscribers to sign-up for streaming TV such as Netflix, Crave TV, and Shomi…also streaming music platforms like Apple Music and Google Music – all services that increase subscriber data usage and significantly increases the telecom’s profits.

The second big obstacle the report points out is that even though Canadians are spending more time viewing online content, this is at the expense of regular TV.  Paid subscription rates have been on the decline since 2012 – it will be a long time before TV, as we know it, will become obsolete.  However, while many do not want to watch streaming TV or movies on their smartphone, or even their tablet, with the huge push for Smart TVs, people will happily stream on a 50-inch flat or curved TV with their WiFi.

Internet is fast becoming the mainstay for home entertainment – growth in that market segment has surpassed wireless mobile.  It will not be long before internet services will generate more revenue than broadcasting and the wireline phone segment.  It has not helped that almost all of the telecom carriers have recently raised their prices $5 to $10 a month and essentially eliminating any BYOD benefit.  A recent study by Sphere shows the current pricing across Canada and is an interesting read.