Defining the Information and Communications Technologies Sector
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Defining the Information and Communications
Technology Sector
Adoption of the OECD definition and introducing
the North American Industry Classification System
Prepared for Industry Canada
by Daniel April
Statistics Canada
March 1999
Contract U4525-7-0009
Wired and Wireless Telecommunications Statistical
Infrastructure and Economic Analysis
Deliverable 3.4.A
Introduction
Two recent events, the adoption by the OECD of a definition for the ICT sector and the adoption by the NAFTA countries of the new North American Industry Classification System (NAICS), will have a considerable impact on the statistics produced to describe this important sector of the economy. The purpose of this paper is to:
- describe the context in which the definition of this sector has evolved;
- present the latest international definition and the equivalent definitions in terms of national standards; and
- present the plans for implementation of NAICS in Canada, in particular for those surveys of interest for tracking the ICT sector.
The context in which the definition of the ICT sector has evolved
For a number of years, policy makers and analysts in Canada and around the world have expressed an interest in understanding and measuring the importance of the so-called "ICT sector". In the absence of a standard definition for the ICT sector, it has been very difficult to monitor its development, to make international comparisons and to develop policies.
In an effort to stimulate discussions on this issue, Statistics Canada and Industry Canada published a working document entitled "Measuring the Global Information Infrastructure for a Global Information Society" in June 1996. The main thrust of this working document was to propose a definition for the ICT sector in terms of the existing Canadian Standard Industrial Classification (CSIC) and to present a statistical profile of the Canadian ICT sector. The proposed definition was based on the notion that the ICT sector should include industries "primarily engaged in producing goods or services, or supplying technologies, used to process, transmit or receive information". After some deliberation, the proposed Canadian industries were as follows:
For the first time, a standard list of industries was adopted to describe the ICT sector and Industry Canada prepared and published a statistical review of the ICT sector based on this definition.
Discussions continued at the OECD, and the Committee for Information, Computer and Communications Policy (ICCP) established an Ad Hoc Statistical Panel to address the issue of indicators for the information society. More specifically, the Panel was to develop definitions which would support the development of these indicators. The task set at the first meeting of the Panel in 1997 was agreement on a definition of the ICT sector, based on a list of industries drawn from the third revision of the International Standard Industrial Classification (ISIC. revision 3). This objective was realized at the June 1998 meeting of the Panel and the resulting definition was released by the OECD in September, 1998.
The OECD definition
The panel has agreed to the following definition:
| Industry groupings | ISIC | Industry titles |
|---|---|---|
| Manufacturing | 3000 | Manufacture of office, accounting and computing machinery |
| 3130 | Manufacture of insulated wire and cable | |
| 3210 | Manufacture of electronic valves and tubes and other electronic components | |
| 3220 | Manufacture of television and radio transmitters and apparatus for line telephony and line telegraphy apparatus, and associated goods | |
| 3230 | Manufacture of television and radio receivers, sound or video recording or reproducing apparatus, and associated goods | |
| 3312 | Manufacture of instruments and appliances for measuring, checking, testing, navigating and other purposes, except industrial process control equipment | |
| 3313 | Manufacture of industrial process control equipment | |
| Goods Related Services | 5150 | Wholesale of machinery, equipment and supplies |
| 7123 | Renting of office machinery and equipment (including computers) | |
| Intangible Services | 6420 | Telecommunications |
| 7200 | Computer and related activities |
Although the OECD definition of the ICT sector differs somewhat from the definition that was used in Canada, the underlying principle is very similar. In this case, the products of a candidate manufacturing industry must:
- be intended to fulfill the function of information processing and communication, including transmission and display; or
- use electronic processing to detect, measure and/or record physical phenomena, or to control a physical process.
Components primarily intended for use in such products are also included. The products of a candidate service industry must:
- be intended to enable the function of information processing and communication by electronic means; and,
- the service provided must go beyond simply the supply of goods.
More detail on this definition can be found in the OECD document DSTI/ICCP/AH/M(98)1. The main differences between the OECD definition and the definition previously used in Canada are:
- The exclusion of radio and television broadcasting;
- The inclusion of manufacturers of insulated wire and cable;
- The inclusion of wholesalers and lessors of ICT equipment.
Defining the ICT Sector in terms of national standards
The purpose of the OECD definition is to provide a framework to compile statistics that are comparable from country to country. Given that ISIC is not used in North America(1), it is necessary to develop a list of industries in terms of the national standard that is as close as possible in scope to the ISIC based definition.
The industry standard currently in use in Canada is the 1980 Canadian Standard Industrial Classification (1980 SIC). Existing Canadian ICT statistics are produced on the basis of this standard. However, the 1980 SIC will be gradually replaced by the new North American Industry Classification System (NAICS)(2)
During this transition period, there will be a need for definitions to be expressed in terms of both national standards. These definitions are outlined below:
| Industry groupings | SIC80 | Industry titles |
|---|---|---|
| Manufacturing | 3341 | Record Players, Radio and TV Receivers Industry |
| 3351 | Telecommunication Equipment Industry | |
| 3352 | Electronic Parts and Components Industry | |
| 3359 | Other Electronic Equipment Industries | |
| 3361 | Electronic Computers and Peripheral Equipment | |
| 3362 | Electronic Office, Store and Business Machine Industry | |
| 3369 | Other Office, Store and Business Machine Industry | |
| 3381 | Communications and Energy Wire and Cable Industry | |
| 3911 | Indicating and Recording Instruments Industry | |
| 3912 | Other Instruments and Related Products | |
| Goods Related Services | 5743 | Electronic Machines, Equipment and Supplies (except Computers), Wholesale |
| 5744 | Computer and Related Machines, Equipment and Software, Wholesale | |
| 5791 | Office and Store Machines, Equipment and Supplies, Wholesale | |
| 9913 | Office Furniture and Machines Rental and Leasing | |
| Intangible Services | 4814 | Cable Television Industry |
| 4821 | Telecommunication Carriers Industry | |
| 4839 | Other Telecommunication Industries | |
| 7721 | Computer Services | |
| 7722 | Computer Equipment Maintenance and Repair |
The main differences between this definition and the previously used 1980 SIC based definition are:
- The inclusion of SIC categories 3381 - Communications and Energy Wire and Cable Industry, 5743 - Electronic Machines, Equipment and Supplies (except Computers), Wholesale, 5744 - Computer and Related Machines, Equipment and Software, Wholesale, 5791 - Office and Store Machines, Equipment and Supplies, Wholesale, and 9913 - Office Furniture and Machines Rental and Leasing.
- The exclusion of SIC categories 4811 - Radio Broadcasting, 4812 - Television Broadcasting and 4813 - Combined Radio and Television Broadcasting.
| Industry groupings | NAICS | Industry titles |
|---|---|---|
| Manufacturing | 33331 | Commercial and Service Industry Machine Manufacturing(3) |
| 33411 | Computer and Peripheral Equipment Manufacturing | |
| 33421 | Telephone Apparatus Manufacturing | |
| 33422 | Radio and Television Broadcasting and Wireless Communications Equipment Manufacturing | |
| 33431 | Audio and Video Equipment Manufacturing | |
| 33441 | Semiconductor and Other Electronic Component Manufacturing | |
| 33451 | Navigational, Measuring, Medical and Controlling Devices Manufacturing (3) | |
| 33592 | Communication and Energy Wire and Cable Manufacturing | |
| Goods Related Services | 41731 | Computer, Computer Peripheral and Pre-Packaged Software Wholesaler-Distributors |
| 41732 | Electronic Components, Navigational and Communications Equipment and Supplies Wholesaler-Distributors | |
| 41791 | Office and Store Machinery and Equipment Wholesaler-Distributors | |
| 53242 | Office Machinery and Equipment Rental Leasing | |
| Intangible Services | 51121 | Software Publishers |
| 51322 | Cable and Other Program Distributors | |
| 51331 | Wired Telecommunications Carriers | |
| 51332 | Wireless Telecommunications Carriers (except Satellite) | |
| 51333 | Telecommunications Resellers | |
| 51334 | Satellite Telecommunications | |
| 51339 | Other Telecommunications | |
| 51419 | Other Information Services | |
| 51421 | Data Processing Services | |
| 54151 | Computer Systems Design and Related Services | |
| 81121 | Electronic and Precision Equipment Repair and Maintenance (3) |
The above definitions were developed using the following process:
- First a concordance between ISIC classes and the national standards were developed on the basis of Statistics Canada Standards Division's activity description data base;
- Second, the "immaterial" links between the national classifications and those particular ISIC classes were eliminated. This exercise is somewhat subjective, but necessary, given the relatively large number of partial links between the classification systems. The final result is a list that does not include parts of industries, so that it is possible to compile statistics on the basis of the proposed definition.
NAICS implementation plan
The North American Industry Classification System will be gradually introduced into Statistics Canada's survey program. The following table outlines the plans, as they currently stand, for the surveys most relevant to those interested in the ICT sector.
| Survey | Reference period | Level of detail | Availability |
|---|---|---|---|
| Annuals | |||
| Annual Survey of Manufacturers | 1997 | 6 digit | 2nd quarter 2000 |
| Wholesaling and Retailing in Canada (Annuals) | 1997 | 3 digit | 2nd quarter 2000 |
| Annual Survey of Telecommunications Service Providers | 1997 | 6 digit | 2nd quarter 1999 |
| Cable Television and Other Program Distribution | 1997 | 6 digit | 1st quarter 1999 |
| Annual Survey of Computer Services | 1997 | 5 digit | 2nd quarter 2000 |
| Annual Survey of Consumer Goods Rental | 1997 | 5 digit | 2nd quarter 2000 |
| Annual Estimates of Employment, Earnings and Hours | 2001 | 4 digit | 2nd quarter 2002 |
| Industrial Research and Development - Intentions | 2000 | 6 digit | 4th quarter 2000 |
| Capital expenditures | 1997 | 4 or 5 digits | 3rd quarter 1999 |
| National Input-Output Accounts | 1992-1997 | unknown | 2nd quarter 2000 |
| Provincial GDP by industry | 1992-1999 | unknown | 4th quarter 2001 |
| Provincial Input-Output Accounts | 1997 | unknown | 3rd quarter 2000 |
| Sub-Annuals | |||
| Gross Domestic Product by Industry (Monthly) | 01/1992 to 09/2000 | 3 digit | 2nd quarter 2000 |
| Labour force information | Jan 1999 | 4 digit | 1st quarter 1999 |
| Quarterly Financial Statistics for Enterprises | 1stQ 1999 | 3 or 4 digit | 2nd quarter 1999 |
| Employment, Earnings and Hours | Jan 2001 | 3 digit | 1st quarter 2001 |
| Quarterly Survey of Telecommunications Service Providers | 1st Q 1999 | 51331 51332 |
3rd quarter 1999 |
The impact of introducing NAICS
The introduction of a new classification system is typically accompanied by a break in time series. The transition from the 1980 CSIC to NAICS is no exception. In the case of ICT industries, however, the coverage at the aggregate level (i.e. ICT sector) is similar, whether expressed in terms of the 1980 SIC or NAICS. The new classification has the advantage of recognizing new industries(4), especially in computer services and telecommunications industries, two fast growth area. As well, with a few exception, it is possible to define the ICT sector in terms of 4-digit NAICS, hereby reducing the negative impact of different programs producing statistics at different levels of the classification.
Annex
| ISIC3 | ISIC title | SIC80 | Canadian 1980 SIC title |
|---|---|---|---|
| 3000 | Manufacture of office, accounting and computing machinery | 3361 | Electronic Computers and Peripheral Equipment |
| 3362 | Electronic Office, Store and Business Machine Industry | ||
| 3369 | Other Office, Store and Business Machine Industries | ||
| 3130 | Manufacture of insulated wire and cable | 3381 | Communications and Energy Wire and Cable Industry |
| 3210 | Manufacture of electronic valves ant tubes and other electronic components | 3352 | Electronic Parts and Components Industry |
| 3220 | Manufacture of television and radio transmitters and apparatus for line telephony and line telegraphy | 3351 | Telecommunication Equipment Industry |
| 3359 | Other Electronic Equipment Industries | ||
| 3230 | Manufacture of television and radio receivers, sound or video recording or reproducing apparatus, and associated goods | 3341 | Record Players, Radio and TV Receivers Ind |
| 3312 | Manufacture of instruments and appliances for measuring, checking, testing, navigating and other purposes, except industrial process control equipment | 3911 | Indicating and Recording Instruments Industry |
| 3313 | Manufacture of industrial process control equipment | 3912 | Other Instruments and Related Products |
| 5150 | Wholesale of machinery, equipment and supplies | 5743 | Electronic Machines, Equipment and Supplies (except Computers), Wholesale |
| 5744 | Computer and Related Machines, Equipment and Software, Wholesale | ||
| 5791 | Office and Store Machines, Equipment and Supplies, Wholesale | ||
| 6420 | Telecommunications | 4814 | Cable Television Industry |
| 4821 | Telecommunication Carriers Industry | ||
| 4839 | Other Telecommunication Industries | ||
| 7123 | Renting of office machinery and equipment (including computers) | 9913 | Office Furniture and Machines Rental and Leasing |
| 7200 | Computer and related activities | 7721 | Computer Services |
| 7722 | Computer Equipment Maintenance and Repair |
| ISIC3 | ISIC title | NAICS | NAICS titles |
|---|---|---|---|
| 3000 | Manufacture of office, accounting and computing machinery | 33331 | Commercial and Service Industry Machinery Manufacturing |
| 33411 | Computer and Peripheral Equipment Manufacturing | ||
| 3130 | Manufacture of insulated wire and cable | 33592 | Communication and Energy Wire and Cable Industry |
| 3210 | Manufacture of electronic valves ant tubes and other electronic components | 33441 | Semiconductor and Other Electronic Component Industry |
| 3220 | Manufacture of television and radio transmitters and apparatus for line telephony and line telegraphy | 33421 | Telephone Apparatus Manufacturing |
| 33422 | Radio and TV Broadcasting and Wireless Communication Equipment Manufacturing | ||
| 3230 | Manufacture of television and radio receivers, sound or video recording or reproducing apparatus, and associated goods | 33431 | Audio and Video Equipment Manufacturing |
| 3312 | Manufacture of instruments and appliances for measuring, checking, testing, navigating and other purposes, except industrial process control equipment | 33451 | Navigational, Measuring and Control Instruments Manufacturing |
| 3313 | Manufacture of industrial process control equipment | ||
| 5150 | Wholesale of machinery, equipment and supplies | 41731 | Computer, Computer Peripheral and Pre-Packaged Software Wholesaler-Distributors |
| 41732 | Electronic Components, Navigational and Communications Equipment and Supplies, Wholesaler-Distributors | ||
| 41791 | Office and Store Machinery and Equipment, Wholesaler-Distributors | ||
| 6420 | Telecommunications | 51322 | Cable and Other Program Distribution |
| 51331 | Wired Telecommunications Carriers | ||
| 51332 | Wireless Telecommunications Carriers (except Satellite) | ||
| 51333 | Telecommunications Resellers | ||
| 51334 | Satellite Telecommunications | ||
| 51339 | Other Telecommunications | ||
| 7123 | Renting of office machinery and equipment (including computers) | 53242 | Office Machinery and Equipment Rental and Leasing |
| 7200 | Computer and related activities | 51121 | Software Publishers |
| 51419 | Other Information Services | ||
| 51421 | Data Processing | ||
| 54151 | Computer Systems Design and Related Services | ||
| 81121 | Electronic and Precision Equipment Repair and Maintenance |
(1) Most developed countries use a national classification to describe their economy. ISIC provides a bridge between various national classifications. Back
(2) The Canadian version of NAICS was published in March 1998 (cat. 12-501-XPE). It is known as NAICS Canada 1997. Back
(3) Contain a significant non-ICT components. Back
(4) For example wireless telecommunications and software publishing, two industries that did not exist at the time the 1980 SIC was designed. Back