Market Study Highlights: Competition in Canada's Broadband Industry
August 7, 2019
In May 2018, the Competition Bureau launched a market study on broadband (high-speed) Internet services. We set out to understand whether Canadians are fully benefiting from competitive Internet services.
For example, we looked at whether independent Internet service providers—which buy access to the networks of traditional phone and cable companies—were offering consumers a viable competitive alternative to Canada’s telephone or cable companies.
What we learned was that many Canadians enjoy a meaningful choice of Internet service providers and are generally satisfied with their current provider. The majority of Canadians continue to obtain Internet from one of Canada’s traditional telecom companies, often in a bundle with telephone or television services. However, many Canadians are turning to independent providers, also known as wholesale-based providers. We found that those customers report higher satisfaction than the ones who use a traditional provider.
Throughout Canada, more than 1 million households purchase Internet from wholesale-based providers, and many others have leveraged their presence to negotiate better deals from the traditional providers. However, an exception still exists for Canadians in remote and rural areas, who typically have fewer and less modern options for Internet services.
We also learned that price isn’t everything. Consumers take into account many important factors when choosing Internet providers, such as speed, monthly download caps and customer service.
The findings also emphasise that the strength of Canada’s high-speed networks depends on investment and innovation by traditional telecom companies.
During the study, we received input from a variety of Internet service providers, and commissioned public opinion research, including focus groups and a survey of more than 2,000 households. We also heard from over 42,000 Canadians who shared their views through an online survey.
Thank you to all those who took the time to participate in our study.
Check out the highlights of our findings below!
Did you know?
There are two main ways Canadian homes get access to high-speed Internet:
- Cable lines
- Telephone lines
There are also two types of high-speed Internet service providers:
They are the local cable or phone companies that own the networks and use them to provide Internet services
They are companies that pay to use the networks of the local cable or phone companies to provide Internet services
Most Canadians are satisfied with their current Internet service provider and the choice of providers available to themFootnote 1
- 90% of respondents are satisfied with their Internet service provider
- 78% of respondents are satisfied with the choice of Internet service providers available to them
- 5 in 6 respondents have not switched their Internet service provider in the past 2 years
Remote and rural areas generally have fewer and less modern options for Internet servicesFootnote 2
- 26% of rural homes do not have access to wired high-speed Internet service
- 97% of urban homes have access to Internet speeds of 50 Mbps and higher, compared to 37% of rural and remote homes
Over 1 million Canadian households get their Internet services from a wholesale-based provider
- 1 million households across Canada are served by wholesale-based providers
- Wholesale-based customers are more likely to be very satisfied with their service provider than facilities-based customers
- Wholesale-based providers serve 1 in 6 households in the areas they are focused on
Wholesale-based providers play an important competitive role in the market
- Wholesale-based providers' market share has been growing over the past ten years
- The presence of flanker brands suggest wholesale-based providers play an important competitive role
- New services offered by wholesale-based providers, such as television, may grow their competitive significance
However, the strength of Canada’s networks is built on large investments driven by facilities-based competition
- Dynamic facilities-based competition leads to higher speeds and better networks
- Facilities-based providers invest significantly to keep up with consumer demand
- Wholesale access can negatively impact the incentive to invest by facilities-based providers
Emerging technology may offer Canadians more alternatives for high-speed Internet services in the future
- Canadians can access high-speed Internet through alternative technologies such as satellite services
- Many consumers are unlikely to switch to alternatives due to pricing and service limitations
- 5G wireless services may offer a reasonable alternative to wired connections in the future
There are four main types of Internet consumers – which one are you?
Loyals stick with the brand they trust. They value customer service and network reliability and tend to purchase their Internet from a facilities-based provider. Loyals are least likely to think about or follow through with switching their Internet services. They are also most likely to bundle their Internet with other services and tend to live outside of large urban centers.
Speed-seekers have a need for speed. They’re less concerned about brand and customer service, and more concerned with having a download speed and download/upload limit able to support their data needs. Speed-seekers tend to be younger and are most likely to switch their Internet provider.
When it comes to their Internet service, for deal-seekers, price is king. Deal-seekers care much more about price than other qualities like brand and customer service. Deal-seekers tend to live in large urban centers and are more likely to subscribe to their Internet services through a wholesale-based provider than Loyals and Speed-seekers.
This group of consumers takes a balanced approach to choosing their Internet services. They consider download speed and price as well as brand, reliability and customer service. Balancers are most likely to be female and are most likely to purchase their Internet service from a wholesale-based provider.
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