TORONTO – Competition between Canada’s telecommunications and cable companies will rise to unprecedented levels in the coming years as companies keep spending to improve their network fibre-optic infrastructure, according to a new report from Moody’s Investors Service.
The report, ‘Broadband Communications – Canada: Unique Market Structure Guides Capital Spending for Broadband Providers’, says the investment is unlikely to yield a definitive winner in the long run. Rather, based on their investments and advances in internet protocols, the companies' technological capabilities are more likely to converge.
"Canadian broadband communications companies will continue investing in their networks over the next decade, driving their fiber-optic transmission capacity ever-deeper toward consumers," said Moody's SVP Bill Wolfe, in the report’s news release. "As television programming continues to shift to the internet and as direct to consumer advertising becomes increasingly important, connection quality becomes paramount and connectivity investments become essential."
Recent wireless regulatory initiatives have inadvertently spurred both fixed-line and wireless competition in Canada, Moody's says, noting that cable giants Rogers Communications, Shaw Communications, Quebecor Media and Bragg Communications also compete with the traditional fixed-line telecom incumbents to offer wireless services. And to avoid marginalization over the longer term, Canadian telecommunications companies are investing heavily in their last-fixed-line-mile networks.
The arrival of fifth-generation (5G) wireless protocols within about five years will also boost cross-delivery-platform competition, since it will give wireless operators broadcast capabilities that rival fixed-line quality, Moody’s continued. While initially wireless investments will be credit negative, ultimately companies' spending will improve their credit quality by opening new markets, facilitating the creation of new products and reducing costs. Wireless capital spending will likely surge in the next two years to prepare last-mile infrastructure and spectrum for 5G.
