TORONTO – "I wish I could say as Canadians we could have as much pride in the state of the telecommunications industry as we do in our sports teams," CNOC president and CEO of Distributel Communications Matt Stein told attendees at the Canadian ISP Summit Tuesday as he presented the results of a survey from Leger commissioned by his company.
The report, Broken Connection: Canadian Consumers' Views on Large Telecommunications Providers, was based on an online survey of 1,535 Canadians conducted in October of this year using Leger's online panel.
"The industry is at an interesting crossroad," he noted. " If I had to define the year in one word, it would be constructive. If I were to take a second word, I'd probably say a challenge. Constructive decisions and constructive discussions that have changed and continue to change our industry. Challenge, like I said, because incumbents are stopping at nothing; they made every attempt to protect their duopoly."
Canadians are starting to pay attention to big telcos, he noted, and survey results indicated that. Nearly all – 97% – of respondents have Internet service in their homes, with 79% being customers of one of the big telecom providers. Forty percent of respondents said they'd like to change providers, but felt trapped by their current ISP, and 90% say they are frustrated that they're paying much higher fees than consumers in other countries. Despite this, 45% believe that they have no alternatives.
However, Stein said the business model works for investors, given 44% EBITDA (earnings before interest, taxes, depreciation and amortization) margins among the big operators. However, he said, "I'm not sure it's working for Canadians."
A high point last year, he said, was the August decision by the CRTC to adjust wholesale Internet rates – a decision that was promptly appealed by the big telcos and put on hold ("Disappointing but not surprising," Stein said.). Regardless, many Canadian Network Operators Consortium members, and non-CNOC members, immediately dropped prices and bumped up speeds.
"We didn't wait," he said. "The value of that change immediately converted to value for Canadians."
The incumbents, on the other hand, said the CRTC decision forced them to cut back on rural Internet improvements, something Stein called "crazy".
"It doesn't make a lot of sense. It feels like ransom." – Matt Stein, Distributel
"So the CRTC lowered the wireline price that is largely applicable in urban areas, causing the incumbents to no longer invest in wire less prices, in largely rural areas," he said. "It doesn't make a lot of sense. It feels like ransom."
He also pointed out nearly all (90%) Canadians surveyed who have home Internet are frustrated that they are paying much higher Internet fees than consumers in other countries. Rural Canadians (96%) are significantly more likely to be frustrated with paying more than other countries compared to urban and suburban residents. However, this result is countered by an international survey published by the Economist Intelligence Unit (EIU), which ranked Canada first among the 100 countries in Internet affordability, and 18th in Internet availability; Canada ranked sixth in the overall index.
Stein is encouraged by the CRTC policy directive from the federal government earlier this year to prioritize affordability, innovation and competition, but reminded attendees that while high speed Internet has been dominating headlines lately, we can't forget about mobile. He said that 5G and mandated MVNOs will consume interest over the next year.
Canada lags behind other developed countries in cellular penetration, he said, with 85.9 cellular subscriptions per 100 Canadians in 2017; the worldwide average is 104.5 per 100 people. During the election campaign, Prime Minister Justin Trudeau noted that Canadians are paying up to twice as much for their wireless service as people in other G7 countries and promised to address the issue.
But is this the dawn of a new era? Stein thinks it's too early to tell. "This year matters more than the years before," he said. "The crossroads we're at is a critical one. It's never been more important, that uniting powerful voice not only to fight for regulatory changes that have consumers at its core, but to articulate the impact of these decisions on our businesses, and most importantly, on Canadians. We must not only participate in those discussions that impact our industry, we must continue to side with Canadians."
“CNOC is playing an increasingly critical role in the industry," he went on. "And we will continue to be vocal in our belief that consumers come first.”
