 Canada: Telecoms and technology background
FROM THE ECONOMIST INTELLIGENCE UNIT
Canada’s technology sector is highly advanced and diversified but has struggled over the past few years to recover from the dotcom crash of 2000-02. Former technology stars such as Nortel Networks, Celestica and Corel have undergone, and in some cases are still undergoing, painful financial restructuring and sweeping job cuts in an effort to reduce losses.
The information and communications technology (ICT) sector contributed 5.4-5.6% of Canada’s GDP in 2003-04, up from 4% in 1997, but down from over 6% at the height of the dotcom boom in early 2000. According to the Canadian Radio-television and Telecommunications Commission (CRTC), total telecoms service revenue grew by just 1% in 2003 to C$31.8bn (US$24.5bn), and capital spending fell by 17%. Slow growth in revenue masked double-digit growth in wireless and Internet services, whereas growth in local, long-distance, and data and private line markets declined. Pay and pay-per-view television also bucked the overall trend in the sector. The technology and telecoms sector accounts for about 4% of total employment.
The communications industry is particularly important to Canada because of the country’s huge distances, and it plays a vital role in linking the remote rural areas and the vast Arctic region to the rest of the country. Wireless communication is popular and expanding rapidly, but is mostly limited to areas with cell-site repeater stations, which are located primarily along major highway routes and in urban centres. Internet usage and broadband penetration are among the highest in the world. Furthermore, almost all Canadian elementary and secondary schools now have classroom Internet connections.
All levels of government place a high priority on attracting investment in the ICT sector, and numerous incentives are available. The federal government has sought to promote “regional clusters”, ranging from computer science to electrical engineering and animation, that benefit from local education and research infrastructure. Quebec has been especially successful in attracting investors in, among others, the pharmaceutical, biotechnology and telecoms sectors.
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SOURCE: The Economist Intelligence Unit
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