The State of Broadband Internet in Canada

(Disponible en français : Internet à large bande au Canada : portrait de la situation)

Canadians are increasingly using the Internet: according to Statistics Canada, the share of Canadians aged 15 and older using the Internet rose from 83% in 2012 to 91% in 2018. With advances in e‑commerce and mobile communication, the development of e-learning platforms and increased participation in social media, broadband (or “high-speed”) Internet has become an integral part of Canada’s socio-economic infrastructure.

However, as broadband Internet speeds increase, so does the “availability gap” in terms of access to information and communication technologies between Canada’s urban and rural areas, sometimes referred to as a “digital divide.” This creates two classes of users: the technology “haves” and “have-nots.” The Government of Canada has been working in recent years to develop programs aimed at eliminating or at least narrowing this digital divide.

What is broadband?

According to the Canadian Radio-television and Telecommunications Commission’s (CRTC) Communications Monitoring Report 2017, “broadband” is defined as an Internet download speed of more than 1.5 megabits per second (Mbps); this speed allows for standard definition video streaming, real-time video gameplay, and music downloads. Speeds of 5 Mbps and higher allow for high-definition video streaming.

In 2016, considering the importance of broadband Internet in the daily lives of Canadians, the CRTC declared it an essential service for all Canadians. It defined basic service as speeds of 50 Mbps download and 10 Mbps upload for broadband Internet access services on fixed networks with an unlimited data plan option and access to the latest wireless technology in all homes, businesses and major traffic routes.

Table 1 shows the availability of various broadband speeds for Canadian households in 2018 by region.

Table 1 – Availability of Broadband Services by Canadian households, Selected Download Speeds, 2018 (Percentage of Households)

Download Speed Range Availability (Percentage of Households)
  Rural Areas Small Population Centres Medium Population Centres Large Population Centres
5+ Mbps 94,2% 100% 100% 100%
25+ Mbps 90,5% 99,7% 100% 100%
50/10/Unlimited 40,8% 98,0% 99,8% 99,9%
100+ Mbps 37,9% 97,5% 99,7% 99,9%

Source: Table prepared by the author using data from the Canadian Radio-television and Telecommunications Commission (CRTC), Communications Monitoring Report 2019.

The data in Table 1 highlight the “availability gap” between Canada’s urban and rural areas. This is the same finding that the CRTC highlighted in its analysis of the broadband coverage map, which shows a rural-urban divide with regard to service level availability. This gap is also due in part to Canada having low rural population densities across vast geographic areas, where it becomes difficult for service providers to make a return on their infrastructure investments.

Canada’s broadband industry

Canada’s broadband industry is growing. In 2017, revenues generated by the Internet service industry reached $11 billion, accounting for almost 22% of total Canadian telecommunications retail revenue. Since 2013, these revenues have grown by an average of 9.2% per year. Average monthly revenue per user increased 5.5% from 2016 to reach $58.49 in 2017. Moreover, from 2013 to 2017, the number of residential Internet service subscriptions grew by 1.5% while the population grew by 0.1%.

Canadians are also increasingly subscribing to higher broadband Internet speeds. In 2013, services with speeds slower than 16 Mbps accounted for 69% of residential high-speed Internet service subscriptions, while services with speeds greater than 50 Mbps accounted for 5% of subscriptions. By 2017, subscriptions with download speeds below 16 Mbps accounted for only 36% of market share, and Internet packages with download speeds above 50 Mbps accounted for 39%. This was due to Canadians’ growing adoption of data-hungry applications, such as video streaming and, increasingly, going online via smartphones and tablets.

Despite this growth, not all households with broadband Internet access can subscribe to it. In 2018, a CRTC study found that Canadian consumers paid less than those in other developed countries for lower-speed services (Level 1 basket), but paid more for higher-speed services (Level 4 basket). Comparatively, higher prices may help explain the difference in Canada between broadband availability and actual broadband subscriptions. Figure 1 illustrates this difference for Canadian households in 2016.

Figure 1 – Broadband Availability vs. Broadband Subscriptions, By Province and Territory, 2016 (Percentage of Households)

There is a distinct gap in all provinces and territories between broadband availability and broadband subscription as a percentage of households. This gap ranges from 5% in Newfoundland and Labrador to 21% in the three territories combined. In Canada, the average gap is 15%, as broadband is available to 98% of Canadian households while 83% subscribe to it.Note: “Northern Territories” includes Canada’s three territories.
Source: CRTC, Communications Monitoring Report 2017.

An analysis of Internet subscribers helps better explain the gap between broadband availability and subscriptions. According to Statistics Canada data on Internet use, there is a relationship between Internet access and household income. In 2018, 80.9% of households with an income of less than $40,000 had Internet access at home, as opposed to over 98.6% of those with an income of over $80,000. Both groups also use online government services at 62.1% and 81.7% respectively. A closer look reveals a relationship between age and Internet usage, regardless of income: in 2018, 98.6% of individuals aged 15 to 24 in the lowest income quartile used the Internet, compared with 63.0% of those aged 65 and older.

Canadian government’s policy and programs

The CRTC promotes competition in the telecommunications sector. However, it does not directly control retail prices of Internet services as it deems the industry to be sufficiently competitive; this is done rather through the forbearance policy established in the Telecommunications Act. Nevertheless, to further increase competition, the CRTC issued a policy direction mandating large incumbent telecommunications companies, such as Rogers and Bell, to allow wholesale access to smaller Internet services providers, such as Teksavvy Solutions and VMedia. These smaller providers can then sell the service to consumers at a discounted rate. As well, in March 2019 the federal government made an order “issuing a direction to the CRTC on implementing the Canadian Telecommunications Policy objectives to promote competition, affordability, consumer interests and innovation.”

In recent years the Government of Canada has introduced various programs and initiatives in an attempt to improve broadband Internet coverage across Canada and meet the targets set by the CRTC:

  • In 2016, the CRTC created a $750 million fund, made up of contributions from larger telecommunications service providers, to support projects in areas where established targets were not being met. However, Telecom Regulatory Policy CRTC 2018-377, issued on 27 September 2018, lowered the target to now require that projects eligible for the fund provide access to download speeds of 25 Mbps and upload speeds of 5 Mbps instead of the original targets of 50 and 10 Mbps. The CRTC said this would allow “projects covering underserved areas [to] deliver a broadband Internet access service that the majority of Canadians use today.” In 2019, in Telecom Notice of Consultation CRTC 2019-191, it issued a call for applications for funding from this Fund.
  • In 2016, the Government of Canada announced that it was investing up to $500 million over five years to bring broadband Internet service to 300 rural and remote communities through the Connect to Innovate program.
  • In Budget 2018, $100 million over five years was announced under the Strategic Innovation Fund (SIF) to support projects focused on low-orbit satellites and next-generation rural broadband Internet service.
  • In Budget 2019, the Government committed to ensuring that 95% of Canadians have access to the CRTC’s speed targets (50/10 Mbps) by 2026 and 100% by 2030, and it proposed various initiatives to achieve this, including $1.7 billion over 13 years in funding under the new Universal Broadband Fund.

Author: Dillan Theckedath, revised by Sarah Lemelin-Bellerose, Library of Parliament