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The Economic Impact of the Canadian Telecom Sector

From the 2023 PwC report “Connecting Canadians Through Resilient Networks”, it can be stated the Canadian telecom sector holds significant importance within our economy, making direct contributions to GDP and job creation. In 2022, it contributed nearly $77 billion to direct GDP and supported 724,000 jobs. As Canada continues to digitize, the sector's role in delivering enhanced connectivity becomes increasingly crucial, with the potential to add an additional $112 billion to the Canada’s GDP by 2035.

Connectivity provided by the telecom sector is vital for Canadians who rely on it for business operations, education, entertainment, and communications. The average data usage per mobile data subscriber and monthly download traffic per Internet access subscriber has been consistently increasing, highlighting the growing dependence on connectivity.

The sector has responded to the increasing demand by investing significantly in expanding access to high-quality networks. In 2021, 99.7% of Canadians had access to mobile network coverage where they lived or conducted business, and 93.5% of households had access to high-speed broadband Internet. The annual average investment of $12.1 billion (18.6% of average revenue) in network infrastructure over the past five years is higher than the average revenue invested across peer telecoms in the USA, Japan, Australia, and Europe.

The economic impact of the telecom sector extends beyond direct contributions, including charitable contributions, corporate income taxes, and indirect effects on GDP and job creation. In 2022, the sector made $323 million in charitable contributions and paid $2.7 billion in corporate income taxes.

Moreover, the deployment of enhanced connectivity, particularly 5G, plays a pivotal role in advancing the digital economy. The widespread access to 5G, reaching 87.8% of the Canadian population, enables a broad spectrum of use cases across various industries, including transportation, manufacturing, mining, oil and gas, finance, and insurance.

In addition to declining prices for consumer cellular and Internet access services, the telecom sector also faces challenges unique to Canada, such as population dispersion, harsh weather conditions, economies of scale, and high spectrum costs. Additionally, recent interest rate rises have increased the cost of capital, posing another challenge for funding critical network investments.

The sector's ongoing investments in critical network infrastructure are crucial for supporting Canadian innovation, global competitiveness, and the continued growth of the digital economy. However, maintaining a healthy telecom industry that encourages both investment and competition is essential for sustaining ongoing investments and ensuring the sector's ability to meet the evolving needs of Canadian consumers and businesses.

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