The economic impact of the telecommunications concerning Canada's gross domestic product.

University Degree Business and Administrative studies

EXECUTIVE SUMMARY

Nearly half of the labor force in Canada works in occupations involving the collection and processing of information. In a society in which information has become a commodity, communications provide a vital link that can mean the difference between success or failure. Telecommunications is a fundamental infrastructure of the Canadian economy and society. For these reasons, an efficient and dynamic telecommunications industry is necessary to ensure economic prosperity.

Telecommunications in Canada, which include services and manufacturing, employ more than 125,000 people and generate over $21 billion in revenues (Dept. of Communications). Telecommunications helps to overcome the obstacles of distance in a vast country such as Canada, permitting remote communities to benefit from services taken for granted in large urban centers. More than 98 percent of Canadian households have a telephone, and there are more than 15 million telephone lines for a population of nearly 27 million (Dept. of Communications). It is therefore not surprising that Canadians are among the biggest users of telecommunications in the world. For example, in 1999, Canadians made more than three billion long-distance calls (Dept. of Communications).
The importance of the information economy is increasing over time as new technology improves the communications infrastructure and as industries that provide content over that infrastructure continue to grow.

Canada has one of the most developed communications infrastructure in the world: more than 98% of households have telephones; 74% have cable television service and 99% of the population can receive off-air broadcasting signals as of 1993.

The telecommunications and computer service-producing industries generated about $35 billion in revenues, provided 260,000 jobs and contributed 4.3% to the gross domestic product in 1994. Overall growth of 6.9% for carriers and 4% for the computer service industries' gross domestic product fared better than the economy average of 3.2% in the ...

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The players in the Telecommunications service industry include: the Stentor Alliance of 9 major regional telephone companies; 50 independent telephone companies; Canada's satellite and overseas telecommunications carriers (Telesat and Teleglobe); a bunch of other carriers such as Unitel, Sprint Canada and Westel; 2 national cellular carriers (Rogers Cantel and Mobility Canada); a growing number of radio common carriers; and over 150 resellers.

The telecommunications carriers' contribution to the gross domestic product was $16 billion or 3% of the $528 billion total gross domestic product in 2000. The telecommunications carriers' output grew 6.9% or twice as fast as Canada's gross domestic product in 2000.

In 2000, the telecommunications carriers provided 120,000 jobs, there was no change in the number of jobs provided by the telecommunications carriers. Earnings of employees in the telecommunications, computer and broadcasting industries were substantially higher than average. The average annual salary in the telecommunications industry was $44,000. These earnings compare favorably with the average $37,000 for the Canadian economy.

Annual revenues for the telecommunications carriers amounted to about $15 billion. Estimated figures for other related industries would increase the revenues by an additional $3 billion. Profit margins for the telecommunications carriers were above 20% in 2000.

The total assets of the three industries approached $60 billion. The telecommunications carriers accounted for $40 billion or two-thirds of this total. The assets were valued at $6.5 billion or 11% for the computer service industry and $13 billion or 22% for the broadcasting industry.

The telecommunications equipment industry has been driven by growth in the domestic telecommunications services market. Canada is the home base for Northern Telecom, one of the world's five largest telecommunications equipment suppliers. There are also numerous small to medium-sized telecommunications equipment enterprises that become world leaders in their product niches.

CONCLUSION

Given the fundamental role of communications in Canadian society, and the vital importance of this sector in the Canadian economy, deregulation (or more accurately, easier regulation) of the telecom market will ensure that the Canadian telecommunications industry can successfully meet the challenges of the coming decades. By promoting the establishment of a more open telecommunications market, deregulation will contribute to improving Canada's competitiveness. Telecommunications is the country's leading high-technology industry (Dept. of Communications, 1992). It is one of the few industries in which Canada is a world leader, and it provides an essential infrastructure for Canadian businesses. The economic importance of this sector is apparent, and the importance of telecommunications to our Gross Domestic Product explains the urgent need to give Canada the ability to maintain and promote competitiveness in telecommunications, both nationally and internationally.

Bibliography

Angus, Lis. "Telecom Act Close to Approval" Telemanagement: The Angus Report on Communications Systems, Services, and Strategies. p17, June-July 1993.

Blackwell, Gerry "The Canadian Telecom Market in Perspective" Telemanagement: The Angus Report on Communications Systems, Services, and Strategies. September 1993.

Bill C62 - An Act Respecting Telecommunications (The Telecom Act) Ottawa: Canadian Federal Government,
1999.

Beatty, Perrin Summary of the Bill Respecting Telecommunications Ottawa: Canadian Federal Government, 1999.

Telecommunications: Legislation for Canada Ottawa: Department of Communications, 2000.

Statistics Canada, "Heritage Institutions" (Catalogue 87-207)

Statistics Canada, "Services Indicators" (Catalogue 63-016)

RESEARCH ASSIGNMENT: THE ECONOMIC IMPACT OF THE TELECOMMUNICATIONS CONCERNING CANADA’S GROSS DOMESTIC PRODUCT

PROFFESSOR: Bob Delaney

STUDENT: Ryan Sladen

STUDENT #: 037-612-975

DUE DATE: 11/08/02