Market Research Mobile Internet Services End User Usage Trends

Canadians are spending a larger percentage of their budgets on cellular phones and Internet access.

From 1997 to 2004, households increased their total expenditure on cellular and Internet services by 27.5%. Over the same period, expenditures on household operations also increased by 27.7%. However, when examining communications, Stats Canada noted that expenditures on traditional telephone service fell by 8.4% while expenditures on wireless increased by 253%, and Internet access by 600%s

 

In addition to this dramatic growth in expenditures on wireless and Internet access, the share of total expenditures has increased from 0.2% to 0.5% for wireless and from 0.1% to 0.3% for Internet access. The share of expenditures on wireline service fell from 1.5% in 1997 to 1.0% in 2004 (Table 2).

The increasing share of cellular and Internet expenditures, and declining share of wireline expenditures, suggests that Canadians are increasing the relative importance of mobile technologies and Internet access in their household budgets.

Since the launch of cellular services in the mid-1980s, mobile phones have largely been a complement to the traditional phone line – but that is beginning to change. Recent statistics show that more Canadians have chosen to make their cell phone their only means of communication. In 2009 it seems that everyone has a cell phone, from the teenager discussing after-school plans, to the businessperson checking into the office or with clients. In fact at the end of 2005 there were 16.6 million subscribers to mobile communications services. [6]

Traditional Home Phone Service Decline (PSTN)

There is no doubt that mobile technology is here to stay, growing in popularity and is overtaking traditional wireline data and phone services. The trend has only strengthened to 2009 based on other independent reading.

Canadian consumers are spending a higher percentage of their total expenditure on wireless communications. This combined with the decreasing importance of spending on wireline technologies, suggests that Canadians are placing a higher priority on wireless access when compared to traditional wireline access.

In addition, the increase in wireless subscribers, population and households, along with the decrease in the number of wireline connections, supports the hypothesis that Mobile technologies are replacing home phones and wired Internet connections. (Cimeron McDonald, SIEID, Statistics Canada) [6].

The trends represent a change in lifestyle that has created a negative perception of wired services, similar to feeling chained to a desk. Canadians want the freedom, convenience, and flexibility of wireless services. This is a shift in lifestyle and the infiltration of the technology into the daily patterns of the lives of Canadians.

Mobile Technology Becoming the Norm in Canada

These findings are further strengthened in a 2008 Statistics Canada Report [1]. Wireless access is about to overtake traditional wireline access. For the fifth consecutive year, traditional wireline access to the Public Switched Telephone Network (PSTN) declined. From a high of 20.8 million lines in 2001, it eroded to 18.8 million in 2006.

In 2006, wireless subscriptions increased by 14.0% to 19.1million subscribers, resulting in more than 58% of Canadians having a cell phone.

Shift from TV and Cable to Internet Based and Mobile Internet Entertainment

The following data is from the Statistics Canada Report “Literacy and Digital Technologies “ (December 2005) [3]. This data tracks the penetration of various technologies in the homes of Canadians between 1997 and 2003. The trend have continues into the late 2000s with Internet penetration increasing and home phone landline declining. Some reports have found a growing length of time spent online that has eroded typical prime-time TV viewing habits. This trend will continue as Mobile technologies speed up and become cheaper. The trends strongly suggest that a natural migration from wireline High Speed Internet to Mobile Internet is taking place. Internet-based entertainment including Internet Video and Internet Radio are poised to replace traditional Television-based entertainment. Internet Broadcasting is growing in importance and popularity. For example, Sirius Satellite Radio and most TV channels offer a streamed video or audio version of their content. iTunes also now offers pay-per-view TV Shows and Movies. There is no question; Internet Broadcasting will continue to increase in market size.

Canadians Are Broadband Internet Leaders Globally

Statistics Canada did a very important study of Broadband usage in Canada in 2003 [2]. This report has been widely quoted, and shows that Canadians (who are highly urban in their geographic concentration) tend to rapidly adopt Internet broadband technologies. Canadians are willing to pay for broadband and actively use broadband technologies. This logically has extended into their use of high-speed wireless technologies.

The Internet in Canada is a mass medium that continues to grow steadily with over 23,000,000 monthly users and roughly 20,000,000 daily users, the vast majority of Canadians have come to rely on this medium for news, entertainment, research, commerce and communications.

Canadians are, by far, the world’s heaviest Internet users and among the world’s savviest. According to the comScore World Metrix report, Canadians spend an average of 45.5 hours per Internet user per month, nearly 20-hours per month more than the worldwide average of 26-hours per Internet user per month and more than 10-hours more per month than the second and third heaviest users, Israel and the United Kingdom.

Canadians Lead the World in Consuming Digital Media

Canadians have also led the world in consuming all types of content and media formats online, including online video. Of the five countries currently reported by comScore Video Metrix, online video had the highest reach in Canada, where over 19-million viewers viewed a video online in December 2007, representing 89% of the total online population age 15 and older.

Canadians View the Most Internet Video Globally

Per capita, Canada’s online video audience also viewed more videos than any of the other reported countries, averaging 112 videos per viewer for the month of December 2007. Again, U.S. activity was much lower, averaging 77 videos per viewer over the same time period.

Credit for this exceptional amount of usage has been attributed to a high level of Internet connectivity, broadband access and a wealth of available content. To quote Karin Von Abrams, senior analyst at eMarketer and author of the “Canadian Online Advertising” report, “The country has one of the best broadband infrastructures in the world and higher household Internet penetration than the United States. The online population is engaged, tech-savvy and independent-minded.”

Canadian Internet usage data from Ipsos Reid 2007 Interactive Reid Report clearly emphasizes our leadership in Broadband and Internet usage globally:

  • Total Internet access penetration in Canada is 85%
  • Internet access penetration in Canada at home 78%
  • Access to high-speed at home 85%
  • Average hours per week using the Internet among adults 19 hours
  • Average hours per week using the Internet among teens 13.3 hours

Canadians Actively Consume Mobile Internet Digital Media

There are very positive statistics regarding Canadian Mobile Internet usage patterns that were included in the “Canadian Media Director's Council Media Digest 08/09”, Canadian Media Directors Council (CMDC), 2009 [14]:

  • 1 million have mobile video capabilities
  • 10% currently download mobile video
  • 21% have mobile Internet access
  • 1/3 access the web on a mobile device at least once a week
  • 21% access the web a mobile device at least daily
  • 42% of wireless subscribers sent at least one peer-to-peer text message in March 2008. This group of unique users accounted for the 1.4 billion peer-to-peer text messages sent in March 2008
  • Access to the Internet through mobile is available but not all sites are mobile accessible. Internet access is estimated at 80%
  • 74% of Canadians age 18-34 have access to a wireless device
  • 72% of Canadians age 34-54 have access to a wireless device
  • 48% of Canadians age 45+ have access to a wireless device
  • 70%+ Penetration in major urban centers for wireless devices

Mobile Broadband Overtaking Fixed-Line Broadband Subscriptions

More people are using mobile devices for high-speed Internet access than are signing up for fixed-line subscriptions, according to UN data published on October 6th 2009. Mobile subscriptions are expected to reach 600 million, leapfrogging the estimated 500-million fixed-line subscriptions by 2010, the International Telecommunications Union said. (Toronto Star, B5, October 7, 2009).

Mobile Broadband Internet TV Services Exist Today

Rogers Wireless, Bell Mobility and LOOK Communications have already launched mobile broadcasting services and provide customers with “real-time access to live television programming” including exclusive Blue Jays content, news, sports and entertainment on mobile devices.

Bell Canada (BCE Inc.) offers a competing service and Bell offers more than a dozen channels in similar entertainment categories as Rogers’ offering, including Fashion TV, FOX Sports, and TLC3.

There is great debate at the CRTC regarding the development of regulations for Mobile Internet Services, nevertheless, the services exist and are flourishing while the legislation is being developed.

Market Research- Mobile Device Capabilities

Another strong indicator of the future of Mobile Internet Technology is to look at the capabilities of existing Mobile Devices as well as the Internet services Mobile Carriers are providing to their customers today.

Mobile Carriers have done their research in this highly competitive market. In this section we will survey the mobile devices and Internet Packages to extrapolate what the Mobile Carriers perceive the current market to be (see Appendix A for the raw data).

Devices capabilities in the Mobile Market are a delicate balance of price, performance, application availability, and speed. Mobile Carriers are fully aware of the price conscious nature of consumers and there is tremendous competition in the marketplace for devices.

SmartAirMedia conducted a Primary Research Survey of the latest devices offered by Rogers was conducted in the consumer, business, advanced business, and entry-level phone categories. Data was provided by surveying Rogers Mobile websites for mobile devices available, see Appendix A for full details. This represents the full range of device types offered by Rogers in October 2009.

All the mobile devices in the market survey supported video, audio, and advanced web browsing. Mobile Carriers are now only selling devices that support advanced video and audio high-speed network playback. The market for mobile video and audio broadcasting will grow since all new devices in the survey supported the capabilities required to playback Internet Broadcasting content on a mobile device.

Device Capability Percentage of Devices Surveyed Required for Internet Broadcasting

Device Capability
High Speed Mobile Connectivity
Percentage of Devices Surveyed
Required for Internet Broadcasting
Wi-Fi Connectivity 100% Yes
Advanced Web Browsing with 98% Yes
Video and Audio Support 100% Yes
Video and Audio Media Players 100% Yes
High Performance Devices 60% No (better playback with better performance)
High Resolution Displays 100% Yes
OS-Type Application Support 40% No
Media Player 100% Yes
Advanced Web Browsing 100% Yes
Full Keyboards 60% No (keyboard makes video playback and browsing easier)

Brand and Style:

  • Style and Image - the look of the device and it’s coolness factor
  • Brand Name – certain device brands are in high demand- there is perceived technology superiority and also a coolness factor involved, for example iPhone, Blackberry

100% of the devices surveyed supported high-speed mobile network connectivity with 98% also supporting Wi-Fi

  • Wi-Fi Support – A segment of devices offer Wi-Fi support to allow you to connect to wireless hotspots or home wireless networks to save on data costs with your Mobile Carrier. These are typically higher price point devices with much more advanced Internet capabilities
  • Data Network Speed- Devices vary in their support for Mobile Carrier Data Networks. Recently Canadian Carriers made a shift to 3G technology which is faster, more reliable, and compatible across different network technologies (CDMA and GSM both support 3G). Advanced devices support 3G and Mobile Carriers are moving all their devices to 3G to reduce network maintenance costs.

Device Speed and Performance (60% of devices fall into the high performance category)

  • Device Performance and Speed- Nobody likes to wait for web pages to load or for video to begin playing. Mobile devices are hampered by slower performance because of the need to conserve battery power, their size, and because people don’t want devices that overheat. This poses serious technological challenges for device manufacturers. Faster devices cost more to produce as a result and use more cutting edge technology. iPhones are expensive, so are Blackberry’s. Cheaper Mobile Devices use older technology that is usually more cost effective and slower. Speed and cost are directly related.

Video and Audio Support is Ubiquitous (100% of the devices supported these features)

  • Integrated Media Player – we are in the “iPod Era”- everyone wants multi-functional devices that support audio and video playback because people don’t want to carry around multiple devices in their pocket. All mobile devices now offer some type of audio playback and over 75% offer some kind of video playback.
  • iPod and Audio Playback- All devices in the survey support this feature and it has become a standard must have functionality.
  • Video Playback- All devices in the survey support video playback in standard mobile formats such as mp4 and 3gp. More sophisticated devices support more video formats and are therefore more flexible.

Advanced Web Browsing with Integrated Video and Audio (100% of the devices supported these features)

  • Advanced Web Browsing – All the devices surveyed have advanced web browsing capabilities that allow the mobile device to view web pages with video and audio content embedded into them.
  • Larger Screens- All current devices support larger high-resolution displays for browsing web pages more effectively on a mobile device. This is essential for an acceptable video playback user experience.

OS-Type Application Support

  • Integrated Applications- Devices manufacturers are beginning to differentiate devices based on brand name applications like Google Maps, Google Search, Facebook etc. 40% of the devices surveyed use branded applications to differentiate themselves. Consumers are beginning to view mobile devices like desktop computers, and buy hardware because of certain application availability.

References

  • [1] Service Bulletin- Statistics Canada- Broadcasting and Telecommunications Science, Innovation and Electronic Information Division (September 2008)- Vol. 38, no. 1 (ISSN 1492-4455).
  • [2] Research Paper- Highway: Broadband in Canada High-speed on the Information, Statistics Canada, (September 2003) B. Veenhof, P. Neogi and B. van Tol (ISSN: 1492-7918 / ISBN: 0-662-34795-1).
  • [3] Literacy and Digital Technologies: Linkages and Outcomes, Statistics Canada (December 2005), B. Veenhof, Y. Clermont and G. Sciadas (ISSN: 1492-7918 / ISBN: 0-662-42253-8).
  • [4] Household Internet Use Survey - Microdata User's Guide, Statistics Canada, (2003) (ISSN: 1712-3704).
  • [5] You Tube for Business- Online Video Marketing for Any Business, Michael Miller, QUE Publishing, (2009) (ISBN: 0-7897-3797-3).
  • [6] Innovation Analysis Bulletin — Vol. 8, no. 2 (June 2006), Statistics Canada, (Catalogue no. 88-003-XIE).
  • [7] Broadcasting & Cable TV in Canada: Industry Profile, Datamonitor, September 2008.
  • [8] Media in Canada: Industry Profile, Datamonitor, October 2008.
  • [9] Mobile Phones in Canada: Industry Profile, Datamonitor, December 2008.
  • [10] Movies and Entertainment in Canada: Industry Profile, Datamonitor, June 2009.
  • [11] Wireless Telecommunication Services in Canada: Industry Profile, Datamonitor, July 2009.
  • [12] Internet Access in Canada: Industry Profile, Datamonitor, June 2009.
  • [13] “Ottawa Invests $10.7 Million In Digital Media Commercialization In Waterloo Region and Stratford”, Communitech News (www.communitech.ca) January 22, 2009.
  • [14] “Canadian Media Director's Council Media Digest 08/09”, Canadian Media Directors Council (CMDC), 2009.
  • [15] ICT Toronto - An Information and Communication Technology (ICT) Cluster Development Strategy for the Toronto Region - 2006, Study by the City of Toronto.
  • [16] ICT Toronto - An Information and Communication Technology (ICT) Cluster Development Strategy for the Toronto Region 2006, Study by the City of Toronto.
  • [17] Greater Toronto Area Information and Communications Technology Study 2004, Study by the City of Toronto.
  • [18] The Interactive Digital Media Industry (IDM) in the Greater Toronto Area - November 2003, Study by the City of Toronto.
  • [19] Greater Toronto Information and Communications Technologies (ICT) Industry Profile 2004, Study by the City of Toronto.
  • [20] Broadcasting Regulatory Policy CRTC 2009-329” [http://www.crtc.gc.ca/eng/archive/2009/2009-329.htm], 4 June 2009.
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