Canada’s Information and Communications Technologies Industry Michael Binder Assistant Deputy...

Canada’s Information and Communications Technologies Industry

Canada’s Information and Communications Technologies Industry

Michael BinderAssistant Deputy Minister

Spectrum, Information Technologies and Telecommunications

Presentation to Multimedia CompaniesMinistry of Economic Development

HamburgOctober 18, 2000

2

Canada…Canada…

……More than a nice place to visitMore than a nice place to visit……More than a nice place to visitMore than a nice place to visit

3

With the Highest Quality of Life…With the Highest Quality of Life…

Source: United Nations, Human Development Report, 2000Source: United Nations, Human Development Report, 2000

Human Development Index*

Canada ranks 1st for seventh year in a row

Human Development Index*

Canada ranks 1st for seventh year in a row C

anad

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4

Canada… A Miracle of CommunicationsCanada… A Miracle of Communications

4

5

Considering Our Geography & Climate…Considering Our Geography & Climate…

……Not Bad, eh?Not Bad, eh?

2nd Largest Country in the World (9,976,140 sq. km)

6 time zones

Extreme temperature ranges

31 million people - low density

Nearly 90% of the population is concentratedwithin 160 km of the US/Canada border

strong North-South pull vs East-West

6

We Have A Long History of Achievements...We Have A Long History of Achievements...

1876

…Making us a world leader in communications…Making us a world leader in communications

World’s firstlong distance

telephone call fromBrantford to Paris,

Ontario

Alexander Graham Bell

7


1901


Guglielmo Marconireceives

first transatlanticwireless message

8


1906

Reginald Fessendenbroadcast first

voice/music


9


1972

First geostationarydomestic satellitecommunications


10

We Have a Long History of Achievements…We Have a Long History of Achievements…

Nearly 1,000,000X

Faster

CA*net1993

1 page per second(56.6 Kbs)

Pages of text

1 million pages per second(40 Gbs)

Pages of text

CA*net31999/2000

1999 - World’s First, Fastest All-Optical National Network


11

1999

First country to connect all public schools and libraries to the Internet

0%2%

19%

43%

72%87%

100%

We Have a Long History of Achievements…We Have a Long History of Achievements…

93 94 95 96 97 98 Mar 99


12

And a Pro-Competitive EnvironmentAnd a Pro-Competitive Environment

Telecommunications Act 1993, amended in 1998

Radiocommunication Act 1989

Broadcasting Act 1991

Canadian Radio-Television and Telecommunications Commission

(CRTC)

Enhanced efficiency, innovationand competitivenessUniversal access and affordability

Efficient and optimum use ofspectrumPromote innovation and R&D

National identity & culturalsovereigntyMake predominant use of Canadianresources

Independent regulatory bodyAuthority comes from theTelecommunications Act and theBroadcasting Act

Government plays a role where market forces failGovernment plays a role where market forces fail

13

How Do We Compare in G-7?First in Telephone and Cable PenetrationHow Do We Compare in G-7?First in Telephone and Cable Penetration

98.0 96.9

95.0

94.289.3

France U.K. GermanyItaly U.S.

Source: World Telecommunication Development Report, ITU, 1999

% of Households withTelephone Service, 1998

U.S.

63.4

46.9

11.5 6.80.8

U.K. ItalyGermany France

* EstimatesSource: World Telecommunication Development Report, ITU 1999

% of Households withCable TV Subscribers, 1998*

98.4

Canada

68.6

Canada

14

How Do We Compare in G-7?First in Telephone AffordabilityHow Do We Compare in G-7?First in Telephone Affordability

Source: OECD Communications Outlook, 1999 (August 1998 data)

Annual Business Telephone Charges US $ PPP (Peak Rate)

1067

1037

984

976

826

816

Italy

U.S.

Germany

France

U.K.

Japan

Annual Residential Telephone ChargesUS $ PPP (Peak Rate)

436

420

419

367

348

340

Italy

France

Germany

U.K.

Japan

U.S.

744Canada 327Canada

15

Basic Internet Access Costs

Source: OECD Communications Outlook, 1999

France

U.K.

Germany

Japan

Italy

U.S.

Cost of 20 hours per month, 1998in U.S. $ PPP

$72 $70 $68

$52$42 $40

Wireless Communications Costs

Source: Yankee Group, Wireless / Mobile Communications Global Report, Volume 3, No. 16, May 1999

Price per minute, 1999 in U.S. $ PPP

Paris

TokyoBoston

Berlin

London

Rome

$0.36 $0.36$0.32

$0.31$0.29

$0.18

Canada

$31

Toronto

$0.09

How Do We Compare in G-7?First in Internet & Wireless AffordabilityHow Do We Compare in G-7?First in Internet & Wireless Affordability

16

How Do We Compare in G-7?Second to US in Internet Users & in PCsHow Do We Compare in G-7?Second to US in Internet Users & in PCs

Internet Users Per 1,000Inhabitants - 1999

U.S.

Germany France

JapanU.K. Italy

Personal Computers Per 1,000Inhabitants - 1999

398

213

145

193

8796

U.S.Germany France

JapanU.K.

Italy

510

Canada

361

Canada

360

297306

287221

192

Source: International Telecommunication Union, Telecommunications Indicator, July 2000

17

Strong Economic GrowthStrong Economic Growth

Real GDP Growth in G-7 Countries*, 1997-1999

* Average of year-to-year percentage changes in real GDPSource: Main Economic Indicators, OECD, April 2000

3.8

Canada

0.7

G-7Average

2.6

France

2.5

U.K.

1.7

Germany

1.3

Italy

0.0

Japan

Canada’s economy has outperformed other G7 countries

U.S.

4.2

18

Aldo BaumgartnerPresident and CEO, Wyeth-Ayerst Canada

“The superior universities, availability of highly skilled workers, along with excellent tax incentives for research and development make Canada an ideal location for Wyeth-Ayerst Canada

An Excellent Post Secondary SystemAn Excellent Post Secondary System

1998 U.S. Gourman report scored 10 Canadian electrical engineering programs in the top 22, and 18 in the top 40

Canada’s 67 universities and colleges produce more than 25,000 graduates per year in math, engineering and pure and applied sciences

RANKING OF ELECTRICAL ENGINEERINGUNIVERSITY PROGRAMS

Institution Score U.S. Cdn. Rank Rank

M.I.T. 4.92 1Stanford 4.91 2Berkeley 4.88 3Illinois 4.86 4Toronto 4.86 1UCLA 4.82 5McGill 4.82 2Cornell 4.81 6U.B.C. 4.81 3McMaster 4.80 4Purdue 4.79 7Southern California 4.77 8Princeton 4.76 9Michigan 4.75 10Carnegie Mellon 4.74 11Polytechnic-Brooklyn 4.73 12Queen’s 4.72 5Alberta 4.72 6Calgary 4.71 7Polytechnique, Mtl. 4.70 8Saskatchewan 4.70 9Manitoba 4.70 10

SOURCE: The Gourman Report, Undergraduate Programs, 10th Edition 1998

19

Generous R&D tax treatment

Immediate and full write-off for R&D capital equipment

Firms reduce R&D costs through direct investment or sub-contracting in Canada

Low R&D CostsLow R&D Costs

Canada 0.70

Relative Competitiveness of R&DTax System — 1998

Korea

U.S.

France

U.K.

Japan

Mexico

Italy

Germany

The B-index represents a ratio of the after-tax cost of a $1 expenditure on R&D divided by 1 less the corporate tax rate. A lower B-index indicates a more competitive R&D tax systemSource: Conference Board of Canada June 1999.

0.88

0.89

0.91

0.92

0.97

1.00

1.01

1.02

1.03

1.05

Australia

Sweden

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A competitive labour market is keeping wage settlements down

According to the U.S. Bureau of Labour Statistics, labour costs in Canadian manufacturing (wage and non-wage) are lowest in the G-7

* Total compensation costs include direct pay, and the cost of other labour taxes, employer expenditures for legally required insurance programs and contractual and private benefit plans.

Source: U.S. Bureau of Labor Statistics

Cost of Labour — Manufacturing*, 1999

140

109100

9486 86

GermanyJapan

U.S.France

ItalyU.K.

81

Canada

$ U.S. per hour, PPP

Low Labour CostsLow Labour Costs

21

A First-Class Technological InfrastructureA First-Class Technological Infrastructure

Second only to the U.S. among the G-7

Canada ranks above or very close to the U.S. in terms of Internet users and Internet hosts, computers per capita, and computer instructions per second

Canada is considered to have the best overall technology-people combination in the world

* Standing among 46 countries. Index based on 12 characteristics including investment in telecommunications, computers in use, computer power, internet connections, number of telephone lines, cost of telephone calls and use of robotics.

Source: World Competitiveness Yearbook, 2000

Ind

ex

Technological Infrastructure* World Rank, 1999

1st

14th

20th 21st23rd

28th

Canada U.S. France Germany U.K. Japan Italy

Ind

ex

U.S.

5th

CanadaFrance

GermanyU.K.

JapanItaly

22

Access to Largest Market in the WorldAccess to Largest Market in the World

Canada-U.S. cross border trade $1.25 billion a day

NAFTA — access to: 400 million people

GDP $9.4 trillion U.S.

In addition to eliminating tariffs, NAFTA provides procedures for:

border facilitation

movement of personnel

investment and intellectual property protection

product certificationSource: CIA, 1998 World Fact Book

Calgary Regina

Halifax

Los Angeles

Denver

New York

Boston

Philadelphia

Washington

BaltimoreDetroitChicagoCleveland

St. Louis Pittsburgh

Milwaukee

Houston

Atlanta

Vancouver

Toronto

Montréal

Seattle

Miami

Mexico City

San Francisco

Winnipeg

300 mi

600 mi Charlottetown

St. John's

Edmonton

VictoriaOttawa

Windsor

QuébecFredericton

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Canada Welcomes Foreign Investment Canada Welcomes Foreign Investment

Source: Statistics Canada

1999Foreign direct

investment in Canada has more than doubled since 1988

Increasingly more investment goes to knowledge-based industries in high-tech manufacturing and services sectors

Wood & Paper

Energy & Metallic Minerals

Finance & Insurance

Services & Retail

Other

Machinery & Transportation

$240 Billion

Distribution of Foreign Direct InvestmentBy Industry

1988

$114 Billion

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Technology advancing rapidly

Monopolies to competition

Trade barriers falling - globalization

Convergence of technologies, services & markets

Mergers & acquisitions mania - industry restructuring

Dramatic growth in wireless communications

Phenomenal growth of the Internet

The World is Changing…The World is Changing…

No end in sightNo end in sight

25

Canada is a Trading NationCanada is a Trading Nation

Canada

% of GDP

* (Exports + Imports)/GDP Source: OECD Economic Outlook, June 2000

1971

1999

Trade in Goods and Services* - 1971 vs. 1999

U.K.

Germany France

Italy U.S.

Finland Japan

41.250.0

43.839.7

30.8 31.8

10.8

20.7

85.375.8

66.158.7

51.7 50.9

28.220.3

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We Are in a Global Race Where ...We Are in a Global Race Where ...

Partnerships are KeyPartnerships are Key

National Vision is EssentialNational Vision is Essential

Speed WinsSpeed Wins

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A National Vision… A National Vision…

"Make the information and

knowledge infrastructure

accessible to all Canadians,

thereby making Canada the most

connected nation in the world."Information Highway Advisory Council 1995,1997

Speech from the Throne 1997, 1999Budget Speeches 1998, 1999, 2000

PM Speeches 1998, 1999, 2000

...for Connecting Canadians...for Connecting Canadians

28

A Six Part Agenda for National LeadershipA Six Part Agenda for National Leadership

To Make Canada theTo Make Canada theMost Connected Country in the WorldMost Connected Country in the World

SmartCommunities

ElectronicCommerce

CanadianGovernments

Online

ConnectingCanada tothe World

CanadianContentOnline

CanadaOnline

29


SmartCommunities

CanadaOnline

ElectronicCommerce

CanadianGovernments

Online



CanadaOnline

CanadaOnline

Ensuring Canadians have affordable accessto the best Information Highway possible

30


SmartCommunities

CanadaOnline

ElectronicCommerce

CanadianGovernments

Online



SmartCommunities

SmartCommunities

12 demonstration projects, models for usingICT in new and innovative ways…

New model for community development

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SmartCommunities

CanadaOnline

ElectronicCommerce

CanadianGovernments

Online





Bringing Canadian Content and Culture Into the Digital Age

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SmartCommunities

CanadaOnline

ElectronicCommerce

CanadianGovernments

Online



CanadianGovernments

Online

CanadianGovernments

Online

Be a model user, and ensure Canadians have the government most connected to its citizens by 2004

33


SmartCommunities

CanadaOnline

ElectronicCommerce

CanadianGovernments

Online



ElectronicCommerceElectronicCommerce

Making Canada a Centre of Excellencefor electronic commerce:

Capturing a 5% share of the world market

34


SmartCommunities

CanadaOnline

ElectronicCommerce

CanadianGovernments

Online



ConnectingCanada

to the World

ConnectingCanada

to the World

Branding Canada to the World

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Branding Connectedness...Branding Connectedness...

…to Canadians…to Canadians

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Tremendous Success...Tremendous Success...

100% of schoolsand librariesconnected

250,000computersto schools

10,000 volunteer organizations

CA*net3: World’s fastest Internet

backbone

10,000 CAP sites

12 Smart Communities

World-leadingE-Com Policy Framework

Households & SMEs: 42% 69%Use the Internet

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…Has Made Canada a World Leader…Has Made Canada a World LeaderConnectedness Rankings*

Conference Board of Canada – 10 Country Comparison

* Based on a composite index. The comparisons were based primarily on 1997-98 data.Source: Conference Board of Canada

411367589

10

126359579

10

43126587

109

12473558

109

126934975

10

Overall Connectedness Infrastructure Access Affordability Usage

Socio-EconomicEnablers

U.S. CanadaSwedenFinlandAustraliaJapanU.K.GermanyFranceItaly

123456789

10

But things can change quicklyBut things can change quickly

38

Shift Focus to BroadbandShift Focus to Broadband

Key applications needs full interactivity(tele-learning, tele-health, e-com)

Need to bridge digital divide

Must increase skilled labour pool and preparenext generation knowledge workers

Reaping the Benefits of the Networked EconomyReaping the Benefits of the Networked Economy

Speech From the Throne, 1999

“Provide increased access to high-speed Internet service for classrooms and libraries and stimulate the production of Canadian

multimedia learning content and applications.”

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Shift to Mobile ServicesShift to Mobile Services

Projecting 20 M Canadian subscribers by 2004Source: IDC,Baby’s First Steps: The Canadian Wireless Data and Internet Market Forecast,1999-2004; June 200

0

500

1,000

1,500

2,000

1990 2000 2010

Fixed Local Access

Mobile Local Access

Millions

Worldwide Mobile and Fixed Telephone Subscribers

Source: ITU, “World Telecommunication Development Report: Mobile Cellular” 1999

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Driving Release of New Spectrum…Driving Release of New Spectrum…

…Primarily for Commercial Use…Primarily for Commercial Use

0

5

10

15

20

25

1980 82 84 86 88 90 92 94 96 98 2000

Cu

mu

lati

ve

Av

era

ge

Am

ou

nt

of

Sp

ec

tru

m x

10

00

MH

z

3.7 GHz1980 1993

8.1 GHz1993 1998

3.6 GHz1998 2000

Source: Industry Canada compilations

LMCS

MCS

WLL

DBS/DTH

DRB/DTV

3G

41

Growth of the Broadband InternetGrowth of the Broadband Internet

Source: View from the Living Room, Omnia Communications, (July 2000)

Estimated connectivity status of Canadian & US households(as proportion of total HH: 1999-2005)

4% 7% 12% 19%

44%51%

53%53%

50%

52%42% 35% 28% 23%

27%

2%

35%

44%

36%

21%

62%

1999 2000 2001 2002 2003 2004 2005

Dialup

Not Online

Broadband*

It has been estimated that 35% of Canadian Households will have high-speed Internet access by 2005.

* Includes cable modem and DSL

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Broadcast Distributors Broadcast Distributors

High Penetration Rates and New ServicesHigh Penetration Rates and New Services

0

200000

400000

600000

800000

1000000

Dec-98 Dec-99 Mar-00

Digital TV Cable modem DTH

Source: CCTA / Individual Company Reports

Growth of New Services

32%

61%

3%12%

Internet ReadyInternet Subscribers

U.S. Canada

Cable Internet ReadyHouseholds and Subscribers

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Beyond Connectedness...Beyond Connectedness...

New Networked Economy & Society

USE CONTENTINFRASTRUCTURE

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Canadian ICT Sector at a Glance Canadian ICT Sector at a Glance

• Revenues $116 billion1

• Employment 512,0001

• R&D $4.4 billion2

• Share of GDP* 5.7%2

• Share of private sector R&D 46%2

• Total exports $31 billion2

• Total imports $54 billion2

• Establishments 26,0003 (including 1,300 in manufacturing)

Source: ICT Statistical Review, Industry Canada.

11998 Data21999 Data31997 Data

* Excludes ICT wholesaling

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A Key Sector of the EconomyA Key Sector of the Economy

"Canada's growing high-tech sector is emerging as the backbone to this stellarhigh growth, low-inflation performance."

Adrienne Warren, Senior Economist, Bank of Nova Scotia

"The main story seems to be that the economy is being driven by a high-tech engine."Sal Guatieri, Senior Economist, Bank of Montreal

Growth of Canadian Economy VERSUS Growth of ICTs from Q1 2000 to Q2 2000

ICT Impact on the Canadian Economy

GDP (annualized)4.0% 24.3%

Employment0.4% 2.0%

Exports5.3% 23.6%

6.1 times

5.0 times

4.5 times

Leadership required to ensure growth continuesLeadership required to ensure growth continues

Total Economy ICT Sector only

46

4,382

ICTSector

982 910660

Aircraft &Parts

Engineering& Scientific

Services

Pharmaceutical& Medicine

1999 Private Sector R&D Expenditures ($ millions)

Most Innovative Sector in Canada Most Innovative Sector in Canada

ICT R&D expenditures were $4.4 billion in 1999; 46% of the total Canadian private sector R&D

Five of the top ten R&D performers in Canada are ICT firms

47

Our Areas Of Expertise Are...Our Areas Of Expertise Are...

Telecom InfrastructureCable InfrastructureSatellite InfrastructureTelecom & Network

EquipmentOptical Technologies

Broadly-Based Strengths

Software development (data mining, security, educational/training, animation & graphics)

Semiconductor designWireless technologiesElectronic mfg. Services

Narrowly-Focused Strengths

48

Clusters of Activity Across the CountryClusters of Activity Across the Country

CalgaryComputing Devices CanadaHarrisLSI LogicNortel Networks (Wireless)NovatelSanminaSmart TechnologiesWi-Lan

VancouverElectronic Arts Canada MDSI Mobile Data Infowave Software Seagate SoftwarePivotal Sierra Wireless PMC Sierra Spectrum Signal MacDonald Dettwiler Processing360networks Inc.

Kitchener-WaterlooCom Dev Open Text Dalsa PixStreamElectrohome Raytheon CanadaNCR Research in Motion

OttawaCisco MosaidCognos Newbridge/AlcatelCorel Nortel NetworksCRC NRCCrosskeys Philsar Semi.Jetform QNX SoftwareJDS Uniphase SiemensMitel Tundra

Toronto 724 Solutions GEAC Alias Wavefront Gennum ATI Technologies Hewlett-Packard Celestica HummingbirdCerticom IBMExtend Media Lucent

MontrealBCI Matrox SR TelcomBCE Emergis Motorola TeleglobeCGI Microcell TIWCIGR MPB ViasystemsCITR Nortel Networks Virtual-C-MAC Positron PrototypeEicon PrimetechEricsson SoftimageMarconi Comm.

Atlantic ProvincesComDev Wireless Litton Sys.Deltaware Sytems NautelDMR Group Nautical Data InfoInteractive SatlanticInstrumar SimscapeJOT Inc. Tecknowledge HealthKnowledgeHouse xWave

EdmontonAlberta Microelectronics Corp.CEL CorpComputronixIntuit CanadaLogicanSentai Software CorporationTR LabsWiband Communications

49

Canadian ICT Success StoriesCanadian ICT Success Stories

75% of all backbone Internet traffic in North America is carried on Canadian products

First to deliver 10 gigabit/second systems, now selling to over 90% of the world market

Largest designer and manufacturer of optical components in the world

1999 Info World Product of the Year - the Blackberry, a wireless communications device

Canadians develop over 60% of the special effects software used in Hollywood

Euro coin was designed using Canadian software

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Canada… A Great Place to InvestCanada… A Great Place to Invest

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For Further InformationFor Further Information

Electronic Commercewww.e-com.ic.gc.ca

ICT Industrywww.strategis.gc.ca/infotech

www.strategis.gc.ca/SSG/sf01703e.html

Connecting Canadianswww.connect.gc.ca

Investment in Canadawww.investincanada.ic.gc.ca

Canada’s Information and Communications Technologies Industry Michael Binder Assistant Deputy...

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