Canada’s Information and ommunications Technologies Industr Michael Binder Assistant Deputy Minister Spectrum, Information Technologies and Telecommunications Presentation to Multimedia Companies Ministry of Economic Development Hamburg October 18, 2000
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Canada’s Information and Communications Technologies Industry Michael Binder Assistant Deputy Minister Spectrum, Information Technologies and Telecommunications.
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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
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UK
4
Canada… A Miracle of CommunicationsCanada… A Miracle of Communications
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
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
20
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
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.”
39
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
40
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
42
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
43
Beyond Connectedness...Beyond Connectedness...
New Networked Economy & Society
USE CONTENTINFRASTRUCTURE
44
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 $54 billion2
• Establishments 26,0003 (including 1,300 in manufacturing)
Source: ICT Statistical Review, Industry Canada.
11998 Data21999 Data31997 Data
* Excludes ICT wholesaling
45
A Key Sector of the EconomyA Key Sector of the Economy
"Canada's growing high-tech sector is emerging as the backbone to this stellarhigh growth, low-inflation performance."
Adrienne Warren, Senior Economist, Bank of Nova Scotia
"The main story seems to be that the economy is being driven by a high-tech engine."Sal Guatieri, Senior Economist, Bank of Montreal
Growth of Canadian Economy VERSUS Growth of ICTs from Q1 2000 to Q2 2000
ICT Impact on the Canadian Economy
GDP (annualized)4.0% 24.3%
Employment0.4% 2.0%
Exports5.3% 23.6%
6.1 times
5.0 times
4.5 times
Leadership required to ensure growth continuesLeadership required to ensure growth continues
Total Economy ICT Sector only
46
4,382
ICTSector
982 910660
Aircraft &Parts
Engineering& Scientific
Services
Pharmaceutical& Medicine
1999 Private Sector R&D Expenditures ($ 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...
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