Almost 50 cents of every dollar flowing into the Canadian telecom sector now comes from cellular or Internet service, an indication of how much the traditional phone has been shoved aside as the industry's biggest money generator.
The sector brought in a record $36.1-billion last year, but old-fashioned local phone service represented just 27 per cent of the pie, or $9.75-billion, according to annual data published by the federal communications regulator.
The report, released yesterday, highlights the contrasting segments of the telecom industry. Internet and cellphone service now combine for just over 49 per cent of total revenue.
Cellular phones command $12.64-billion in revenue, or 35 per cent of the industry total.
They have become the new kings of the sector, not only overtaking residential phone service, but the industry's other traditional cash cow - long distance service, which brought in $4.69-billion last year, representing just 13 per cent of the pie.
The dominance of cellular service is perhaps more apparent when looking at profits, industry observers said.
Wireless service accounted for $5.6-billion in pretax profit last year, which equals 44 per cent of its revenue.
Overall, the industry made $7.5-billion in pretax profit, holding on to roughly 32 per cent of total revenue.
"You can see where the money is," said Kaan Yigit, a consultant at Solutions Research Group Inc. in Toronto. "Wireless is bench-pressing above its weight in profits."
Wireless subscriptions grew by 10 per cent last year, but revenue rose more than 15 per cent, indicating the use of data services and other cellphone features is driving the trend.
Further pushing the traditional residential phone into the background is the increasing number of Canadians opting only for cellular service. Barely more than 1 per cent of households were using only cellphones in 2001. Last year that number hit 5 per cent.
"We are seeing the Golden Age of wireless," Mr. Yigit said.
The report suggests two thirds of Canadian homes have at least one cellphone. Other industry estimates peg cellular penetration at 58 per cent of the population.
Though Canada still lags the United States, Europe and Asia in terms of cellphone penetration, it leads in broadband adoption.
About 7.5-million homes now have high-speed Internet access, equal to 60 per cent of households.
Mark Goldberg of telecom consulting firm Mark H. Goldberg and Associates Inc. said the challenge for the industry is to continue investing in networks that will increase the use of high-speed Internet among consumers.
"One of the things we'll be watching is how they are able to invest in technology that allows them to continue the speed evolution of Internet service," he said.
