The Economics of Telecommunications in Canada: A Backgrounder

Abstract

We examine the role that the telecommunications sector plays in the Canadian Economy. This examination is predominantly based on an analysis of data from Canada’s system of National Accounts. Through examination of upstream and downstream value flows we itemize direct contributions of telecom in the form of upstream production generated by the sector, value added generated by the sector as well as downstream production. We also assess recent trends in telecom service levels, prices and the resulting labour income and investment behavior in the sector. Our assessment also includes projections of the relationship between telecom capital stock and overall Canadian GDP and GNP. We close with a discussion of the policy implications of the current regime of wholesale price regulation in the telecom sector and how this relates to investment incentives and by extension the overall health of the Canadian economy.