FOR IMMEDIATE RELEASE
[Ottawa, Wednesday, June 5th 2002] - Nearly
one in five Canadian Internet Service Providers (ISPs) are currently
losing money, while almost 40% have operating margins of 6% or
less, according to a new report by the national research firm,
POLLARA Inc. Over 60% of Canadian ISPs earn less than $1 million
in revenues annually.
The POLLARA report, Industry Framework
of Internet Service Providers, was sponsored by Industry
Canada's Telecommunications Policy Branch and endorsed by the
Canadian Association of Internet Providers (CAIP). It can be
accessed at http://www.caip.ca/issues/ISPReport.pdf
The 34-page report concludes that, while
the public may perceive the Canadian ISP industry as healthy,
the smaller and mediumsized industry players face many challenges
stemming from their dependence on and inability to compete fairly
with the larger network providers. The Report states that smaller
and medium companies comprise the lion's share of the ISP industry
and provide affordable Internet service to many Canadian business
and households.
"Our smaller ISP members have been
complaining for a long time now that they simply can't compete
fairly in the uneconomic price war the monopoly cable companies
and the incumbent telephone companies are waging with each other
in the high-speed Internet market, but neither the CRTC nor the
Competition Bureau seem to be listening", said Jay Thomson,
President of CAIP, speaking on behalf of the Association's Independent
(non-cable, non-telco) Members. "Our independent members
believe the POLLARA Report validates these concerns and urge
that something be done to ensure Canadians can benefit from widespread
competition from ISPs of all sizes."
CAIP continues its fight for fair access
for third-party ISPs to the cable industry's high-speed network,
a battle begun in 1996. In August of 2001, the Association, of
behalf of its Independent Members, filed a lengthy complaint
with the CRTC regarding fellow-CAIP member Bell Canada's high-speed
Internet pricing practices. The CRTC is expected to rule on that
complaint very soon.
The POLLARA report cautions that, while access is readily available
to the public at presumably affordable prices, it will be important
to track the health of the ISP industry over time in order to
ensure the business challenges facing the industry do not ultimately
create a predatory competitive environment for small and medium
ISPs.
Some other findings in the POLLARA report:
- just over 400 ISPs in Canada serve more
than 1,000 customers each (another 536 serve fewer than 1,000
customers, of which about 135 serve less than 100 customers);
- 44% of Canadian ISPs have between 1 and 5 employees; in total
ISPs directly employ 5,640 individuals;
- 77% of ISPs provide dial-up Internet access to Canadian businesses
and/or households; only 14% provide cable Internet service;
- less than 10% of ISPs are "pure play" ISPs, i.e.
they currently and are planning to offer Internet access exclusively;
by far, most ISPs offer or plan to offer a number of other services
as well, including web-hosting, web design and consulting, and
hardware and software sales;
- wireless Internet services and Voice over Internet Protocol
(VOIP) will likely have the highest rate of growth in terms of
availability from ISPs.
CAIP represents a broad range of
Internet providers, including large incumbent telephone companies,
competitive telephone carriers, backbone providers and all sizes
of independent ISPs. Approximately 80% of Canadian Internet users
subscribe to a CAIP-member ISP for their Internet service.
For more information, please contact:
Jay Thomson
President
CAIP (on behalf of the Independent Members of CAIP or "IMCAIP")
Tel.: 613 232 CAIP (2247)
e-mail: jay@caip.ca
Ian Knowles, Sr. VP, POLLARA
Tel.: 613 237 0674
e-mail: ikno@pollara.ca