The Canadian Internet Economy

Eight in 10 Canadian households have Internet access

In 2010, according to Statistics Canada, eight out of 10 Canadian households had Internet access. Access rates were higher in large cities, where about 81 per cent of households had access, and lower in small cities (76 per cent) and rural areas (71 per cent). British Columbia boasted the highest rates of access with 84 per cent, followed by Alberta (83 per cent) and Ontario (81 per cent).

There was, however, a considerable income divide in Internet access with wealthier households far more likely than poorer households to have access. If Canadian households are split into four groups based on income, the richest one-quarter of households, those with annual incomes of $87,000 or more, had almost universal (97 per cent) access. At the other end of the income divide, barely half (54 per cent) of the poorest one-quarter of households, those with incomes of $30,000 or less, had Internet access.

Of the 21 per cent of Canadian households that didn't have Internet access, more than half (56 per cent) told Statistics Canada they had no interest in it, one-fifth (20 per cent) cited the cost of access or equipment and 15 per cent said they lacked a device, such a computer, with which to connect.

Canadians pay higher rates for lower Internet access speeds

Compared with much of the rest of the leading global economies, Canadians pay far more than most for high-speed Internet access and, at the same time, tolerate access speeds that are a fraction of those in many Asian and European countries. As the infographic, based on data from the Organisation for Economic Co-operation and Development (OECD) illustrates, the average price per month for one megabit-per-second (mbps) of access is more than four dollars in Canada. This places Canada 23rd on a list headed by Japan, where one mbps costs less than one-tenth of what it does in Canada. Furthermore, the Japanese – and the residents of many other countries such as South Korea, France, Sweden, and Portugal – can surf the Internet at speeds that are three and four times higher than in Canada.

Canada's ranking in the areas of broadband speed and price has been consistently dropping since the OECD started collecting this data 10 years ago. In 2001, Canada was ranked second overall with regard to cost and speed. Other nations, in particular South Korea and Sweden, have made significant progress in broadband development over the same time period, due in large part to government-led strategies to enhance their national digital economies.

Canadians are online more than anyone else

The relatively high cost of getting online doesn't seem to deter Canadians, however, as we spend more time online than anyone else, a total of 44 hours per month. Once there, they spend more than 40 per cent of our time watching videos, racking up 19 hours per month, second only to Germany.

Canadians like to shop online

Half (51 per cent) of Canadian Internet users ordered goods or services online in 2010, placing nearly 114 million orders and spending approximately $15.3 billion. Travel arrangements were the most common purchase, with more than half (55 per cent) of online shoppers using electronic commerce for this purpose. This was followed by tickets for entertainment events (48 per cent) and books, magazines and online newspaper (40 per cent).

Canadians lag in mobile Internet use

According to Statistics Canada, more than half of Canadians in households with Internet access were using more than one type of device to connect, with more than one third (35 per cent) using wireless devices such as smartphones or tablets. Most of these wireless devices were being used on home or business Wi-Fi networks, however, with Canada lagging behind much of the rest of the developed world when it comes to mobile Internet use.

For starters, according to comScore, just 60 per cent of Canadians use a mobile phone, a proportion hasn't changed much in the past couple of years. That compares unfavourably with nearly 90 per cent market penetration in the U.S. and over 100 per cent in Europe and some developing countries. Still, according to a recent report from Ipsos Reid, 22 per cent of Canadians have access to the Internet via a smart phone. And at least one of the major Canadian carriers, Rogers, predicts 100 per cent cell phone penetration in Canada by 2014.

The next billion Internet users will access the Internet via mobile, bypassing fixed line broadband altogether. Research from the Boston Consulting Group (bcg.com) demonstrated that, in Brazil, Russia, India, China, and Indonesia will be 1.2 billion Internet users by 2015. The majority of them will access the Internet via a mobile phone. In many countries, fixed line broadband is often either prohibitively expensive and/or unavailable; whereas mobile access is increasingly available and relatively inexpensive.

For Canadian businesses to take advantage of the business opportunities offered by new online and mobile markets, they will have to shift the way they communicate with their customers by adopting mobile-ready web sites and applications.