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Canada’s Information and Communications Technologies Industry. Presentation to Multimedia Companies Ministry of Economic Development Hamburg October 18, 2000. Michael Binder Assistant Deputy Minister Spectrum, Information Technologies and Telecommunications. Canada….

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slide1
Canada’s Information and Communications Technologies Industry

Presentation to Multimedia Companies

Ministry of Economic Development

Hamburg

October 18, 2000

Michael Binder

Assistant Deputy Minister

Spectrum, Information Technologies and Telecommunications

canada
Canada…

…More than a nice place to visit

2

with the highest quality of life
CanadaWith the Highest Quality of Life…

Human DevelopmentIndex* Canada ranks1st for seventh yearin a row

UK

U.S.

Japan

Iceland

Norway

Sweden

Belgium

Australia

Netherlands

Source: United Nations, Human Development Report, 2000

3

considering our geography climate
Considering Our Geography & Climate…
  • 2nd Largest Country in the World (9,976,140 sq. km)
  • 6 time zones
  • Extreme temperature ranges
  • 31 million people - low density
  • Nearly 90% of the population is concentratedwithin 160 km of the US/Canada border
    • strong North-South pull vs East-West

…Not Bad, eh?

5

we have a long history of achievements
1876We Have A Long History of Achievements...

Alexander Graham Bell

World’s first

long distance

telephone call from

Brantford to Paris,

Ontario

…Making us a world leader in communications

6

we have a long history of achievements1
1901We Have A Long History of Achievements...

Guglielmo Marconireceivesfirst transatlanticwireless message

…Making us a world leader in communications

7

we have a long history of achievements2
1906We Have A Long History of Achievements...

Reginald Fessenden

broadcast first

voice/music

…Making us a world leader in communications

8

we have a long history of achievements3
1972We Have A Long History of Achievements...

First geostationary

domestic satellite

communications

…Making us a world leader in communications

9

we have a long history of achievements4
CA*net

1993

1 page per second

(56.6 Kbs)

Pages of text

Nearly 1,000,000X Faster

1 million pages per second

(40 Gbs)

Pages of text

We Have a Long History of Achievements…

1999 - World’s First, Fastest All-Optical National Network

CA*net3

1999/2000

…Making us a world leader in communications

10

slide11
100%

87%

72%

43%

19%

2%

0%

We Have a Long History of Achievements…

1999

First country to connect all public schools and libraries to the Internet

93

94

95

96

97

98

Mar 99

…Making us a world leader in communications

11

and a pro competitive environment
Enhanced efficiency, innovation

and competitiveness

Universal access and affordability

Efficient and optimum use of

spectrum

Promote innovation and R&D

National identity & cultural

sovereignty

Make predominant use of Canadian

resources

Independent regulatory body

Authority comes from the

Telecommunications Act and the

Broadcasting Act

And a Pro-Competitive Environment

Telecommunications Act

1993, amended in 1998

Radiocommunication Act

1989

Broadcasting Act

1991

Canadian Radio-Television and Telecommunications Commission(CRTC)

Government plays a role where market forces fail

12

how do we compare in g 7 first in telephone and cable penetration
98.4

68.6

Canada

Canada

How Do We Compare in G-7?First in Telephone and Cable Penetration

% of Households withCable TV Subscribers, 1998*

% of Households withTelephone Service, 1998

98.0

96.9

63.4

95.0

46.9

94.2

89.3

11.5

6.8

0.8

Germany

France

Italy

U.S.

U.S.

U.K.

Italy

France

U.K.

Germany

* Estimates

Source: World Telecommunication Development Report, ITU 1999

Source: World Telecommunication Development Report, ITU, 1999

13

how do we compare in g 7 first in telephone affordability
744

327

Canada

Canada

How Do We Compare in G-7?First in Telephone Affordability

Annual Business Telephone Charges US $ PPP (Peak Rate)

Annual Residential Telephone Charges

US $ PPP (Peak Rate)

Japan

816

340

U.S.

U.K.

826

348

Japan

France

U.K.

976

367

Germany

Germany

984

419

U.S.

France

1037

420

Italy

1067

436

Italy

14

Source: OECD Communications Outlook, 1999 (August 1998 data)

how do we compare in g 7 first in internet wireless affordability
$31

$0.09

Toronto

Canada

How Do We Compare in G-7?First in Internet & Wireless Affordability

Basic Internet Access Costs

Wireless Communications Costs

Cost of 20 hours per month, 1998

in U.S. $ PPP

Price per minute, 1999 in U.S. $ PPP

$0.36

$0.36

$0.32

$72

$70

$0.31

$68

$0.29

$52

$0.18

$42

$40

Boston

London

Tokyo

France

Germany

Italy

Paris

Berlin

Rome

U.K.

Japan

U.S.

Source: Yankee Group, Wireless / Mobile Communications Global Report, Volume 3, No. 16, May 1999

Source: OECD Communications Outlook, 1999

15

how do we compare in g 7 second to us in internet users in pcs
360

361

Canada

Canada

How Do We Compare in G-7?Second to US in Internet Users & in PCs

Internet Users Per 1,000

Inhabitants - 1999

Personal Computers Per 1,000

Inhabitants - 1999

510

306

398

297

287

221

192

213

193

145

96

87

U.K.

U.S.

Japan

Italy

U.K.

U.S.

Japan

Italy

Germany

France

Germany

France

Source: International Telecommunication Union, Telecommunications Indicator, July 2000

16

slide17
4.2

3.8

2.6

2.5

1.7

1.3

0.7

0.0

U.S.

France

Germany

Japan

G-7Average

Canada

U.K.

Italy

Strong Economic Growth

Real GDP Growth in G-7 Countries*, 1997-1999

  • Canada’s economy has outperformed other G7 countries

* Average of year-to-year percentage changes in real GDP

Source: Main Economic Indicators, OECD, April 2000

17

an excellent post secondary system
An Excellent Post Secondary System

RANKING OF ELECTRICAL ENGINEERING

UNIVERSITY PROGRAMS

Institution Score U.S. Cdn.

Rank Rank

  • 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

M.I.T. 4.92 1

Stanford 4.91 2

Berkeley 4.88 3

Illinois 4.86 4

Toronto 4.86 1

UCLA 4.82 5

McGill 4.82 2

Cornell 4.81 6

U.B.C. 4.81 3

McMaster 4.80 4

Purdue 4.79 7

Southern California 4.77 8

Princeton 4.76 9

Michigan 4.75 10

Carnegie Mellon 4.74 11

Polytechnic-Brooklyn 4.73 12

Queen’s 4.72 5

Alberta 4.72 6

Calgary 4.71 7

Polytechnique, Mtl. 4.70 8

Saskatchewan 4.70 9

Manitoba 4.70 10

“The superior universities, availability of highly skilledworkers, along with excellent tax incentives for research and development make Canada an ideallocation for Wyeth-Ayerst Canada

Aldo Baumgartner

President and CEO, Wyeth-Ayerst Canada

SOURCE:The Gourman Report, Undergraduate Programs, 10th Edition 1998

18

low r d costs
Canada

0.70

Low R&D Costs

Relative Competitiveness of R&D

Tax System — 1998

  • 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

Germany

1.05

Italy

1.03

Sweden

1.02

Japan

1.01

U.K.

1.00

Mexico

0.97

0.92

Korea

France

0.91

Australia

0.89

0.88

U.S.

The B-index represents a ratio of the after-tax cost of a $1 expenditure onR&D divided by 1 less the corporate tax rate. A lower B-index indicates amore competitive R&D tax system

Source: Conference Board of Canada June 1999.

19

slide20
81

Canada

Low Labour Costs

Cost of Labour — Manufacturing*, 1999

  • 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

140

$ U.S. per hour, PPP

109

100

94

86

86

Germany

U.S.

Italy

Japan

France

U.K.

  • * 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

20

slide21
5th

Canada

A First-Class Technological Infrastructure

Technological Infrastructure* World Rank, 1999

  • 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

1st

14th

Index

20th

21st

23rd

28th

U.S.

France

U.K.

Italy

Germany

Japan

Index

* 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

Canada U.S. France Germany U.K. Japan Italy

21

access to largest market in the world
300 mi

St. John's

Edmonton

Charlottetown

600 mi

Québec

Fredericton

Regina

Calgary

Montréal

Victoria

Vancouver

Halifax

Ottawa

Winnipeg

Seattle

Toronto

Boston

Windsor

Milwaukee

New York

Chicago

Detroit

Philadelphia

Cleveland

Baltimore

Pittsburgh

St. Louis

Washington

San Francisco

Denver

Atlanta

Los Angeles

Houston

Miami

Mexico City

Access 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 certification

Source: CIA, 1998 World Fact Book

22

slide23
Canada Welcomes Foreign Investment

Distribution of Foreign Direct InvestmentBy Industry

  • Foreign direct investment in Canada has more than doubled since 1988
  • Increasingly more investment goes to knowledge-based industries in high-tech manufacturing and services sectors

1999

1988

Machinery & Transportation

$114 Billion

$240 Billion

Source: Statistics Canada

23

the world is changing
The World is Changing…
  • Technology advancing rapidly
  • Monopolies to competition
  • Trade barriers falling - globalization
  • Convergence of technologies, services & markets
  • Mergers & acquisitions mania - industry restructuring
  • Dramatic growth in wireless communications
  • Phenomenal growth of the Internet

No end in sight

24

slide25
Canada is a Trading Nation

Trade in Goods and Services* - 1971 vs. 1999

% of GDP

1971

85.3

75.8

1999

66.1

58.7

51.7

50.9

50.0

43.8

41.2

39.7

31.8

30.8

28.2

20.7

20.3

10.8

Canada

U.S.

U.K.

Italy

France

Germany

Finland

Japan

* (Exports + Imports)/GDP Source: OECD Economic Outlook, June 2000

25

slide27
A National Vision…

"Make the information and knowledge infrastructure accessible to all Canadians, therebymaking Canada the most connected nation in the world."

Information Highway Advisory Council 1995,1997

Speech from the Throne 1997, 1999

Budget Speeches 1998, 1999, 2000

PM Speeches 1998, 1999, 2000

...for Connecting Canadians

27

a six part agenda for national leadership
Canada

Online

CanadianContentOnline

ElectronicCommerce

Connecting

Canada tothe World

Smart

Communities

Canadian

Governments

Online

A Six Part Agenda for National Leadership

To Make Canada theMost Connected Country in the World

28

a six part agenda for national leadership1
A Six Part Agenda for National Leadership

Canada

Online

ElectronicCommerce

Canada

Online

CanadianContentOnline

Canadian

Governments

Online

Smart

Communities

Connecting

Canada tothe World

Ensuring Canadians have affordable access

to the best Information Highway possible

29

a six part agenda for national leadership2
A Six Part Agenda for National Leadership

SmartCommunities

ElectronicCommerce

Canada

Online

CanadianContentOnline

Canadian

Governments

Online

Connecting

Canada tothe World

Smart

Communities

12 demonstration projects, models for using

ICT in new and innovative ways…

New model for community development

30

a six part agenda for national leadership3
A Six Part Agenda for National Leadership

CanadianContentOnline

ElectronicCommerce

Canada

Online

CanadianContentOnline

Canadian

Governments

Online

Connecting

Canada tothe World

Smart

Communities

Bringing Canadian Content and Culture

Into the Digital Age

31

a six part agenda for national leadership4
A Six Part Agenda for National Leadership

ElectronicCommerce

CanadianGovernmentsOnline

Canada

Online

CanadianContentOnline

Canadian

Governments

Online

Connecting

Canada tothe World

Smart

Communities

Be a model user, and ensure Canadians havethe government most connected to its citizensby 2004

32

a six part agenda for national leadership5
A Six Part Agenda for National Leadership

ElectronicCommerce

ElectronicCommerce

Canada

Online

CanadianContentOnline

Canadian

Governments

Online

Connecting

Canada tothe World

Smart

Communities

Making Canada a Centre of Excellence

for electronic commerce:

Capturing a 5% share of the world market

33

a six part agenda for national leadership6
A Six Part Agenda for National Leadership

ConnectingCanadato the World

ElectronicCommerce

Canada

Online

CanadianContentOnline

Canadian

Governments

Online

Connecting

Canada tothe World

Smart

Communities

Branding Canada to the World

34

slide35
Branding Connectedness...

…to Canadians

35

slide36
Tremendous Success...

100% of schoolsand librariesconnected

Households & SMEs: 42% 69%

Use the Internet

250,000computers

to schools

10,000 volunteer organizations

10,000 CAP sites

World-leadingE-Com Policy Framework

CA*net3: World’s fastest Internet backbone

12 Smart Communities

36

has made canada a world leader
…Has Made Canada a World Leader

Connectedness Rankings*

Conference Board of Canada – 10 Country Comparison

Socio-

Economic

Enablers

Overall Connectedness

Infrastructure

Access

Affordability

Usage

U.S.

Canada

Sweden

Finland

Australia

Japan

U.K.

Germany

France

Italy

1

2

3

4

5

6

7

8

9

10

1

2

6

3

5

9

5

7

9

10

4

3

1

2

6

5

8

7

10

9

4

1

1

3

6

7

5

8

9

10

1

2

4

7

3

5

5

8

10

9

1

2

6

9

3

4

9

7

5

10

* Based on a composite index. The comparisons were based primarily on 1997-98 data.

Source: Conference Board of Canada

But things can change quickly

37

shift focus to broadband
“Provide increased access to high-speed Internet service for classrooms and libraries and stimulate the production of Canadian multimedia learning content and applications.”

Speech From the Throne, 1999

Shift 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 Economy

38

shift to mobile services
Worldwide Mobile and Fixed Telephone Subscribers

Millions

2,000

1,500

Fixed Local Access

1,000

Mobile Local Access

500

0

Source: ITU, “World Telecommunication Development Report: Mobile Cellular” 1999

1990

2000

2010

Projecting 20 M Canadian subscribers by 2004

Source: IDC,Baby’s First Steps: The Canadian Wireless Data and Internet Market Forecast,1999-2004; June 200

Shift to Mobile Services

39

driving release of new spectrum
2000

1998

LMCS

3.6 GHz

25

1993

1998

8.1 GHz

MCS

20

WLL

15

Cumulative

Average Amount of Spectrum x 1000 MHz

1980

1993

10

DRB/DTV

3.7 GHz

5

DBS/DTH

0

3G

1980

82

84

86

88

90

92

94

96

98

2000

Source: Industry Canada compilations

Driving Release of New Spectrum…

…Primarily for Commercial Use

40

growth of the broadband internet
21%

23%

Not Online

28%

35%

42%

52%

62%

44%

50%

Dialup

53%

53%

51%

44%

36%

27%

35%

19%

2%

Broadband*

12%

7%

4%

1999

2000

2001

2002

2003

2004

2005

Growth of the Broadband Internet

Estimated connectivity status of Canadian & US households(as proportion of total HH: 1999-2005)

* Includes cable modem and DSL

It has been estimated that 35% of Canadian Households will have high-speed Internet access by 2005.

41

Source: View from the Living Room, Omnia Communications, (July 2000)

broadcast distributors
Cable Internet ReadyHouseholds and Subscribers

Growth of New Services

1000000

61%

800000

600000

32%

400000

12%

200000

3%

0

Dec-98

Dec-99

Mar-00

Internet Ready

Internet Subscribers

U.S.

Canada

Digital TV

Cable modem

DTH

Source: CCTA / Individual Company Reports

Broadcast Distributors

High Penetration Rates and New Services

42

beyond connectedness
New Networked

Economy & Society

USE

CONTENT

INFRASTRUCTURE

Beyond Connectedness...

43

canadian ict sector at a glance
* Excludes ICT wholesaling

11998 Data

21999 Data

31997 Data

Source: ICT Statistical Review, Industry Canada.

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)

44

a key sector of the economy
5.0 times

4.5 times

6.1 times

4.0%

24.3%

0.4%

2.0%

5.3%

23.6%

GDP (annualized)

Employment

Exports

Total Economy

ICT Sector only

Leadership required to ensure growth continues

A Key Sector of the Economy

ICT Impact on the Canadian Economy

Growth of Canadian Economy VERSUS Growth of ICTs from Q1 2000 to Q2 2000

"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

45

m ost innovative sector in canada
1999 Private Sector R&DExpenditures($ millions)

4,382

982

910

660

ICT

Sector

Aircraft &

Parts

Engineering

& Scientific

Services

Pharmaceutical

& Medicine

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

46

our areas of expertise are
Broadly-Based Strengths

Narrowly-Focused Strengths

  • Telecom Infrastructure
  • Cable Infrastructure
  • Satellite Infrastructure
  • Telecom & Network Equipment
  • Optical Technologies
  • Software development (data mining, security, educational/training, animation & graphics)
  • Semiconductor design
  • Wireless technologies
  • Electronic mfg. Services
Our Areas Of Expertise Are...

47

clusters of activity across the country
Clusters of Activity Across the Country

Ottawa

Cisco Mosaid

Cognos Newbridge/Alcatel

Corel Nortel Networks

CRC NRC

Crosskeys Philsar Semi.

Jetform QNX Software

JDS Uniphase Siemens

Mitel Tundra

Toronto

724 Solutions GEAC

Alias Wavefront Gennum

ATI Technologies Hewlett-Packard Celestica Hummingbird

Certicom IBM

Extend Media Lucent

Edmonton

Alberta Microelectronics Corp.

CEL Corp

Computronix

Intuit Canada

Logican

Sentai Software Corporation

TR Labs

Wiband Communications

Atlantic Provinces

ComDev Wireless Litton Sys.

Deltaware Sytems Nautel

DMR Group Nautical Data

InfoInteractive Satlantic

Instrumar Simscape

JOT Inc. Tecknowledge Health

KnowledgeHouse xWave

Calgary

Computing Devices Canada

Harris

LSI Logic

Nortel Networks (Wireless)

Novatel

Sanmina

Smart Technologies

Wi-Lan

Montreal

BCI Matrox SR Telcom

BCE Emergis Motorola Teleglobe

CGI Microcell TIW

CIGR MPB Viasystems

CITR Nortel Networks Virtual-

C-MAC Positron Prototype

Eicon Primetech

Ericsson Softimage

Marconi Comm.

Vancouver

Electronic Arts Canada MDSI Mobile Data

Infowave Software Seagate Software

Pivotal Sierra Wireless

PMC Sierra Spectrum Signal MacDonald Dettwiler Processing

360networks Inc.

Kitchener-Waterloo

Com Dev Open Text

Dalsa PixStream

Electrohome Raytheon Canada

NCR Research in Motion

48

canadian ict success stories
Canadian ICT Success Stories
  • 75% of all backbone Internet traffic in North America is carried on Canadian products
  • First to deliver 10 gigabit/second systems, now selling to over 90% of the world market
  • Largest designer and manufacturer of optical components in the world
  • 1999 Info World Product of the Year - the Blackberry, a wireless communications device
  • Canadians develop over 60% of the special effects software used in Hollywood
  • Euro coin was designed using Canadian software

49

for further information
For Further Information

Connecting Canadians

www.connect.gc.ca

Electronic Commerce

www.e-com.ic.gc.ca

ICT Industry

www.strategis.gc.ca/infotech

www.strategis.gc.ca/SSG/sf01703e.html

Investment in Canada

www.investincanada.ic.gc.ca

51

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