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September 2007

Canada Internet:
Users and Usage
Karin von Abrams, Senior Analyst kvonabrams@emarketer.com

Executive Summary: In many respects, Canada is an online powerhouse. According to recent data, it has a higher proportion of the population online than the United States. In broadband penetration and affordability, it rivals the US and many other developed countries. Young Canadians are avid, experienced online users. Internet access in the workplace is beginning to catch up with healthy rates of household connection. Canadian consumers spend aboveaverage time online and count themselves among the worlds keenest bloggers.
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Internet Users and Penetration in North America, by Country, 2005-2011 (millions and % of population)
2005 US % of population Canada % of population 175.4 20.0 2006 181.9 21.0 2007 188.1 21.8 2008 193.9 22.6 2009 200.1 23.3 2010 206.2 24.1 2011 211.3 24.8

61.9% 63.6% 65.2% 66.6% 68.1% 69.6% 70.6% 61.0% 63.4% 65.3% 67.1% 68.5% 70.3% 71.9%

Note: eMarketer uses historical data from the International Telecommunication Union (ITU) as a baseline; penetration figures are based on population estimates from the US Census Bureau's International Data Base (IDB); an Internet user is defined as someone who uses the Internet at least once per month Source: eMarketer, January 29, 2007
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But this picture obscures significant variations between younger and older Internet users and between regions. E-commerce, for example, has been slow to take off in the absence of retailers and online offerings that genuinely address Canadian tastes and requirements. Canadas mobile networks and operators are not as well prepared as they should be to supply reliable data services at competitive prices. These and other social, technical and commercial obstacles threaten to hold Canada back when the country should be setting online standards for North America and the rest of the world. Issues & Questions How do Canadas rates of Internet access and broadband penetration compare with those of the US and other countries?

The eMarketer View The Economy Internet Access Broadband Penetration The Online Audience What Canadians Do Online Conclusion Related Information and Links About eMarketer

2 3 3 5 8 11 24 25 25

What are the most popular online activities of Canadian

Internet users?
What major differences exist between online habits in the

English- and French-speaking parts of the country?


What trends are emerging in Canadian e-commerce and

mobile Internet use?

The First Place to Look

Copyright 2007 eMarketer, Inc. All rights reserved.

The eMarketer View


Key eMarketer Numbers Canada Internet Users and Usage
24.8 million 10.3 million 93.6% Internet users in Canada in 2011, up from 21.0 million in 2006 Broadband households in Canada in 2011, up from 7.4 million in 2006 Broadband households as a percent of total online households in 2011, up from 87.1% in 2006 Percent of Internet users in Canada who will purchase online in 2009, up from 53.3% in 2006 Average annual online spending* per Internet user in Canada in 2009, up from C$1,007 (US$891) in 2006

But the scene is changing as US-based stores look to Canada to help bolster sales and profits when demand at home is declining. Canadian retailers also realize there is a valuable market to play for, with a good deal of pent-up demand. It will take at least a year for Canadas online marketplace to offer the value and variety online consumers enjoy in the US, the United Kingdom and many other countries. The mobile sphere is another area where Canada ought to excel but appears to be falling behind. Mobile operators are hard pressed to find the cash to invest in larger and better networks, a key challenge considering Canadas size. Operators have traditionally levied hefty fees for data downloads compared with charges in most other countries. While the government, operators, consumers and mobile phone makers are trying to solve these issues, progress appears slow and difficult.

63.0% C$1,438 (US$1,295)

Note: Converted to US$ at average annual exchange rates (projected for future years); *includes spending on online travel, event tickets and digital downloads Source: eMarketer, 2006 & 2007
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Canada is something of a conundrum where the Web is concerned. The country embraced home Internet access and broadband quite early. Large numbers of the online population have taken to online banking, blogging and social networking. Most school age Canadianseven very young oneshave been well acquainted with the Internet for years. But Canada has not followed the pattern of leading wired countries in other ways. Historically, workplace access to the Internet has not been nearly as common as home access in Canada, although the gap is shrinking. Large parts of the country are not well served by Internet connections. The French-speaking province of Quebec still trails other regions in access and Internet use. Despite, or perhaps because of, Canadas proximity to the US, e-commerce remains somewhat underdeveloped. Business-to-business (B2B) sales are solid and growing. According to eMarketer and other sources, over one-half of online Canadians bought a product or service on the Internet in 2006. Until recently, however, consumers found relatively little to attract them to online stores. For a start, almost no American brand retailers bothered to understand the niceties of the Canadian market. Instead, they expected people in Canada to accept the drawbacks of Web sites, prices and delivery advice determined by US norms and trade regulations. Canadians often could not tell what the final price of a purchase would be or how long delivery might take. Meanwhile, many Canada-based retailers hung back from developing online retail operations, thinking they could wait until others had established the market and got the ball rolling. These two circumstances combined to leave Canadas consumer e-commerce in the doldrums for some time.

Canada Internet

The Economy
In terms of gross domestic product (GDP), Canada had the worlds eighth-largest economy in 2006, according to the International Monetary Funds World Economic Outlook Database as of April 2007.
The countrys economic outlook in the medium term is strong. Growth in real GDP is projected to average 2.6% per year through 2011 by the Economist Intelligence Unit (EIU). The average exchange rate in 2006 was C$1.13 to US$1.00. The EIU projects that the rate will average C$1.09 to US$1 in 2007, falling to C$1.23 to US$1.00 by 2011.

Internet Access
Canadas population was 33.4 million in July 2007, according to the US Census Bureau. This total is expected to rise by about 300,000 annually and reach 34.8 million by 2012.
Where the Internet is concerned, Canada is one of the worlds best-connected countries. eMarketer estimates that almost twothirds of Canadians used the Internet at least once a month in 2006, roughly the same proportion as in the US and Australia and at least five percentage points more than in the UK. Only Japan and South Korea could boast substantially higher rates of Internet use that year.
Internet Users and Penetration in Select Countries Worldwide, 2006 (millions and % of population)
Internet users US China Japan Germany UK South Korea France Italy India Brazil Canada Mexico Spain Australia Argentina Rest of World Worldwide 181.9 133.5 87.2 39.4 35.1 34.4 28.7 28.6 25.5 21.2 21.0 20.0 16.5 13.1 7.9 368.0 1,080.0 Penetration 63.6% 10.2% 68.4% 47.8% 57.9% 70.5% 47.1% 49.2% 2.3% 11.3% 63.4% 18.6% 40.8% 64.5% 19.8% 13.2% 16.6%

Note: eMarketer uses historical data from the International Telecommunication Union (ITU) as a baseline; penetration figures are based on population estimates from the US Census Bureau's International Data Base (IDB); an Internet user is defined as someone who uses the Internet at least once per month Source: eMarketer, January 2007
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Canada Internet

Internet Access

eMarketer estimates that Internet penetration in Canada will continue to rise steadily from 2007 through 2011, at between 1.4 and 1.8 percentage points per year.
Internet Users and Penetration in Canada, 2005-2011 (millions and % of population)
2005 2006 2007 2008 2009 2010 2011 20.0 (61.0%) 21.0 (63.4%) 21.8 (65.3%) 22.6 (67.1%) 23.3 (68.5%) 24.1 (70.3%) 24.8 (71.9%)

Top 15 Countries Worldwide, Ranked by Internet Users, January 2006 & January 2007 (thousands of unique visitors and % change)
January 2006 1. US 2. China 3. Japan 4. Germany 5. UK 6. South Korea 7. France 8. India 9. Canada 10. Italy 11. Brazil 12. Spain 13. Russia 14. Netherlands 15. Mexico Total Worldwide 150,897 72,408 51,450 31,209 29,773 24,297 23,712 15,867 18,332 15,987 12,845 12,206 10,471 10,772 8,624 676,878 January 2007 153,447 86,757 53,670 32,192 30,072 26,350 24,560 21,107 20,392 18,106 14,964 12,710 12,707 11,077 10,149 746,934 % change 2% 20% 4% 3% 1% 8% 4% 33% 11% 13% 16% 4% 21% 3% 18% 10%

Note: eMarketer uses historical data from the International Telecommunication Union (ITU) as a baseline; penetration figures are based on population estimates from the US Census Bureau's International Data Base (IDB); an Internet user is defined as someone who uses the Internet at least once per month Source: eMarketer, January 29, 2007
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Although the overall numbers are relatively small, Canada continues to post a high rate of online population growth, with 11% more Internet users in January 2007 than the year before, according to comScore World Metrix. This double-digit growth is unique among the developed countries where the Internet is firmly established. By contrast, the US online population is thought to have grown just 2% between January 2006 and January 2007. The Internet populations of France and Germany appear to have gained less than 5% during the same period, even though proportional Internet penetration in these countries is lower than in Canada.

Note: ages 15+; home, work and university locations; excludes traffic from public computers (eg Internet cafes) and access from mobile phones or PDAs Source: comScore World Metrix as cited in press release, March 6, 2007
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In March 2007, the International Telecommunications Union (ITU) put the number of Canadian Internet users even higher at 22 million, or 67.8% of the population. More recent comScore figures indicate that user numbers rose 14% between June 2006 and June 2007 to reach 23.09 million. A number of research firms and institutions concur: Internet use is already strong in Canada, and the Canadians who are not already online are joining at a rate more often seen in less developed countries. The annual Broadcasting Policy Monitoring Report by the Canadian Radio-television and Telecommunications Commission (CRTC), released in mid-2007, also paints a bright picture. According to the CRTC, 70% of households in Canada subscribed to the Internet in 2006, a 6% rise over the previous year.

Canada Internet

Internet Access

Broadband Penetration
By any standard, Canada is well served by broadband technology. Figures from Ipsos Insight indicate that more than seven in 10 active Canadian Internet users had a high-speed connection in the last two months of 2006. This figure mirrored the level of broadband access in the US, although Canada had a lower percentage of its population using a dial-up connection.
Active* Internet Users in Select Countries Worldwide, by Primary Access Technology, November-December 2006 (% of respondents)
High-speed Dial-up Brazil** Canada China** 26.5% 63.9% 83.4% 31.2% 72.0% 89.4% France Germany India** Japan 52.3% 50.2% 63.4% 77.7% 60.9% 58.7% 56.9% 71.3% 83.2% 67.9% Mexico** Russia** South Korea UK US 46% 71% 79% 70% 84% 40% 89% 34% 26% 80% 57% 71% 43% 16% 15% 25% 10% 46% 11% 44% 52% 4% 15% 19% Wireless access/service 6% 6% 4% 3% 11% 6% 18% 7% 9% 6% Other or don't know 5% 7% 2% 2% 6% 3% 16% 4% 9% 19% 4%

Canadians have always accessed the Internet far more at home than at work. In 2005, for example, roughly 61% of the total population age 18 and older was online at home, according to Statistics Canada. Only an additional 7% of respondents said they went online from other locations such as school, work, libraries and Internet cafes.
Demographic Profile of Adult Internet Users in Canada, by Access Location, 2005 (% of respondents in each group)
Home Gender Male Female Age 18-34 35-54 55-64 65+ Education Less than high school High school or college University degree Income <C$13,000 C$13,001-C$26,999 C$27,000-C$45,999 C$46,000+ Total 77.3% 68.3% 49.3% 22.5% 88.9% 75.0% 53.8% 23.8% 61.5% 60.3% 68.0% 67.8% Total*

Note: *home, school, work, public library or other; excludes residents of the Yukon, Northwest and Nanuet Territories, inmates of institutions, persons living on Indian Reserves and full-time members of the Canadian Armed Forces Source: Statistics Canada,"Canadian Internet Use Survey (CIUS)," August 15, 2006
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Note: *in the past month; **urban sample Source: Ipsos Insight, "The Face of the Web 2006," April 18, 2007
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Internet access at work has risen as more businesses move online to improve communications and efficiency. By 2006, 45% of the online population was using an Internet connection at work, compared to 38% three years earlier, according to the Ipsos Canadian Inter@ctive Reid Report. comScore Media Metrix recently compared home and work Internet use in the second quarter of 2007. Its figures suggest that almost 22 million Canadians were accessing the Web from home, and 8.2 million had access from work only. The average number of unique visitors accessing the Internet from work increased 15% between the second quarter of 2006 and the second quarter of 2007, whereas the average number of visitors using home access rose 10%, according to comScore.

The number of dial-up connections continues to fall steadily. eMarketer calculates that by the end of 2007, at least 88% of all Canadians who go online will use a broadband connection. This number will rise to 95% in 2011.
Broadband vs. Dial-Up Internet Users in Canada, 2005-2011 (millions)
2005 Dial-up Broadband Total 3.8 16.2 20.0 2006 2.9 18.1 21.0 2007 2.5 19.3 21.8 2008 2.1 20.5 22.6 2009 1.6 21.7 23.3 2010 1.3 22.8 24.1 2011 1.2 23.6 24.8

Note: eMarketer defines an Internet user as a person ages 3+ who accesses the Internet at least once per month; broadband includes ADSL, cable, satellite, fixed wireless, fiber, powerline, WiMAX and emerging broadband technologies accessed at home Source: eMarketer, January 12, 2007
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Canada Internet

Broadband Penetration

The Global Entertainment and Media Outlook: 2007-2011 report, published by PricewaterhouseCoopers (PwC) in collaboration with Wilkofsky Gruen Associates (WGA), defines the access market in subscriptions (that is, as households, since a household typically has one Internet subscription shared by all who live there). PwC suggests that broadband subscriptions will continue to grow at double-digit rates during 2007 and 2008. According to these data, broadband should pass the 70% penetration milestone by the end of 2008 and dominate the Canadian market completely by 2011. PwC projects that 85% of all households will have high-speed access in 2011, leaving just 600,000 dial-up households. Figures on broadband penetration released by the Organization for Economic Cooperation and Development (OECD) place Canada in ninth position among the countries it covers, based on the percentages of subscribers using DSL, cable and other high-speed connections. This placing is well ahead of the US and even Japan but significantly behind South Korea and several European countries.
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Broadband Subscriber Penetration in OECD Countries, by Access Technology, December 2006 (% of population)
DSL Denmark Netherlands Iceland South Korea Switzerland Norway Finland Sweden Canada Belgium UK Luxembourg France Japan US Australia Austria Germany Spain Italy New Zealand Portugal Ireland Hungary Czech Republic Poland Slovak Republic Greece Turkey Mexico OECD
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Cable 9.4% 12.0% 0.0% 10.7% 8.8% 3.8% 3.5% 5.2% 12.3% 8.4% 5.1% 2.2% 1.1% 2.8% 10.3% 3.3% 6.4% 0.5% 3.1% 0.0% 0.6% 5.1% 1.3% 3.8% 2.1% 1.6% 0.7% 0.0% 0.0% 0.8% 4.9%

Other 0.4% 0.0% 0.6% 0.0% 0.9% 0.6% 0.3% 4.8% 0.1% 0.1% 0.0% 0.0% 0.0% 0.0% 0.6% 1.0% 0.3% 0.1% 0.1% 0.6% 0.7% 0.0% 2.0% 2.0% 3.7% 0.1% 0.2% 0.2% 0.0% 0.0% 0.3%

Total 31.9% 31.8% 29.7% 29.1% 28.5% 27.7% 27.2% 26.0% 23.8% 22.5% 21.6% 20.4% 20.3% 20.2% 19.6% 19.2% 17.3% 17.1% 15.3% 14.8% 14.0% 13.8% 12.5% 11.9% 10.6% 6.9% 5.1% 4.6% 3.8% 3.5% 16.9%

19.6% 19.5% 28.8% 11.4% 18.8% 21.7% 23.5% 16.0% 11.4% 14.0% 16.5% 18.2% 19.1% 11.1% 8.5% 15.0% 10.6% 16.4% 12.1% 13.8% 12.7% 8.7% 9.1% 6.1% 4.8% 5.2% 3.4% 4.4% 3.8% 2.7% 10.5%

Source: OECD, April 23, 2007


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Since these figures were issued, the methodology used by the OECDwhich focuses purely on the adoption rate of broadband connectionshas sparked debate about what criteria should be used to determine the rankings and what they aim to demonstrate. The Information Technology and Innovation Foundation (ITIF) has argued that a more complete measure would also consider speed and price. Increasingly, in the digital economy it is the speed and capacity of the network that matters. The OECD tracks cost and speed of connections but does not include them in its overall broadband rankings. The number of subscribers per household is also relevant.

Canada Internet

Broadband Penetration

The ITIFs revised rankings give a far more rounded picture of how well each country is served by broadband offerings. Note that Japan leaps into second place here, chiefly because of its highspeed connections and price per bit (the lowest in the world). Canada slips one place, to 10th, thanks to a solid but not outstanding performance in all categories.
Top 20 OECD (1) Countries, Ranked by Broadband Metrics, 2006
Subscribers per household (2) 1. South Korea 2. Japan 3. Iceland 4. Finland 5. Netherlands 6. Sweden 7. France 8. Denmark 9. Norway 10. Canada 11. Belgium 12. US 13. Switzerland 14. Australia 15. Austria 16. Portugal 17. UK 18. Germany 19. Italy 20. Luxembourg 0.90 0.52 0.83 0.57 0.73 0.49 0.49 0.70 0.64 0.62 0.54 0.51 0.68 0.50 0.42 0.42 0.50 0.38 0.38 0.51 Average speed (Mbps) (3) 45.6 61.0 6.0 21.7 8.8 18.2 17.6 4.6 7.4 7.6 6.2 4.8 2.3 1.7 7.3 8.1 2.6 6.0 4.2 3.1 Price per month (4) $0.45 $0.27 $4.99 $2.77 $4.31 $0.63 $1.64 $4.92 $4.04 $6.50 $6.69 $3.33 $21.71 $2.39 $5.99 $10.99 $11.02 $5.20 $3.36 $18.48 Overall score (5) 15.73 14.99 12.14 12.11 11.87 11.54 11.41 11.37 11.29 11.11 10.60 10.47 10.40 10.23 10.08 9.92 9.92 9.81 9.78 9.71

A less obvious sign that Canada is better served by broadband than the US is the age of people using it. Figures published in 2007 by Google Canada and Media-Screen indicate that overall Canadian broadband consumers tend to be younger than those in the US. The study found that 15% of broadband users in Canada were 18- to 24-years-old. But in the US just 9% of broadband users fall into this age group, as the majority of users are older members of the working population. That is good for the current state of the nation in many ways but less good for the future. As younger people complete their education and enter the economy, high-speed access to online resources will be crucial to their success. For now at least, young Canadians are more likely to benefit from those resources. eMarketer anticipates that Canada will continue to outperform the US in overall broadband penetration through 2011 and beyond.
Broadband Households and Penetration in North America, by Country, 2005-2011 (millions and % of total households)
2005 2006 2007 2008 2009 2010 2011 US % of total households Canada % of total households 43.9 6.4 54.6 7.4 65.0 8.1 74.1 8.7 81.1 9.3 86.2 9.8 89.9 10.3 37.6% 45.9% 53.6% 60.1% 64.6% 67.6% 69.3% 50.5% 58.0% 62.6% 66.7% 70.4% 73.8% 76.7%

Note: eMarketer defines "broadband" as an Internet connection of 200 kbps in at least one direction; includes ADSL, cable, satellite, fixed wireless, fiber, powerline, WiMAX and emerging broadband technologies accessed at home Source: eMarketer, March 12, 2007
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Note: (1) Organization for Economic Cooperation and Development; (2) OECD measures penetration on a per capita basis because comprehensive data on household penetration is generally unavailable; ITIF has used average household size as a multiplier to convert OECD per capita penetration data to household penetration data; it should be noted that one problem with this method is that the OECD data likely also includes some DSL business subscribers; (3) methodology for calculating broadband speed involves averaging the speeds of the incumbent DSL, cable and fiber offerings provided in OECD's April 2006 "Multiple Play" report, with each assigned a weight according to that technology's respective percentage of the nation's overall broadband subscribership, as reported in OECD's "Broadband Statistics to December 2006;" for nations that did not have a listed fiber speed in the "Multiple Play" report but had fiber subscribers, a speed of 10 Mpbs was assigned; (4) price per month for 1 Mbps using fastest technology (US$ PPP); (5) each nation's overall score is the sum of its standard deviation score for each of the three indicators Source: The Information Technology & Innovation Foundation (ITIF) report, "Assessing Broadband in America: OECD and ITIF Broadband Rankings," April 2007
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Moreover, PwC predicts that fees for broadband in Canada will stay low in real terms compared to those in other countries. PwC estimated that the average broadband subscription in Canada in 2006 costs just US$16.75 (C$18.93) per month, one of the lowest rates in the world. Moreover, these researchers anticipate that Canadian broadband costs will show a compound annual growth rate of just 0.2% in US dollars for the five years beginning in 2006, resulting in a projected average cost of only US$16.92 (C$20.81) per month in 2011. This rate of increase will make broadband progressively more affordable for Canadians and encourage further uptake.

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This analysis strengthens the conclusion that Canada enjoys a healthier broadband situation than the US. Prices are higher in Canada, but in the US both average speed and number of subscribers per household are below Canadian levels, thus the country as a whole is less efficient in broadband terms.

Canada Internet

The Online Audience


eMarketer has calculated that Canadas Internet population passed 21 million at the end of 2006 and that roughly two-thirds of Canadians are now online. Within certain age and income groups, that proportion is far higher.
In fact, the Internet found many early adopters in Canada. In 2001, 82% of Canadian adults age 18 to 54 already had access to the Internet, according to Ipsos Reid. By 2006, nearly nine in 10 of the same age group had access. During the same period, uptake among Canadians 55 and older rose more dramatically, although the proportion of older people online is still much lower overall.
Adults in Canada with Internet Access, by Age, 2001 & 2006 (% of respondents in each group)
2001 82% 48% 2006 88% 61% 18-54 55+

A large majority of Canadians under 18 are also online and have been for some time. The Young Canadians in a Wired World study, carried out by the Media Awareness Network, which canvassed more than 5,200 young people in grades 4 to 11 in French and English language schools across the country, found that Internet access in this group was almost universal as long ago as 2005. In that year, 94% of young people said they went online from home, and 61% said they had high-speed access. Just over one-half of grade 11 students said they were able to access the Internet through their personal computer. Internet uptake does vary substantially from one part of Canada to another. The relatively low level of Internet use in Quebec has been an issue for some years. Many analysts have concluded that the language barrier is to blame, but other regional characteristics may play a part as well.
Adult Internet Users in Canada Who Go Online At Least Once a Week, by Province, 2006 (% of respondents)
British Columbia Alberta Ontario Manitoba/Saskatchewan Atlantic Quebec 49% 66% 65% 63% 55% 53%

Note: from any location Source: Ipsos Reid, "Older Canadians and the Internet" as cited in press release, February 15, 2007
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This has important implications for Canadas Internet use and online economy in the longer term. Statistics Canada calculated that the number of Canadians 55 and older will double between 2005 and 2025. In particular, the 59-to-64 age group is the fastest-growing demographic, so there are clear opportunities for providers of goods and services to an older population. Many of these older Canadians enjoy a relatively high standard of living and value the opportunity to save time and effort when shopping or booking travel, for example. If the digital divide is not bridged, however, many older citizens will be put at a disadvantage. Government services will not be delivered effectively to those unable to access online resources and information. The benefits of e-commerce and other online facilities will also bypass older people if they cannot be helped to use the Internet with confidence.

Note: ages 16+ Source: BBM Analytics, "CyberTRENDS," December 2006 as cited by Canadian Radio-television and Telecommunications Commission (CRTC), "Broadcasting Policy Monitoring Report 2007," December 2006
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Some observers have suggested that the province is risk averse, adopting a wait-and-see attitude to new technology until it is proved elsewhere. Also, Quebec seems to have different cultural priorities. Monique Charbonneau, president of the Centre francophone dinformatisation des organizations (CEFRIO), a consortium that encourages the use of IT in Canadas French-speaking areas, was quoted in The Montreal Gazette in February 2007 as saying, We take risks here more in the cultural spheres. Look at Cirque du Soleil and Quebec cinema. We excel at those. Science and technology arent as important here as they are in the AngloSaxon societies. Whatever the reasons for Quebecs slow start online, the province is beginning to catch up with the rest of the country.

Canada Internet

The Online Audience

According to the ITU, overall Canadian Internet penetration in December 2006 was 67.8%. This is not far from the 65.8% of adults in Quebec who used the Internet regularly in 2006, according to the NETendances 2006 report published by CEFRIO in collaboration with Lger Marketing. The percentage of Quebecers going online rose to 71.5% in November 2006 and 72.3% in June 2007, according to CEFRIO.
Active* Adult Internet Users in Quebec, by Month, 2006 (% of population)
January February March April May June July August September October November December 64.3% 63.9% 64.8% 63.9% 68.4% 64.8% 62.4% 65.2% 64.4% 67.3% 71.5% 68.4%

comScore World Metrix recently calculated that Canada leads the world in the average amount of time spent online each month by unique Internet users. Broadband users in particular appeared to be the only national group in the world clocking up more than 40 hours a month on average.
Top 10 Countries Worldwide, Ranked by Average Monthly Hours Online per Unique Visitor, by Access Technology, January 2007
Broadband users 1. Canada 2. Israel 3. South Korea 4. US 5. UK 6. Chile 7. Brazil 8. Finland 9. Spain 10. Sweden 41.3 38.8 36.1 37.2 35.6 38.6 38.5 34.2 33.4 31.4 Narrowband users 14.2 10.9 na* 13.5 7.5 12.6 17.0 na* 9.1 9.7 Total users 39.6 37.4 34.0 31.6 31.2 30.9 30.2 28.7 27.9 27.5

Note: ages 15+; home, work and university locations; excludes traffic from public computers (eg Internet cafes) and access from mobile phones or PDAs; *level of narrowband penetration is very low therefore an accurate reportable estimate is not available Source: comScore World Metrix as cited in press release, March 6, 2007
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Note: n=1,000 adult residents of Quebec chosen and polled each month; *have used the Internet at least once during the previous week Source: Centre francophone d'informatisation des organizations (CEFRIO), "NETendances 2006," conducted by CEFRIO and Lger Marketing, February 2007
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Not surprisingly, it is the audience under 55 that spends more time online, according to Ipsos Reid. This gap has not diminished significantly since 2001.
Weekly Time Spent Online by Adult Internet Users in Canada, by Age, October 2006 (hours)
18-54 55+ 8.7 13.3

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Among those polled for the study, 76% had a computer at home, and more than 19% planned to get a new one during the coming year. Two-thirds (67%) of Quebec adults said they had an Internet connection at home in 2006, and 86% of these adults subscribed to a high-speed service, according to CEFRIO. High-speed cable connections were used by 32% of Quebecers in 2006, up from 25% in 2005. Quebec does not buck all the trends, however. Some common demographic patterns mirror those in the rest of Canada. For example, Internet access is highest among young people. Of Quebecers age 18 to 24, 97% go online. Further, Internet use is correlated with household income. Almost nine in 10 households in Quebec with an annual income over C$60,000 (US$55,045) are connected, and homes with less than C$20,000 (US$18,350) per year have a connection rate of about 40%. Despite regional variations, there is no question that, as a country, Canadians have taken to the Internet in a big way.

Source: Ipsos Reid, "Older Canadians and the Internet" as cited in press release, February 15, 2007
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Canada Internet

The Online Audience

In some ways, the older generation is holding its own. A study by the insurance group AXA found that Canadian retirees were second only to those in the US in hours spent online each week in 2006.
Average Number Hours per Week Spent Online by Retired Adults in Select Countries Worldwide, 2006
US Australia Canada UK New Zealand China France Germany Japan Italy Spain 2 2 3 4 5 5 6 6 7 7 9

Generally, older online Canadians confessed they felt less experienced and adept at Internet skills. Only 13% of respondents 55 and older claimed to be expert or very skilled, compared with 35% of 18- to 54-year-olds. But all adults acknowledged that it was hard to stay on top of change. Less than one in 10 thought they were significantly ahead of the curve as technology evolved around them. More than one-third said they had to work to keep up, and a similar percentage said they were just managing not to fall behind. Almost one in five said there was a significant gap between their knowledge and the pace of change.
Ability of Adult Consumers in Canada to Keep Pace with Technology Change, January 2007 (% of respondents)
Significantly ahead of the curve Ahead of the game but have to work to keep up Barely keeping up to speed Falling significantly behind 19% 8% 36% 34%

Note: includes people under the age of 75 who are retired or in early retirement Source: AXA Group, "Global Retirement Scope 2007 Retirement, a new life after work?," January 1, 2007
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Note: n=1,000 Source: Ipsos Reid, "Canadian Inter@ctive Reid Report" as cited in press release, March 14, 2007
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Another recent Ipsos Reid survey probed the issue of whether adults in Canada thought their skill levels were up to the challenge of the Internet and whether they were keeping up with technological change. Some results were encouraging. For example, three-quarters of Canadian adults said they were fairly or very skilled at using the Internet. The remaining 25% thought they could be described as not very or not at all skilled.

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Canada Internet

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What Canadians Do Online


E-mail remains one of the most popular online activities in Canada.
The CyberTRENDS report, published by BBM Analytics, claims that, as of December 2006, 90% of Internet users in Canada were sending or receiving e-mail. In the same month, more than three-quarters of Canadians online researched products and services, 80% visited sites of interest and 86% searched for specific information. According to the report, Canadian Internet users spent on average about 54% of total online time visiting Canadian sites. An Ipsos Reid survey carried out in the third quarter of 2006 also points to the variety of ways Canadians use the Internet. This survey did not gather data about e-mail use (perhaps because e-mail is taken for granted). Many of the activities that users were asked about did not figure in the CyberTRENDS survey. For this reason, the two surveys do not offer much mutual corroboration. Taken together, however, they appear to confirm that Canadians are transferring personal and family activities online to an extraordinary degree. More than one-half of the Ipsos Reid respondents said they comparison-shopped online, bought goods and services, explored courses or looked for real estate. Many listened to the radio, downloaded music, uploaded photos or played games. At least three in five had researched travel online or carried out banking transactions, the two most popular activities in this sample.
Online Activities of Internet Users in Canada, Q3 2006 (% of respondents)
Online banking transactions 62% Researched trip online 60% Comparison shopped 52% Searched for/viewed real estate 51% Purchased a product or service directly online 50% Researched courses, schools, degrees or diplomas 50% Listened to Internet radio 48% Used the Internet at work for personal reasons 43% Used online photo service 42% Purchased element of travel online 41% Downloaded MP3 file for free 40% Visited a blog 36% Visited home for sale first found online 33% Played poker online for fun 17% Downloaded MP3 file for a fee 16% Taken a course directly online 15% Bought/sold investments 14% Earned a degree/diploma/certificate online 4% Played poker online for money 3% Placed a sports wager online for money 2% Note: n=888 adults with Internet access Source: Ipsos Reid, "The 2006 Canadian Inter@ctive Reid Report" Fact Guide, March 2007
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What Canadians Do Online

Among Quebecers, too, banking operations were the most popular Internet transactions. In July 2006, 38.1% made such transactions online, up from 35.7% in July 2005, according to CEFRIO. (Note, however, that this is still a far cry from the 62% of the overall Canadian online population who banked online in the third quarter of 2006.) It must be said that older Canadians are not involved in many of these activities to the same degree as younger people. In fact, they lag behind younger Internet users in almost all cases. Just 21% of Canadian Internet users 55 and older have participated in online banking, and 34% have listened to radio online. A similar number (32%) have downloaded free MP3 files, and 17% used the Internet to research travel, the same proportion who went online at work for personal reasons. Less than one-quarter (23%) said they had visited blog sites, and a mere 14% had bought something online. On the other hand, Canadians 55 and older are actually more likely to participate in some activities than the younger online population. These activities include taking courses online (the participation rate of older users is 3% higher), buying or selling investments (also 3% higher) and earning a degree or diploma online (4% higher). Only 20% of Internet users 55 and older said they comparison-shopped online.Another study,however,suggest that,in the wider population of Internet users,more than one-half are comparison-shopping. Further, more than one-half of Canadians age 30 and older polled in December 2006 said they used the Internet at least once a week to search for products, services, jobs or community information. Almost three-quarters said they performed these kinds of searches at least once a month.
Minimum Frequency with which Adult Internet Users in Canada Use the Internet to Search for Products to Purchase, Services, Jobs or Community Information, December 2006 (% of respondents)
Weekly Monthly 54% 73%

The Webs role as a source of information about users local facilities and services is growing, too. The Lger Marketing report cited earlier found that a large number of Canadians turn to the Internet even for information that might be available from local newspapers, radio stations or other offline sources close to hand.
Adult Internet Users in Canada Who Use the Internet to Search for Local Services or View Community Postings and Events, December 2006 (% of respondents)
Search for local services View community postings and events 54% 69%

Note: n=1,000 ages 30+ Source: Lger Marketing commissioned by Kijiji Canada, January 16, 2007
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As with online banking, most activities are less popular among French-speaking residents than in Canada as a whole. For example, e-mail is one of the most popular online activities in Quebec, but the percentage of the online population using e-mail was just 60% at the end of 2006, one-third less than in the wider Canadian population.
Select Online Activities of Adult Internet Users in Quebec, March, June & December 2006 (% of respondents)
Used e-mail to get in touch with parents or friends 58.2% 60.5% 60.3% Participated in a chat room 27.4% 27.7% 30.2% Listened to or downloaded music 20.5% 19.1% 25.8% Played games 13.4% 14.1% 16.0% Watched or downloaded videos 12.9% 11.7% 15.8% March 2006 June 2006 December 2006

Note: n=1,000 ages 30+ Source: Lger Marketing commissioned by Kijiji Canada, January 16, 2007
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A report by Google Canada and Media-Screen has yielded an even more striking statistic: 98% of Canadians now search the Internet looking to purchase products and services. This kind of search is part of roughly five hours that Canadians spend on the Internet during a typical five-day week, Monday to Friday. This online poll surveyed 1,002 adults age 18 and older. All respondents were required to have a broadband connection and to have researched or purchased a product or service online, both of which criteria may have a bearing on the results.
Canada Internet

Note: n=1,000 adult residents of Quebec chosen and polled each month Source: Centre francophone d'informatisation des organizations (CEFRIO), "NETendances 2006," conducted by CEFRIO and Lger Marketing, February 2007
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What Canadians Do Online

Quebecers spent 6.1 hours online each week for personal reasons in June 2006, according to CEFRIO. News and information sites were among the most popular destinations, with 35.2% of surfers visiting them regularly. In May 2006, 39.1% of Quebec residents said they planned to go online to arrange travel, compared with 60% of Canadians overall in the third quarter of 2006, according to Ipsos Reid. The increasing usefulness of the Internet in so many areas means that large numbers of Canadians can hardly imagine life without it. More than one-third of adults polled in January 2007 said going online was an important part of their daily routine. About onequarter believed that if they did not learn more about the Internet they would be left behind as the effect of the online channel grows in the world around them.
Attitudes of Adult Consumers in Canada toward the Internet, January 2007 (% of respondents)
Using the Internet is an important part of their daily routine 35%

As life online becomes second nature to most Canadians, Internet use is increasingly overlapping with other activities. Multitasking online is especially prevalent among Englishspeaking Canadian tweens, more than one-third of whom frequently watch TVor have the TV onwhile they surf. One-quarter listen to music while they are online. Only two in five of these 7- to 12-year-olds do not combine Internet use with other tasks or leisure activities, according to the Solutions Research Group.
Multitasking Activities of Tweens in English-Speaking Canada While Using the Internet, September 2006 (% of respondents)
Watching TV Music (not radio) Gaming Using a phone 10% Reading Radio 7% 3% 18% 25% 34%

If they don't find out more about the Internet they will be left behind 26% Don't know how people before me lived without the Internet 16% Perfer to talk to people via e-mail than by any other method 13% Note: n=1,000 Source: Ipsos Reid, "Canadian Inter@ctive Reid Report" as cited in press release, March 14, 2007
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Other None

1% 41%

Note: ages 7-12 who use the Internet; days from 6 am-11 pm Source: Solutions Research Group, "Tween Media Usage" commissioned by YTV, January 2007
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In fact, Canadians of all ages are now multitasking in similar ways, according to BBM Analytics. Listening to the radio while online is especially popular.
Adult Internet Users in Canada Who Perform Other Activities "Often" or "Sometimes" While Accessing the Internet, by Age, 2006 (% of respondents)
Watch TV 16-24 25-34 35-44 45-54 55-64 65+ 16+ 41% 33% 30% 22% 15% 12% 25% Listen to radio 46% 37% 34% 28% 34% 21% 33%

Source: BBM Analytics, "CyberTRENDS," December 2006 as cited by Canadian Radio-television and Telecommunications Commission (CRTC), "Broadcasting Policy Monitoring Report 2007," December 2006
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What Canadians Do Online

Of course broadband also helps to shift radio and other music, TV, video and games online. Thus Internet users can easily engage in these activities simultaneously without leaving their computers. In this realm, too, it tends to be younger male users who are in the vanguard; older users and women are less likely to be accessing music, TV or video online.
Online Audio and Video Activities of Adult Internet Users in Canada, by Gender, 2006 (% of respondents)
Male Download/listen to music Watch videos Listen to radio Watch TV on the Internet Download movies Download TV programs 36% 37% 25% 8% 7% 6% Female 26% 21% 19% 3% 3% 2%

Blogging
Perhaps curiously, for a nation whose people are often seen as reserved, at least in contrast to their neighbors to the south, Canadians have become enthusiastic bloggers. A survey of select countries by comScore Media Metrix and iMedia Connection found that in October 2006 Canada had the highest percentage of its online population visiting blog sites.
Blog Web Site Visitors in Select Countries Worldwide, October 2006 (% of Internet users)
Canada Spain France UK Netherlands US Italy 30.7% 26.7% 36.3% 45.6% 45.1% 44.3% 58.2% 51.4%

Source: BBM Analytics, "CyberTRENDS," December 2006 as cited by Canadian Radio-television and Telecommunications Commission (CRTC), "Broadcasting Policy Monitoring Report 2007," December 2006
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Online Audio and Video Activities of Adult Internet Users in Canada, by Age, 2006 (% of respondents)
18-24 25-34 35-44 35-54 55-64 65+ Download/listen to music Watch videos Listen to radio Download movies Watch TV on the Internet Download TV programs 77% 53% 33% 19% 14% 12% 40% 36% 30% 8% 8% 6% 34% 31% 25% 4% 6% 3% 23% 26% 18% 2% 4% 2% 16% 16% 14% 4% 2% 1% 13% 18% 12% 1% 4% 4%

Germany

Source: comScore Media Metrix as cited by iMedia Connection, December 14, 2006
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The Blog Herald, an online source, published results of an informal survey into blog numbers in several countries. According to the compiler, Canada was among the top 10 countries in the world for blog authorship in July 2006.
Top 10 Blogging Countries Worldwide, Ranked by Number of Blogs, July 2006 (millions)
1. US 2. South Korea 3. China 4. Japan 5. France 6. UK 7. Spain 8. Poland 9. Canada 10. Netherlands 15.0-30.0 15.0 5.0 4.0 3.0 2.5 1.5 1.4 0.7 0.6

Source: BBM Analytics, "CyberTRENDS," December 2006 as cited by Canadian Radio-television and Telecommunications Commission (CRTC), "Broadcasting Policy Monitoring Report 2007," July 2007
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A recent study from the Solutions Research Group appears to confirm that accessing multimedia online is now becoming mainstream. This study concluded that, as of May 2007, more than three million Canadians had uploaded video to a site and that just over 40% downloaded a music file that month, up from 38% in September 2006.

Source: Blog Herald as cited by A Free and Decent Blog Host, January 2, 2007
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These approximate numbers are bound to have risen in the year since the information was compiled.

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What Canadians Do Online

One survey on blogging in the first quarter of 2007, the Ipsos Canadian Inter@ctive Reid Report, concluded that there are now more than 15 million blogs associated with Canadian sites (although not all these will necessarily be Canadian-authored blogs). Moreover, roughly one in five Canadian Internet users had visited a blog site on the day they were polled, and more than 20% had done so in the previous week.
Internet Users in Canada Who Have Recently Visited a Blog, March 2007 (% of respondents)
Today Yesterday 2-7 days ago 10% 22% 19%

Internet Users in Canada Who Visit Blog Sites, by Age, April 30-May 5, 2007 (% of respondents)
13-17 18-29 73% 64%

Source: TNS Canadian Facts as cited in press release, June 11, 2007
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Teens are also the most likely to post comments on blogs. According to TNS, 31% of online teens have made a blog posting. Blogs are gradually attracting more adults, however. Ipsos Reid found that of those adults who said they had never visited a blog, 24% also said they were somewhat likely to do so in the next 12 months and 7% were very likely to. TNS data suggest that 55% of Canadians 50 and older who read blogs have also commented on them. Blogs are also growing in popularity among residents of Quebec, although less dramatically. In 2006, 19.8% of Quebecers polled by CEFRIO claimed to have visited blog sites, compared with 12.3% in 2005. TNS data suggest that blog site visits by residents of Frenchspeaking areas in Canada rose 74% between July 2005 and July 2006, and visits by English speakers rose 82%. More than one-half of Canadians in the Ipsos Reid study used a search engine to find a blog rather than learn about one from friends or colleagues. This intriguing finding could represent a real opening to advertisers because in many cases search engine marketing is already central to their online strategy. If advertisers can harness the power of word of mouth and lead potential customers from search environments to suitable blogs, it should greatly strengthen their hold on potential and actual customers. The next most popular way of finding a blog was through personal or professional networking sites (used by 17% of respondents in the Ipsos Reid study). About one in seven Internet users polled said they found blogs through a news or company site. More than 40% of bloggers also said they had bookmarked a blog once they found one that interested them. Many adults in Canada appear to consider the information expressed in blogs relatively trustworthy, at least in certain subject areas. Two-thirds of the adult Internet users polled by Ipsos Reid said the information in blogs was a very or somewhat reliable way to keep themselves informed about new technology, for example, and only 13% said this information was not at all reliable.

Source: Ipsos Reid, "Ipsos Canadian Inter@ctive Reid Report" as cited in press release, July 19, 2007
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The same study profiled those who looked at blogs and compared their profile with larger demographic groups. Blog visitors are marginally more likely to be male than female, and younger Canadians show more interest than older Internet users. Blogs also attract proportionately more visitors with higher educational qualifications.
Demographic Profile of Blog Visitors in Canada, March 2007 (% of respondents in each group)
Gender Male Female Age 18-34 35-54 55+ Education High school or less Some post-secondary University graduates Total 21% 36% 40% 34% 45% 32% 21% 36% 31%

Source: Ipsos Reid, "Ipsos Canadian Inter@ctive Reid Report" as cited in press release, July 19, 2007
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Recent figures from TNS also point to a relatively young audience for blogs. Almost three-quarters of Canadian online users between 13 and 17 said they visit blog sites, and this proportion falls off only slightly among 18- to 29-year-olds.

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What Canadians Do Online

When it comes to blogs focused on businesses, Canadians are skeptical about the validity of information posted, perhaps because they are aware of the mixed motives that may prompt blog entries. Only 4% said they considered information on blogs about businesses very reliable. This low trust level reinforces the need for advertisers to exercise caution in blog-related marketing and to avoid any appearance of fixing blog postings.
Reliability* of Information on Blogs about Businesses according to Internet Users in Canada, March 2007 (% of respondents)
Very 4%

Among self-described bloggers, 17% said negative comments would make them much less likely to buy a product or service, and 17% said positive comments would make them much more likely to purchase. (Remember that, in the general online population, the comparable percentages were 12% and 10%, respectively.) The same study found that bloggers also spend more time on the Internet than their non-blogging compatriots, clocking up an average of 23.4 hours a week actively engaged online, while nonbloggers spend 15 hours. In fact, bloggers appear more likely than non-bloggers to take part in almost all the online activities that Ipsos Reid researchers asked about.
Select Online Activities of Bloggers* vs. Non-Bloggers in Canada, Q1 2007 (% of respondents)
Bloggers* Non-bloggers Online banking Comparison shopping for products Purchasing products and services online Clicking on Web site advertising 83% 81% 80% 73% 65% 65% 62% 50%

Not at all 15%

Not very 34%

Somewhat 47%

Note: *when trying to form an opinion Source: Ipsos Reid, "Ipsos Canadian Inter@ctive Reid Report" as cited in press release, July 19, 2007
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Note: *Bloggers are those Internet users who say they visit blog sites and also contribute material to blogs Source: Ipsos Reid, "Blogging in Canada" as cited by Marketing Charts, April 2007
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Most Canadians do admit to being influenced by blogs. One in 10 adult Internet users polled by Ipsos Reid thought that positive comments about a product or service on a blog make them much more likely to buy it, and just more than one-half said they would be somewhat more likely to buy. Hence the great attraction for advertisers who stand to benefit substantially from this degree of leverage if a blog mention is approving and seems genuine. There is a downside, however. Negative blog comments have a slightly greater effect than positive ones, something many advertisers have already learned the hard way. Ipsos Reid data indicate that 12% of Canadian Internet users said negative comments about a product or service would make them much less likely to purchase, and 54% say they would be somewhat less likely to buy. Bearing in mind that blogging is an active participation in the online world and represents a visible contribution to online content, it is not surprising that people involved in blogging are also more involved with other aspects of online life than non-bloggers. Ipsos Reid found that Internet users who are experienced users of blogsand contribute actively to themare more likely to be affected by what they read there about products and services.

Bloggers also report more time spent using the Internet while engaged in other activitieswatching TV, listening to the radio, working or spending time with family and friendsthan nonbloggers, an average of 7.7 hours versus 5.2 hours weekly, according to Ipsos Reid.

Social Networking
Blogging is not the only social medium that attracts Canadian Internet users. Social networking sites, such as those that allow sharing of music and video, seem to be even more popular.
Social Networking, Multimedia and Blog Users in Canada, April 2007 (thousands of unique visitors and % reach)
Unique visitors (thousands) Social networking sites Multimedia* sites Blogs Total Internet audience in Canada 18,452 18,247 14,685 23,026 % reach

80.1% 79.2% 63.8% 100.00%

Note: home and work locations; *sites that contain video clips, audio clips or some other kind of interactive media such as shockwave/ flash etc Source: comScore World Metrix, provided to eMarketer, June 8, 2007
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If eight in 10 Canadians online visited a social networking site in April 2007, it highlights astonishing growth in this area in less than a year. A number of sources appear to confirm a sharp uptake in visits to these sites.
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What Canadians Do Online

For example, during the last two months of 2006, just 16% of Canadians reported visiting a social networking site in the preceding 30 days, according to Ipsos Insight. But that was double the number who had visited one before that.
Active* Internet Users in Select Countries Worldwide Who Have Recently or Ever Visited Social Networking Web Sites, November-December 2006 (% of respondents)
South Korea 55% 11% Brazil** 41% 6% China** 27% 15% Mexico** 26% 10% US 24% 8% UK 20% 8% Canada 16% 9% India** 16% 8% Germany 14% 5% France 12% 6% Japan 9% 13% Russia** 1% 2% Within the past 30 days More than 30 days ago

The increasing use of social networking sites by Canadians reflected a wider growth trend during these months. China, India, Germany and France also appear to have doubled the number of people using social networking sites in December 2006. In the US, visits to such sites actually tripled in the same period. The Solutions Research Group (SRG) maintains that between January and June 2007, Canadians again doubled their use of these sites and represented the fastest-growing national population on Facebook. Canadian membership of Facebook has now passed two million, and almost one in 10 Canadian Internet users now has a Facebook page, according to SRG. In August 2007, mobile operator Rogers Wireless responded to the apparent social networking craze by inking an exclusive partnership with Fox Interactive Medias MySpace. Owners of some Rogers cell phones can now use their mobiles to post comments and blog entries on MySpace, check mail, read bulletins and alter their profiles. As with most online innovations, younger Canadians are more involved than older ones. The Rogers deal would seem to confirm this, as MySpace is especially popular with younger people. More than 80% of those visiting social networking sites during the first week of May 2007 were between 13 and 17, according to TNS.
Internet Users in Canada Who Visit Social Networking Sites, by Age, April 30-May 5, 2007 (% of respondents)
13-17 18-29 Source: TNS Canadian Facts as cited in press release, June 11, 2007
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Among respondents 50 and older, 67% said they did not use social networking sites and preferred to keep in touch with family and friends in other ways, such as by phone or e-mail. But age is not the only factor here as 44% of the total sample felt the same. And many people have other doubts about social networking online. Almost one in five said they did not really feel safe using social networking sites, and 17% said their friends did not use them. In addition, a rump population of 16% said they considered these sites stupid and not worth joining.

Note: *in the past month; **urban sample Source: Ipsos Insight, "The Face of the Web 2006" as cited in press release, July 5, 2007
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What Canadians Do Online

Online Gaming
TNS data suggest that, as of late spring 2007, online games came third behind social networks and blogs in the social media stakes, with 36% of Canadian Internet users taking part in them.
Internet Users in Canada Who Use Select Online Social Media, April 30-May 5, 2007 (% of respondents)
Social networks Blogs Play online games 36% 53% 50%

Games for PCs are expected to generate slightly higher revenue in 2007 before beginning to decline again in 2008. Meanwhile, Canadas excellent broadband penetration will encourage continued growth in online gaming. PwC sees the presence and expansion of broadband in Canada as one of the key influences on the game-playing habits of the country. Thanks to broadband, online games already account for more of the gaming market in Canada than in other regions. PwC researchers believe that in 2006 online games represented 28% of Canadas gaming market, compared with 21% in Asia Pacific, 13% in Europe, the Middle East and Africa (EMEA) and 12% in the US. Almost two million Canadians were playing games online in 2006, according to PwC, and nearly 90% of online gamers are believed to have broadband connections. As broadband subscriptions rise to roughly 12 million in 2011, the number of people playing games online is expected to reach four million, one-third of all broadband users. PwC also sees spending on online games rising from US$248 (C$280) in 2006 to US$476 (C$585) in 2011, a compound annual growth rate of 13.9% in US dollar terms. Development of online gamesand the advertising to go with it should be spurred by recent research from Massive, an in-game advertising specialist acquired by Microsoft in 2006. Massives study indicates that in-game ads can increase consumer ad recall by as much as 41% (on average), ad rating by 69%, brand rating by 37% and brand familiarity by 64%. Massives data also suggest that in-game ads can boost purchase consideration by an average of 41%. The fastest-growing market for games is the wireless platform. Of the 18.7 million Canadians who were mobile phone subscribers in 2006, PwC estimates that 2.4 million (13%) downloaded a game. That proportion is projected to rise to 30% in 2011 when mobile subscriptions will approach 29 million. PwC suggests that spending on games for wireless devices will rise more than 150% between 2006 and 2011, from US$89 million (C$101 million) to US$230 million (C$283 million). However, it is not yet clear how much of Canadas wireless gaming will be Internet-based or how quickly online gaming with mobile devices will take off. Current pricing structures make data operations via mobile phones relatively expensive for Canadians. In the short term, gaming online through mobile phones will be an extremely small market.

Source: TNS Canadian Facts as cited in press release, June 11, 2007
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Most popular were online poker and live games where the user is the shooter, according to TNS. Massively multiplayer online games (MMOGs) also have a strong following. By contrast, the virtual world Second Life (often considered a game) did not pull in many punters. Only 2% of Canadians polled said they had sufficient interest in Second Life to create an avatar there. Internet users in Quebec still lag slightly behind other Canadians in their use of gaming sites. The rate of increase in these visits is slower, too. According to the Ipsos Canadian Inter@ctive Reid Report, the number of unique English-speaking Canadian visitors to gaming sites rose 38% between July 2005 and July 2006, and the number of French-speaking visitors rose 33%. Ipsos Reid does note that the home PC has not yet taken over as the primary device used by Canadians who play games. Even though 83% of respondents said that they own a home computer, 38% of adults also own a game console and 23% have a handheld game system. There are several reasons why consoles and handhelds remain an important force in the market. One is that Sonys PlayStation 2 is still a bestseller in Canada. Second, several new-generation consoles, such as the PlayStation 3 and the Nintendo Wii, have done well since their introduction in November 2006. Third, Canada is home to many successful firms developing games for consoles and consumer awareness is high. Further, the Canadian government announced in November 2006 that it would provide investment for locally produced video games destined for consoles, as well as continuing tax incentives that benefit game developers. These and other factors should keep console and video game sales strong through 2007 and the early part of 2008. The market for console and handheld games will grow at a compound annual growth rate of 5.4% between 2006 and 2011, according to projections by PricewaterhouseCoopers (PwC).
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E-Commerce
Statistics Canada has reported that total Canadian online sales rose to almost C$50 billion (US$44.25 billion) in 2006, posting a fifth consecutive year of double-digit growth. Internet retail sales hit C$4.7 billion (US$4.16 billion), almost twice the level recorded for 2005. In the US, by comparison, total online consumer spending including travel was US$170.8 billion (C$193.0 billion) in 2006, according to comScore. Government figures indicate that more than 15% of Canadian retail companies sold online last year, compared to 10% in 2005. But even online retail sales constituted barely 1% of total retail sales in the country in 2006. Overall, the number of Canadian firms selling online was about 8%, up just 1% on 2005. Clearly the majority of Canadian companies are not yet involved in e-commerce, and more than two-thirds of all e-commerce remains B2B. Thus there is still a long way to go before Canadian consumers can enjoy the level of online access to retail goods and services that Internet users in many other countries have. Within the limits of the current online marketplace, Canadas Internet users are enthusiastic shoppers. eMarketer calculates that almost 70% of Canadian Internet users 18 and older are shopping, if not buying, online. eMarketer estimates that the numbers of online shoppers and buyers in Canada will both continue to rise in the next two years. More of the people who research purchases online will also become online buyers.
Online Shoppers in Canada, 2005-2009 (millions and % of Internet users)
2005 2006 2007 2008 2009 Note: ages 18+ Source: eMarketer, December 2006
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Online Buyers in Canada, 2005-2009 (millions and % of Internet users)


2005 2006 2007 2008 2009 Note: ages 18+ Source: eMarketer, December 2006
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8.1 (48.3%) 9.3 (53.3%) 10.4 (56.2%) 11.3 (59.5%) 12.3 (63.0%)

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It is worth noting that 65.6% of Internet users 18 and older in the US were online buyers in 2006 compared with 53.3% in Canada. In the US, average annual spending per online buyer was US$972 (C$1,098) last year, compared with US$891 (C$1,007) in Canada. But eMarkerter projects that the average amount spent online by Canadian buyers is set to pass US$1,000 (C$1,090) this year, a rise of almost 14% in one year.
Average Annual Amount Spent Online* by Online Buyers in Canada Ages 18+, 2005-2009 (% increase** vs. prior year)
2005 2006 2007 2008 2009 $766 $891 (8.7%) $1,014 (13.8%) $1,144 (12.8%) $1,295 (11.2%)

Note: Converted to US$ at average annual exchange rates (projected for future years); *includes online travel, event ticket and digital download sales; **based on C$ figure Source: eMarketer, December 2006
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10.8 (64.4%) 11.9 (67.9%) 12.7 (69.2%) 13.6 (71.4%) 14.6 (74.4%)

The recent J.C. Williams Group poll of 1,500 online buyers and 500 Internet users who buy only offline produced similar findings. These data suggest that the average spend per online buyer in Canada reached C$454 (US$409) in the six months to April 2007 (C$7 more than a year earlier). Also, items in more categories were bought more often than in the same period the year before.

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What Canadians Do Online

In the 18 categories measured by the study, purchase incidence rose between 1% and 5% on the same period the previous year. Music and DVDs, consumer electronics, and toys and video games registered the greatest gains.
Products Purchased Online by Internet Users in Canada, 2006 & 2007 (% of respondents)
Books/magazines 33% 34% Music/DVD/videos 27% 32% Clothing and accessories 21% 23% Consumer electronics 16% 21% Toys, video games 16% 20% Health and beauty items 15% 17% 2006 2007

Of the study respondents, more Canadians than Americans could be described as everyday pros. Where other user segments might go online chiefly to have fun or stay connected, everyday pros like to use the Web to get things done. They are also more affluent than other user segments. At this point, however, the two national populations diverge. In the US, everyday pros do more shopping and buying online than other users, but that is not the case in Canada. The affluence of Canadas everyday pros does not seem to correlate with more online shopping or spending. National traits and habits aside, Canadian e-commerce should rise markedly in the next few years. One reason is that more retailersinside and outside the countryare beginning to offer Canadians real choice and value and developing sites and shipping options to suit. American-based retailers in particular are taking steps to tailor their offerings more to the needs and preferences of Canadian customers, something many did not do before. The fact that a number of these retailers see demand slowing at home is a real incentive, too. Nonetheless, there are still segments of the Canadian population less inclined to buy online. Older Internet users are definitely more reluctant, with 45% of those 55 and older saying they are very concerned about online security and unwilling to use their credit cards on the Internet, claim researchers from Ipsos Reid. About 37% of those 18 to 54 expressed the same security worries. Residents of Quebec are another hesitant group. E-commerce has never taken off in the French-speaking province to the extent it has elsewhere in Canada. It was much more popular in 2006 than in 2001 but did not pick up much during 2006 itself, according to CEFRIO. In October 2006, just 21.2% of Quebecers said they had bought something online in the previous month. Here, too, fear of security flaws and fraud is a big part of the problem, CEFRIO found. In 2006, an average 41.4% of Internet users in Quebec thought paying online was very or sufficiently secure. This percentage rose to 46.1% in October last year, but that leaves at least 53% who thought that using their credit cards online was unsafe. Even as the Internet becomes more familiar and the online buying habit grows in other parts of Canada, Quebec does not seem to be following the trend.

Source: Visa and Yahoo! Canada, "2007 Canadian E-commerce and Social Networking Summary conducted by J.C. Williams Group, July 3, 2007
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These rates of change are hardly meteoric, however. It is hard to find any study of online shopping behavior in which Canadas Internet users do not consistently score lower than their US neighbors. For example, eMarketers comparative estimates of US and Canadian online buyer numbers, cited above, are close to MediaScreens figures. According to these data, 64% of US adult broadband users age 18 and older say they regularly shop for products or services in a typical month, and just 53% of Canadians do so. (The gap may even be greater as data for Canada were collected in April 2007 and data for the US were collected in August 2006.) Although almost one-quarter (23%) of US online buyers use an ewallet or passport payment service, only 16% of Canadians said they use this option. Media-Screen also found less predictable differences between Canadians and Americans where online shopping was concerned.

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What Canadians Do Online

It is more common for Quebec residents to research a product online and then buy it offline. But this behavior is not changing much either, apparently. In 2005, 28% of adult Internet users in Quebec were researching online before buying elsewhere, according to CEFRIO. In 2006, the proportion had risen to just 28.3%. It may be that Quebecers are not finding sites that offer satisfactory product information or comparison-shopping. Or perhaps the number of sites in Frenchstill preferred by most Quebec residentsis disappointing. Retailers and other companies that target Quebecers with useful product information and comparison facilities could seize a significant advantage in this part of the country.
Adult Internet Users in Quebec Who Have Researched or Bought Products Online, January, April & July 2006 (% of respondents)
January 2006 14.4% 28.6% April 2006 12.9% 30.4% July 2006 12.3% 25.9% Bought online Researched products online

A study conducted by J.C. Williams for Visa and Yahoo! Canada also produced firm evidence that Internet users who shop online are far more likely than non-buyers to write a blog entry or an online product review, for example.
Select Social Networking Activites of Online Buyers vs. Internet Users* in Canada, April 2007 (% of respondents in each group)
Written a blog 35% 21% Written an online product review 29% 9% Posted online video content 19% 8% Online buyers (n=1,500) Internet users (n=500)

Note: *who do not make purchases online Source: Visa and Yahoo! Canada, "2007 Canadian E-commerce and Social Networking Summary conducted by J.C. Williams Group as cited in press release, July 3, 2007
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Source: Centre francophone d'informatisation des organizations (CEFRIO), "NETendances 2006," conducted by CEFRIO and Lger Marketing, February 2007
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Both online and offline buyers share some dislikes. More than twothirds (68%) of the online buyers polled by J.C. Williams said they were concerned about their privacy (this rose to 74% among offline buyers). Almost as many (63% of those buying online) said they do not like receiving unwanted marketing messages. Fewer respondents (57%) among the offline buyers complained about this, possibly because they do not receive as many of these messages.

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The J.C. Williams study asked respondents throughout Canada who did not buy online why they avoided doing so. More than one-third (37%) said they had no need to buy on the Internet (up from 36% in April 2006). Just less than one-half (48%) said they worried about using their credit card online (up from 42% a year earlier), and 44% (8% more than in 2006) said they did not want their private information to be accessible on the Web. (The researchers speculated that recent news of online data breaches had helped to push up levels of distrust among their sample.) Just as active Canadian bloggers appear more engaged in all kinds of online activities than non-bloggers, the same is true of online buyers, according to J.C. Williams. Among online buyers, 87% said they had read consumer or product reviews online, compared with 68% of offline buyers. More than 94% of online buyers had watched video clips online versus 83% of offline buyers. The same percentage had viewed pictures on the Internet, compared to 86% of shoppers who did not buy online.

Mobile Internet Users


Government statistics suggest that more than 55% of Canadians had a mobile phone at the end of 2006.
Mobile Phone Subscribers and Penetration in Canada, Q4 2005 & Q4 2006 (millions, % of population and % increase vs. prior year)
Q4 2005 Subscribers Penetration
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Q4 2006 18.04 55.1%

% change 8.4% 7.2%


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16.64 51.4%

Source: Statistics Canada as cited in press release, May 14, 2007

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What Canadians Do Online

Data from BBM Analytics CyberTRENDS report put the 2006 end-of-year number of subscribers slightly higher at 58%. The same study provided an overview of how many Canadians owned other mobile devices as well, and what they used the gadgets for.
Mobile Device Usage in Canada, by Gender, December 2006 (% of respondents)
Male Cellphones MP3 player Webcam iPod PDA Blackberry 53% 62% 64% 58% 75% 64% Female 47% 38% 36% 42% 25% 36% All respondents 58% 14% 9% 7% 5% 4%

Neither the government nor the commercial community will find this situation viable in the long term. Instead, both government and commercial entities will want to reach all citizens with efficient digital channels. Even in towns and cities, networks will need regular upgrading to meet the increasing challenge of mobile traffic. Pricing is the other big issue facing the government and providers of mobile services in Canada. Historically, Canadian mobile operators have prioritized voice over data traffic. Current networks are slow when it comes to data transfer, and operators typically charge subscribers by the amount of data they download or upload, which makes services prohibitively expensive. Several industry observers have commented on this state of affairs, pointing out that Canada, often a leader in technology and civic responsibility, is falling behind the rest of the world in catering for mobile data. In the US and most Western European countries, operators generally offer reasonably priced plans that include unlimited data downloads via mobile. AT&T, the sole service provider for the Apple iPhone, supplies unlimited data transfers for US$20 (C$21.80) per month, for example. Prices of monthly data plans in Canada are higher even than those in some Eastern European, Asian and African nations.
Cheapest Rates for Mobile Data Transfer* among Mobile Operators in Canada As Compared with Rates of Operators in Other Countries, April 2007
Vodafone (New Zealand) T-Mobile (US) Sprint (US) $58 $69 $74 $83 $102 $41

% of cellphone, Blackberry or PDA owners who used these devices to: Take pictures Record video Obtain news or weather Obtain sports scores Watch television 58% 73% 78% 87% 59% 42% 27% 22% 13% 41% 23% 8% 6% 4% 2%

Note: ages 16+ Source: BBM Analytics, "CyberTRENDS," December 2006 as cited by Canadian Radio-television and Telecommunications Commission (CRTC), "Broadcasting Policy Monitoring Report 2007," July 2007
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Of course most of these gadgets and activities do not require Internet access. Also, the number of Canadians accessing the Internet via a cell phone or PDA has lagged substantially behind the level of overall mobile phone use. Mobile Internet penetration reached 21% of cell phone owners in 2006, according to the Ipsos Canadian Inter@ctive Reid Report. In 2003, according to the same source, only one in 10 Canadians accessed the Internet with a mobile device. The CRTC estimates far greater penetration, saying that 58% of Canadians used a cell phone to access the Internet in 2006. But because estimates from other sources are so much lower, it seems likely that the CRTC is calculating potential rather than actual use. This is based on the Internet readiness of modern mobile phones, not the way they are used from day to day. The fact is that Canada suffers from some serious handicaps in the race to get its residents online via mobile. For one, mobile operators generally seem to have little money to invest in network expansion. Coverage is relatively good in urban environments and other areas where population density is high. But enormous tracts of the country are underdeveloped in network terms, which inhibits further uptake of mobile services and disadvantages Canadians in more remote areas.

Terracom (Rwanda) Telsra (Australia) Vodafone (UK) Telus (Canada) $375 Bell (Canada) FIDO (Canada) Rogers (Canada)

$850 $1,600 $1,600

Note: in US$; *cost to transfer 500MB per month or 100 minutes at 700kB/sec Source: ThomasPurves.com as cited in press release, April 9, 2007
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Now that the Internet is moving into the mobile channel, this business model is not sustainable or popular. Operators stand accused of fostering an uncompetitive market that does not meet the needs of Canadian businesses or consumers.

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What Canadians Do Online

Mobile device manufacturers are certainly looking for change. A representative for RIM, which makes the BlackBerry, commented that the firm might sell eight or nine times more devices if Canadian mobile data prices were comparable to fees elsewhere. Mobile phone makers are also frustrated by a system that discourages consumers from buying Internet-enabled, next-generation phones. Consumers also want to see a different approach. High data prices mean Canadians hardly use the mobile Internet and cannot take advantage of new services available elsewhere. If not corrected, development of the mobile Internet market in Canada will be undermined, leaving the country and its consumers at a significant disadvantage. At the same time, Canadians do not seem willing to pay any premium for the mobile broadband that would make robust mobile services possible. Overall, consumers polled in 2006 said that they would choose to pay less, rather than replace their fixed broadband with mobile.
Average Monthly Internet Access Spending and Premium Amount that Internet Users in Select Countries Worldwide Would Pay for Mobile Broadband Services, 2006
Current Internet spending UK US Australia Spain China Canada France Taiwan Italy Germany South Korea Japan $33.0 $31.2 $28.4 $37.9 $8.3 $28.7 $29.6 $20.3 $40.1 $32.4 $30.3 $32.7 Premium would pay for mobile broadband $9.1 $1.9 $1.3 $0.9 $0.2 -$0.7 -$3.0 -$3.5 -$6.8 -$7.6 -$9.7 -$11.5

Mobile Online Activities


In these circumstances, it is not surprising that Canadians have been slower than consumers in many other developed countries to use their mobiles for multimedia, such as video capture. Telephia has reported that just 4% of Canadians took video pictures with their phones in 2006.
Adoption Rate* for Mobile Phone Video Capture in the US, Canada and Select Countries in Western Europe, 2006
Spain Italy UK Sweden France Germany Canada US 3% 4% 9% 9% 10% 12% 15% 14%

Note: *percent of mobile phone users who use their mobile phones to take videos Source: Telephia as cited in press release, October 12, 2006
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An April 2007 survey of professionals age 30 to 54 by Palm Canada and Lger Marketing did spot some encouraging developments. Canadians in this age group who have mobile gadgets are gradually doing more with them. Much of this mobile activity is work-related. The study found that 76% of respondents checked e-mail outside their working hours, and 60% felt they had joined the always-on brigade. A similar number owned up to checking e-mail or voicemail on their devices before going to bed, and 37% admitted they had used their mobile to do work while at a social or family event. More than one-quarter confessed to answering e-mails during dinner. But about 60% of these consumers are also turning to a phone, PDA or other mobile device for entertainment, in the broadest sense of the word. One in five said they use a smartphone or another multifunctional device. More than 40% listened to MP3 music tracks, 33% listened to the radio and 19% watched videos. One in 10 visited social networking sites via mobile. And 73% said they thought e-mailing on mobile devices could be entertainment as well as work. The Telecommunications Industry Association (TIA) and Wilkofsky Gruen Associates have also published figures suggesting that consumer use of mobile data is finally taking off.

Note: All figures are in US$; negative figures represent consumers who are not willing to pay a premium and would in fact choose to pay less to replace their fixed broadband with mobile Source: Parks Associates, "Mobile Broadband Wireless: Path toward 4G," April 2007
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What Canadians Do Online

Conclusion
Canada has a long-standing commitment to the Internet and broadband in particular. The online population continues to rise in substantial increments, and robust broadband infrastructure will bring high-speed services to almost all citizens within a few years.
Most Canadians are eager participants in the online world and keen to take advantage of its benefits. The remarkable growth of blogging and social networking by Canadians is just one sign of their enthusiasm. The high level of participation in online banking and comparison-shopping is another. Some segments of the population, such as those 55 and older and French-speaking residents, have historically been less active online. With older citizens, problems of access and incentive continue, especially as people can become less confident with age and may resist the challenges of mastering new technology. The Canadian government continues its efforts to bring this group online. In Quebec there is growing awareness that the Internet is here to stay and should be made to work for individuals and communities. In many respects, the Web may even be a catalyst for positive changes that no other influence could bring about.
$167

For example, these organizations concluded that Canadian revenue from mobile video games will grow 44% in 2007, to reach US$167 million (CS$182 million). Similarly, revenue from mobile music downloads is expected to rise from US$79 million (C$86 million) in 2006 to $111 million (C$121 million) in 2007, a gain of 41% in US dollar terms.
Mobile Game and Music Revenues in Canada, 2002-2010 (millions)
2002 $5 $1 2003 $14 $4 2004 $27 $17 2005 $72 $52 2006 $116 $79 2007 $111 2008 $214 $144 2009 $249 $186 2010 $288 $234 Mobile video games Mobile music

There are temporary hurdles to clear in the areas of e-commerce and mobile Internet access. Canadian e-commerce, now on a healthy upward path, will continue to expand and deliver more of what consumers want. This in turn will make online channels even more attractive to advertisers. Mobile Internet provision is a harder nut to crack. Mobile operators are being forced to rethink their business models and may need to forgo short-term profit in favor of long-term potential. All in all, Canada looks set to continue in its role as a world leader in Internet provision and usage.

Note: US$ Source: Telecommunications Industry Association (TIA), Wilkofsky Gruen Associates, "2007 Telecommunications Market Review and Forecast," January 2007
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Related Information and Links


Related Links Statistics Canada
http://www.statcan.ca

About eMarketer
eMarketer is "The First Place to Look" for market research and trend analysis on Internet, e-business, online marketing, media and emerging technologies. eMarketer aggregates and analyzes information from over 2,800 sources, and brings it together in analyst reports, daily research articles and the most comprehensive database of e-business and online marketing statistics in the world.

comScore Media Metrix


http://www.comscore.com

J.C. Williams Group


http://www.jcwg.com

PricewaterhouseCoopers
http://www.pwc.com

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