Thank you, Mr. Chair. I'm pleased to be here.
The CWTA represents wireless service providers as well as companies that develop and produce products and services for the industry, including handset and equipment manufacturers, content and application creators, and business-to-business service providers.
My remarks this evening will focus primarily on the pre-budget consultation question that asks: what infrastructure needs can best help grow the economy?
Wireless technology contributes to virtually every aspect of the Canadian economy, as wireless devices are now indispensable business and consumer tools, and Canadians' preference for wireless is clear. In only seven countries in the world does the average mobile user consume more than one gigabyte of data per month. Canada is one of those countries, and Canadians currently rank as the fourth-highest consumers of wireless data in the world, at more than 1.5 gigs per month.
The cumulative effect of more Canadians using smart phones and connected devices to do more is a massive growth in overall data usage. The latest projections indicate that Canadian mobile data traffic will increase 600% by the year 2020. No other sector of the economy must consistently meet levels of demand growth similar to those experienced by the wireless industry every year.
Demand is met by significant infrastructure investment. The Canadian wireless industry has invested more than $2.5 billion in capital expenditures each year since 2009. The doubling of total data usage every two years keeps the industry in a perpetual investment cycle. The industry has also invested an additional $8 billion since 2014 to acquire the spectrum needed to expand and enhance wireless networks to meet current and projected traffic volumes. As a result, the government currently records more than $830 million per year in spectrum auction revenue. These investments create jobs directly related to network expansion and enhancement and the ongoing delivery of advanced wireless services from Canada's service providers.
In 2014 Canada's wireless industry generated 134,000 full-time jobs and an overall economic benefit of $23.5 billion. Canada's service providers will continue to make record investments to meet the exploding demand for data use and ensure a consistent level of service for all Canadians.
Strategic government policies can facilitate additional investment in wireless network infrastructure and support innovation and economic development across Canada. To further enable investment in wireless network infrastructure, CWTA submits that budget 2016 include an accelerated capital cost allowance from current rates to 50% for classes of depreciable assets that relate to telecom network equipment, including broadband networks. These classes include 8, 42 and 46.
Such a change to the income tax system would return significant benefits to Canadians and the national economy. It is projected that increasing the CCA rate for class 46 to 50% would increase telecom investment by $122 million per year in the near term. If the rate is increased permanently to 50%, the increased investment would total as much as $225 million per year, would create an additional 1,660 full-time jobs, and would add $163 million to the GDP.
CWTA has also consistently submitted that additional capital would be available for infrastructure investment if spectrum licence fees, which are currently 37 times greater than those paid by American service providers on a per-subscriber basis, were reduced.
Finally, CWTA submits that the government review the scientific research and experimental development program with the goal of reinstituting competitive tax credits that were reduced or eliminated through the 2012 federal budget.
Wireless technology innovation and R and D is evolving rapidly as companies compete to pioneer 5G network technology and move the digital economy forward. Much of this innovation will happen in Canada if it provides a competitive environment for facilitating telecommunications innovation and investment.
Wireless network infrastructure expansion and enhancement deliver unmatched commercial and social benefits to Canadians, including job creation, contributing to the GDP, and enabling the mobile and virtual workforce, thereby removing geographical barriers for rural businesses and communities to participate fully in the Canadian economy.
Wireless service also connects all Canadians, allowing for collective participation in society and contributing to our shared national identity.
The government, therefore, can directly contribute to innovation and economic development across Canada by facilitating additional investment in wireless network infrastructure.
Thank you.
I'm happy to answer any questions you may have.