Make no mistake: Canada is a digital backwater

05 Mar

So, Canadians spend more time online than anyone else, huh? That’s what the latest report from analysis firm ComScore says.

Now, before anyone misinterprets the results and proclaims Canadians to be digerati – and Canada to be an online leader – there are many other facts to consider that suggest the contrary.

Regardless of the fact that ComScore looks at only 11 countries (a limited sample that makes it hard to declare anyone as “best in the world”), it’s important to understand why Canadians do spend so much time online. The simple explanation is: they were there before most other people.

When the world was moving from dial-up to broadband more than a decade ago, both Canada and the United States were in the lucky position of having both cable and phone providers competing to sign up customers. Since internet access represented a new gold mine for these companies, the competition was fierce, prices were low and the services kept getting better.

Cable infrastructure didn’t (and doesn’t) exist in much of the rest of the world, so governments and regulators had to figure out how to convince, cajole or force their phone companies to provide good broadband and reasonable prices. Some are still trying to do that.

So, while most of the rest of the planet was stuck in the kilobit dark ages, North Americans surfed around on their super high-speed (at the time) two- and three-megabit connections. But things changed over the next decade.

With all the easy-to-reach customers – known as “low-hanging fruit” – signed up, that early competition tailed off as large internet providers moved from the acquisition phase to monetization, which is fancy business speak for milking people. The ISPs had to recoup all that money spent building networks and advertising services, so prices started to creep upward. (Remember when you could get the fastest speeds for $25? Ah, the halcyon days of broadband…)

In some countries, ISPs haven’t yet got to this stage – sometimes because regulators haven’t let them – and customer acquisition is still the name of the game. That’s why ridiculously cheap broadband can be had in places such as the United Kingdom.

The larger effect over the decade was that Canada and the United States leveled off while other countries caught up and surpassed them. Both countries used to top OECD measures of broadband-connected citizens, but they’ve been sliding steadily to the point where Canada is clinging to the top 10, while the U.S. – the country that ironically invented the internet – is mired in the middle of the pack.

This early adoption thus hooked North Americans on the internet early. And hooked is the right word – as anyone who has ever used it can obviously attest to, once you’re online you never go back, which explains why Canadians and Americans are such rabid users of everything from YouTube to Facebook to Twitter. North Americans are the veritable crack addicts of the internet world – they’ll use it no matter how much it costs them.

That’s about all online Canadians have in common with Americans, who are true digerati and internet leaders. Besides their similarly high usage, Americans have also created virtually every large internet business, from Google to Amazon to eBay to Netflix, which raises the question: where are the Canadian equivalents?

Many have tried to answer that conundrum and there are several theories. Some small businesses – the lifeblood of Canada – have in fact argued that the high cost of telecommunications services have been a barrier to online expansion., for example, told regulators a few years ago that it was cheaper to distribute movies on DVDs through the mail than it was to do so electronically.

There’s also the suggestion that Canadians’ are naturally more conservative and risk averse, which keeps their businesses from becoming digital leaders. As Google Canada’s country director Chris O’Neill said a few years ago, business usage of the internet is out of whack with that of individuals: “I’d like to see retailers think more in (new) ways, rather than fearing and trying to avoid the experiences and the behaviours that consumers aren’t just experimenting with, (but) are becoming mainstream.”

Heading back to the consumption side again, there’s also the familiar song that Canadians hear whenever a hot new gadget or internet service debuts – “It’s available everywhere… but not in Canada!” In situations that involve digital content, such as with Hulu or the superior selections available through iTunes and Netflix south of the border, it’s usually a case of tangled licensing rights. And who’s in the middle of those? You guessed it – Canadian broadcasters, who are now also the country’s big ISPs.

What else is there? Oh yes… there is the dearth of venture capital, an inability to convert innovation into commercialization, repeated examples of companies selling out too soon (cough Kobo cough) and the fact that Canada is the only G8 country besides Russia that does not yet have some sort of digital economy strategy (Russians spent this past weekend protesting electoral corruption – what’s Canada’s excuse?)

No less than the highest authority in the land, before he actually was so, said it best a few years ago: “Those societies that have a better understanding of the digital economy will prosper very quickly and those that don’t will not. We’ve had a failure of imagination there,” said David Johnston while he was still president of the University of Waterloo. Today, he serves as the Queen’s representative and, as the Governor General, is technically the boss of Canada.

And while we’re on the topic of the government, how about the international shame Prime Minister Stephen Harper has brought the country by muzzling scientists? As an editorial in Nature, one of the world’s leading scientific journals, put it:

Policy directives and e-mails obtained from the government through freedom of information reveal a confused and Byzantine approach to the press, prioritizing message control and showing little understanding of the importance of the free flow of scientific knowledge.

Are Canadians smart and innovative? Absolutely – and the examples are too numerous to list, although the country’s world-beating video-game industry is a notable one. Are they also heavy users of the internet? By all measures, that also seems to be the case.

But when all of the above is taken together, it seems clear that Canada is institutionally a technological backwater. In other words, who really cares how many YouTube videos Canadians watch or how much time they spend on Facebook?

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Posted by on March 5, 2012 in government, internet


21 responses to “Make no mistake: Canada is a digital backwater

  1. Absnerdity

    March 5, 2012 at 12:11 am

    “Russians spent this past weekend protesting electoral corruption – what’s Canada’s excuse?”

    Canadians should have been doing the same.

    • Chris C.

      March 5, 2012 at 1:49 am


    • Hub

      March 5, 2012 at 3:10 pm

      I was about to suggest that too.

    • schultzter

      March 6, 2012 at 12:31 pm

      That’s exactly what I thought!

    • CS

      March 6, 2012 at 6:37 pm

      So true

  2. Marc Venot

    March 5, 2012 at 1:03 am

    I can provide an example of blocking (or maybe worse, hang up):
    the providing at my building of the telephone books (directory) which writing went smaller and smaller, now not usable without a magnifier.
    It maybe also taxes levied.

  3. Shane Schick

    March 5, 2012 at 2:01 am

    Good (but slightly depressing) post, Pete. Most people just reported the surface information on this story.

    • petenowak2000

      March 5, 2012 at 2:24 am

      Thanks Shane. The only part that depresses me is how little interest/attention the government is paying to tech/digital issues.

      • Hub

        March 5, 2012 at 3:13 pm

        Because they have no interest in it. They are here to answer to their financial bakers, ie the oil industry, the telco and content monopolies, and not to answer to Canadian. The Harper Government on the economy is bad, unlike they claim. They have absolutely no vision beside their cronyism.

        Digital economy is not the only thing. There is not nationwide transport/transit strategy either.

  4. Rui

    March 5, 2012 at 9:11 am

    gov’t paying little interest to tech? More like shutting it down in the name of control with Bill C-11 et al being a case in point.

  5. Simon

    March 5, 2012 at 11:52 am

    I’m most frustrated by the incredibly slow progress being made by Canadian retailers online. Can’t help but wonder if Sears’ fortunes might have been reversed by an early and intense focus on building an online-retail powerhouse. They did it once with the Sears catalog… shouldn’t the online version have been even easier to achieve?

    • petenowak2000

      March 5, 2012 at 11:55 am

      Great analogy!

    • Hub

      March 5, 2012 at 3:15 pm

      Yep, and then Chapters. My experience shopping with them has been worse than Amazon. Less choice, higher prices and worse, less reliability.

      (I believe Amazon is also prevented from going full throttle because of the law, ie the Government)

  6. Phil Mendelsohn

    March 6, 2012 at 10:24 am

    So if I have this straight, Canada has a high rate of internet connectedness, but according to Vic Toews and the Conservatives, that’s because they’re all child pornography buffs.

    • JayDar

      March 6, 2012 at 11:12 am

      That sounds about right. Don’t you just love the arbitrary methods of our government?

  7. James Duncan

    March 6, 2012 at 11:27 am

    I also feel that digital online retailing has been hampered by a general lack of interest by Canada Post and cheap ground shipping.

    The is understandable since the country is so large – but as opposed to the US – where one can get something delivered cheaply and quickly – online orders in Canada can take considerably longer.

    I do feel the lack of a history of catalogue mail order in Canada never allowed this infrastructure to be established.

    Plus my general thoughts that Canadians just love to pride themselves on adoption – rather than support – which is much less glamourous and much more tedious.

  8. winterseeker

    March 6, 2012 at 11:32 am

    Canadians are afraid to speak out en masse; they fear decisive change, restarting a whole new policy or strategy at the risk of it failing and virtually never hold the government accountable…I am a Canadian and am ashamed of this, we really need to overcome our great size as a country and band together coast to coast to coast if we wish to have – especially for those future and most vulnerable people – a better future and more sustainable way of living.

  9. B

    March 6, 2012 at 12:12 pm

    However wrote this is talking out of their ass and not doing their due diligence… for example:

    “…Americans have also created virtually every large internet business, from Google to Amazon to eBay to Netflix, which raises the question: where are the Canadian equivalents?”

    Google came from Canada!

    I stopped reading there!

  10. A

    March 6, 2012 at 12:51 pm ? Originated at Stanford… American-funded… speaking of due diligence…

    good article.

  11. Phil (@Stringfellow573)

    March 12, 2012 at 5:23 am

    Canadians like to take it easy and sit back to observe first. However, we got to get it in second gear and take action. Stop oppressing the original peoples of this land we stole from. The might of the right is dead in the head. Don’t send buckets to people dying of thirst. Get off your fat ass and out of the public funded cafeteria. Cooperate or face the consequences. A Republic is much better than a Democracy. Greeks researched that 3,000 years ago. Why did George Washington agree to a Republic? The safeguards. Every Canadian deserves to have potable water at their command just like Ottawa. Stop the suicides because of bad, thoughtless, hateful, disregard by Ottawa.


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