BCG’s Centre for Canada’s Future Releases New Insights on Canada’s Digital Infrastructure

Findings Highlight the Need for Policymakers to Balance Affordability with Quality, Availability, Investment, and Innovation

TORONTO—BCG’s Centre for Canada’s Future launched a new report today that examines the importance of digital infrastructure investment to Canada’s economic growth. In the Balance: Future-Proofing Canada’s Digital Infrastructure to Unlock Benefits for All found that policymakers must balance affordability with the need for quality, availability, investment, and innovation to enable the best outcome for Canada’s digital infrastructure.

The report estimates that the benefits of the coming digital revolution could add CAN$200 billion or more per year to Canada’s GDP by 2040. That equates to roughly CAN$4,500 per Canadian. New consumer services, such as remote health care and driverless vehicles will improve quality of life and economic opportunities for Canadians. An advanced digital infrastructure will also help Canadian businesses generate massive productivity improvements, accelerate Industry 4.0, and allow innovators to develop and sell new solutions globally. These advances will require significant investment in Canada’s wireless networks and wireline broadband systems. Policymakers will play a critical role in incentivizing private investment.

“The digital revolution is expected to bring significant benefits to Canadian citizens and businesses, yet we can only realize this future with world-class digital infrastructure,” says Vadim Gouterman, a BCG managing director and partner based in Toronto and a coauthor of the report. “Disruptive regulation-driven downward pressure on prices could lead to an investment gap of up to CAN$15 billion over the next five years, which could damage digital innovation in Canada.”

While affordability is an important policy objective, the telecommunications services pricing debate is often portrayed as a binary choice between low costs for consumers and high profits for industry. Reality is more complicated. Quick-win policies to lower prices in the short term have the potential to be damaging to long-term investment.

The research suggests that policymakers need to be careful about moving too aggressively.

According to an assessment of global peers, policy interventions singularly focused on affordability have had significant long-term negative impacts on network investment and quality. The report finds that Canada’s regulatory environment has historically fostered higher investment in digital infrastructure in Canada relative to peers. This has resulted in strong quality and availability in mobile and wireline networks.

“The case studies on how peer countries have tackled affordability challenges are particularly interesting,” says Lawrence Kuo, a BCG managing director and partner based in Toronto and a coauthor of the report. “We found that short-term affordability wins often come at the detriment of infrastructure investment levels, which impact consumers in the medium and long terms. While these policies can be easy to implement, it can be quite challenging to undo their consequences.”

The report recommends that Canada take a measured approach that addresses important affordability concerns while continuing to encourage the private investment needed to unlock the benefits of digital innovation for citizens, businesses, and governments.

To read the report and learn more about BCG’s Centre for Canada’s Future, visit here.

To arrange an interview with one of the authors, please contact Eric Gregoire at +1 617 850 3783 or gregoire.eric@bcg.com

About BCG’s Centre for Canada’s Future

BCG established the Centre for Canada’s Future in 2017 to contribute to the national dialogue and spark action on key economic issues. The Centre’s mission is to be a catalyst for moving Canada forward, leveraging BCG’s capabilities in collaboration with Canadian leaders from across the private and public sectors. The Centre is a non-commercial arm of the firm in Canada.

About Boston Consulting Group

Boston Consulting Group partners with leaders in business and society to tackle their most important challenges and capture their greatest opportunities. BCG was the pioneer in business strategy when it was founded in 1963. Today, we help clients with total transformation—inspiring complex change, enabling organizations to grow, building competitive advantage, and driving bottom-line impact.

To succeed, organizations must blend digital and human capabilities. Our diverse, global teams bring deep industry and functional expertise and a range of perspectives to spark change. BCG delivers solutions through leading-edge management consulting along with technology and design, corporate and digital ventures—and business purpose. We work in a uniquely collaborative model across the firm and throughout all levels of the client organization, generating results that allow our clients to thrive.

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