Canada Forces A La Carte Rules On Cable Industry, Bell Pouts By Refusing To Show Regulator On Television

from the flexible-pricing-packages-are-the-devil dept

For years, the United States has had an on again off again love affair with the idea of a la carte television — or the ability to purchase only the channels you want to watch. After a ten-year debate, “common wisdom” appears to have largely decided against the idea, the public buying into the cable industry’s argument that selling channels individually would: a) kill niche television channels and b) drive up the cost of cable. Of course, the cost of cable TV is climbing skyward anyway, and the Internet has become the perfect place for those niche channels to flee to. Frankly, I’ve always wondered why there’s any hesitation when it comes to blowing up a sector in such dire need of meaningful disruption.

Thankfully, Canada has decided to go ahead and play the guinea pig for us in terms of exploring what an a la carte future would look like. After holding fifteen months of consumer hearings and waiting for years unsuccessfully for more flexible pricing options, Canadian regulatory agency the CRTC has decided to force the issue. The CRTC this week issued a ruling requiring not only that Canadian cable operators provide a discount $25 entry level core TV tier, but that above that, users are allowed to pick channels a la carte. In a statement, the CRTC explained it this way:

“Canadians, who choose to do so, will be able to supplement the entry-level television service by buying individual channels that will be available either on a pick-and-pay basis or through small, reasonably priced packages. If they so choose, they will have the option of selecting theme-based packages?such as sports, lifestyle or comedy?offered by their service providers.

By December 2016, Canadians will be able to subscribe to channels on a pick-and-pay basis, as well as in small packages. In addition, Canadians will have the choice of keeping their current television services without making any changes, if these continue to meet their needs and budgets.”

Of course, the ruling is being met with all manner of hand-wringing from opponents of a la carte and the cable industry about how this is going to “destroy television as we know it.” Canadian media has been flooded all week with stories about how this will only drive up costs, confuse consumers, harm the TV industry, result in cats and dogs sleeping together, and generally just wreak havoc on the TV ecosystem. Except, Canadian law professor Michael Geist points out that if you look past this breathy doomsday analysis in the press and actually ask real analysts, they point out the idea will probably save consumers money:

“Maher Yaghi of Desjardins Capital Markets says the changes could ?lead to a reduction of $5 to $10 in monthly [revenue per user] as customers get the option to choose the channels they want to watch and move discretionary money toward OTT (over-the-top) services such as Netflix.” Canaccord Genuity analyst Dvai Ghose suggests even bigger declines of $9 to $21 for some customers. In fact, Ghose notes that ?current entry-level TV monthly prices for the large BDUs are as follows: Bell Fibe TV $45.95, Rogers Cable $40.48, Shaw $39.90 and Videotron $38.00 and Telus $34.00 ($29.00 if bundled).? A $25 service is obviously going to result in reduced spending for those consumers.”

So yes, the claim that we should avoid a la carte TV because it will make TV bundles — already seeing hikes many times the rate of inflation — more expensive is just silly. So are the claims that forcing more flexible channel bundles on cable operators will somehow destroy quality television (“people will stop creating art if you don’t help prop up our failing business model” has long been an entertainment industry rallying cry). While there are a few folks in the media who seem to get it, there’s been a strange, overarching gushing adoration of the much-hated channel bundle in the media that’s rather inexplicable, and in no way really tied to what consumers actually want. “Be careful what you wish for,” the media logic seems to go, “or you’ll pay a lot of money for cable television!” they bizarrely warn.

Canadian cable operators obviously weren’t happy with the decision, but Canadian telco Bell apparently thought it would be a really good idea to ignore its editorial firewall, and “punish” the CRTC by pettily refusing to show CRTC chief Jean-Pierre Blais on bell-owned CTV:

“Mr. Crull became angry with the CRTC?s so-called pick-and-pay decision last week.According to sources close to the network who spoke on condition of anonymity, Mr. Crull directed senior news staff at CTV, the country?s largest private broadcaster, to exclude Mr. Blais from coverage of the story on Bell-owned networks. The ruling will give consumers more freedom to choose individual TV channels as part of cable and satellite subscriptions, but it could also affect Bell?s bottom line.”

After taking a media beating, Bell Media President Kevin Crull was forced to issue a mealy mouthed mea culpa stating he’d “learned a valuable lesson” about editorial control and really dumb decisions. Of course, Bell continues to insist the CRTC’s move will only raise rates for consumers. Because, you know, cable TV rates weren’t increasing under the current pay TV bundle model — and keeping consumer prices low is every giant cable operator’s top priority.

Meanwhile, those who’ve been claiming that a la carte TV will somehow destroy television as we know it now have an interesting petri dish to keep an eye on in Canada. Of course it’s very possible the regulations are awful or at the very least accomplish nothing. I think one fair point made is the people most attracted to this “skinny bundle” may have already moved on to cheaper streaming options. Still, the CRTC has made it clear that after fifteen months of public hearings, this is what Canadian consumers have told them they want.

With consumers facing bi-annual rate hikes for an abysmal assortment of mediocre content and awful customer service — isn’t it time to at least start experimenting? I’ve always been confused by the hand wringing over consumer interest in a la carte, as if it’s the consumer’s job to somehow ensure that cable companies continue to make the sort of bloated profits they’ve long grown used to. Their only job is to demand quality product at a reasonable price, something cable companies across North America have been failing spectacularly at for more than a decade as they grow ever larger, consolidate, and then jack up programming rates as if it’s going out of style.

Refusing to explore a la carte TV solely because we’re worried it might harm the bloated profits of an apathetic TV industry makes little to no sense to me. These companies, in the U.S. and Canada alike, had a decade to adapt and have fought pricing and package evolution (not just a la carte but any package flexibility) tooth and nail every step of the way. Why not try something different? And if the cable companies and their 300-channel bundles of reality television dreck struggle to adapt to the one-two punch of regulatory intervention and competition from Internet video? Just maybe it was time for their ungracefully-aging business model to sail quietly into the sunset instead of pouting like a chubby, petulant child.

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Comments on “Canada Forces A La Carte Rules On Cable Industry, Bell Pouts By Refusing To Show Regulator On Television”

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50 Comments
Ninja (profile) says:

This move is actually what may save cable TV from vanishing entirely. Think about it. Why pay for a pricey bundle of useless channels just to get a handful you may enjoy a little bit (if you ignore they are moving towards 30% of advertising time in goddamn PAID channels) when you can save the money and use on online ‘a la carte’ services like Netflix? “But, but… That super sports channel that I MUST have!” you sai. Well, keep being raped my friend. I’d rather go without. So far it isn’t being too hard to go without.

Thrudd (profile) says:

Football you bet. ...hur hur hur

Insert any other corporate commercialized sport of your choice.
Sports is pretty much the only thing that keeps the money flowing. Once enough of that particular content is available online you will see ad revenue plumet. But wait, two of the big three own a chunk of each of the major sports franchises in Toronto, so I guess that ain’t happening any time soon.

Dreddsnik says:

“There has grown up in the minds of certain groups in this country the notion that because a man or corporation has made a profit out of the public for a number of years, the government and the courts are charged with the duty of guaranteeing such profit in the future, even in the face of changing circumstances and contrary public interest. This strange doctrine is not supported by statute nor common law. Neither individuals nor corporations have any right to come into court and ask that the clock of history be stopped, or turned back, for their private benefit” Robert Heinlein, 1967

hobo says:

Re: Re:

“We had to struggle with the old enemies of peace – business and financial monopoly, speculation, reckless banking, class antagonism, sectionalism, war profiteering. They had begun to consider the Government of the United States as a mere appendage to their own affairs. We know now that Government by organized money is just as dangerous as Government by organized mob. Never before in all our history have these forces been so united against one candidate as they stand today. They are unanimous in their hate for me – and I welcome their hatred.” – FDR, 1936

Hans says:

Nonsense

Governments shouldn’t be dictating how products are bundled and sold. If anything, they should be working to create a competitive environment.

The real issue here is that people refuse to vote with their wallet and not pay for what they don’t want or like. Insisting the the government get involved merely makes you a dependent of the government’s “service”.

Violynne (profile) says:

This move won’t save anyone money, though the long-term is that consumers will pay more.

It’s inevitable consumers will pay higher for a la carte when then prices of those stations most in-demand will skyrocket.

Hell, basic cable can’t even get past this today without blackouts across the globe.

A la carte is a pipe dream. In fact, the only way to remove the problems facing broadcasting choice is to remove the broadcasters and let production companies distribute without the middle man.

I chuckled with you as you read this dream.

Anonymous Coward says:

Re: Re: Re: Re:

Indeed… got my Canadian news for years from This Hour Has 22 Minutes and the Air Farce, more recently followed by the Rick Mercer Report.

The few times in recent years I’ve watched an official news broadcast, they didn’t tell me anything I didn’t already know via news feeds, other than some interesting clips that turned out to be advertisements for what they were going to present as news on a LATER news broadcast.

All I have to say is that I’m glad I live in a world where there is so little that’s newsworthy that they have to resort to filling the news hour with ads for the next news hour.

Adam (profile) says:

Al-a-carte packages?

I’ve always been a fan of, but I’m not sure this is speaking directly of, a system that a fee would get you X channels for X dollars. Are they saying that I can pay $25 and pick 20 channels of my choosing? Or are they saying I can pay $25 bucks for a small package and then add-on individual ones for a fee. What kills al-a-carte in the us is that the individual pricing is ridiculous. 5 channels individually cost as much as a whole package that includes those 5 channels + 30 more. It’s a built in deterrent. I’d probably resubscribe to television if I could pick 100% of my channels for the package price.

Gracey (user link) says:

Re: Al-a-carte packages?

This is what I’m thinking too. The per channel price could be so higher, we’d be paying more than we currently are now, for less.

I’d agree that it would be great if I could pick the channels I want in the $25 entry level, and I wouldn’t even mind adding on a few additional channels if the cost were $1 or $2 per channel, but my guess is with Rogers, it will be $5 up to $15 for additional channels.

Which means I might just as well keep the package I already have, since the overall cost would be less than selecting what I really want.

While I like the idea of only paying for what I want (I’ve been screaming about that for years, since we only watch about a third of what we’re paying for), the reality of it is likely going to be a lot different than what it was meant to be if the CRTC doesn’t also put a cap on the cost of per channel sales.

crosseye says:

finally

I’ve dumped tv service for a few years and only pull a torrent for the latest walking dead until a few months ago where a small time isp offered a la carte channel selection.

I don’t want/need a bunch of garbage channels of junk I don’t bother with. I want what I want and not this corporate greed factory telling me I must get a bunch of dryer lint fluff just to justify inflating their price.

The government stepping and doing their jobs for the wellness of the public is just democracy at work. They do it all the time due to pure capitalism just doesn’t work, just as pure communism doesn’t work. It must have a framework foe the players to play in, the sandbox. Every industry has it – house builders, financial, insurance etc etc. About time broadcasters and internet is getting higher scrutiny and revised framework to do business in.

Anon says:

Bell? Bell?

I dropped bell when my satellite receiver died. Bell was based on Dish hardware, after my second episode with their customer support (returned dead receiver for credit, then chased customer support with tarcking number for the $450 credit because they “did not receive it”) When that receiver died, we switched to cable for about the same price, no weather interruptions, more options, more “a la carte”.

Plus, most important – Bell was stuck in 1990’s tech. The receiver and PVR could only do HD in one room. Their solution for “HD in every room” was multiple receivers – but then you could still only watch PVR content in one room.

let’s be realistic – the a la carte is because Conservative Prime Minister Harper is scrambling to suck up to Canadians to avoid defeat in he next election. Plus, it doesn’t hurt that Bell Media got its license because the son-in-law of former Liberal Prime Minister Chretien worked for Bell, and the government at the time re-opened the satellite TV competition to grant them a license also when they lost the initial competition. In Canada, it’s a small world at the top.

…and Netflix had to give a big “Fuck You” to the CRTC when they demanded subscription and user data – none of their business, but would most likely have found its way to the big cable companies setting up their own Netflix competitors.

ECA (profile) says:

Ok, this is getting stupid.

Lets ask some questions about this first.
WHAT are the costs to Cable?
1. they PAY to have channels.
Iv posted the rates here and other have also..Average payment is about $0.20 per channel. except for ESPN which is $5.

2. they pay for maintenance.. and this is generally the fun part. as we PAY for them to hook us up to the lines $40-120..

Now the question.
HOW much of my cable bill is NOT for channels?
There is a Box fee..

Something to ponder.
IF’ cable paid out for ONLY what customers WANTED…
how many of the channels would go away?
IF you have a BASIC PACKAGE, and it includes ESPN…they you pay $5 per month for ESPN…even if you dont watch it.
ESPN used to be an EXTRA/addon package.
You Paid for ESPN, if you wanted it..
NOW its part of the basic package, and everyone Pays, every month.

IF’ cable paid out, Only for the channels, they were watched For Each customer..Wouldnt that LOWER the payments they make to ALL the channels?
Or are they over charging us for those channels int he first place?

MATH TIME..
(1)What you are paying (divide by) Number of channels.

Now.
Look at the channel line up…ALL 200-400 channels..
Subtract all those channels you dont want, Wont watch, NEVER watch..
count the number of channels you do watch…
NOW Multiple by the payment per channel..(1)

So, you are paying about $4-5 per channel..

NOW, how much do you wish to Bet…
That that COMPLICATED (POS) Box you have in your home, KNOWS what channels you watch, and sends Data to the cable company, and the cable company Only pays for what you watch?

NOT for all the channels.
But you are Paying for ALL the channels.

ECA (profile) says:

Re: Re: Ok, this is getting stupid.

So, all the stats they get about how many people watch a certain show are random?? Or from Neilson graphics of what people SAY they are watching??

I dont really think so.

On a cable line you can measure the signal from each channel sent, to keep a clear signal. its like reading an OHM meter. you can guage the number of people watching.

Devonavar (profile) says:

Destroying Television

“…this is going to “destroy television as we know it.” … Except, Canadian law professor Michael Geist points out … the idea will probably save consumers money”

These two things are not mutually exclusive. This will save consumers money. It will also attack one of the few remaining sources of funding for Canadian production. It will almost certainly kill off all the “long tail” channels that don’t have the viewership to actually sustain production. These are specialty channels that produce content for local niches. The Conservatives have already gutted most of the public funding for CanCon; spending requirements for Broadcasters are one of the few sources of Canadian funding left, and that will die with the broadcasters.

The practical effect of the CRTC’s decision is that Canadian television will be replaced by American television, because it’s far cheaper to re-syndicate foreign content than it is to produce local content.

I don’t think it’s unreasonable to say that Canadian television “as we know it” is probably going away. The bigger question is whether this decision had anything to do with that … TV as a medium is being superceded by streaming content anyway, and Canadian producers have been facing the fact that producing solely for a Canadian audience is uneconomical for almost a decade now.

I think it’s disingenuous to argue that this won’t adversely affect what’s on Canadian TV. Less money for broadcasters DOES mean less money for creators, and while it’s true that creators will keep creating, it’s also true that the scope of what they can create will be more limited with fewer broadcaster funds to go around.

The only question after that is … does anyone actually care if Canadian TV disappears.

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