Canada Forcing Cheaper, More Flexible Pricing On TV Industry March 1. Will It Work?
from the innovation-at-gunpoint dept
Starting next week, Canadian cable providers will be forced by the government to do something inherently and violently foreign to them: offer cheaper, more flexible cable bundles. In March of last year, Canadian regulator CRTC announced it would be combating high TV prices by forcing cable operators to offer cable channels a la carte, or so-called “skinny bundles” of cheaper cable channels, by December 2016. The CRTC’s full ruling declared that by March 2016, all Canadian TV providers must at least provide a $25, discounted skinny bundle, letting users pick and choose individual channels beyond that.
Not too surprisingly, most cable operators in Canada haven’t been particularly eager to reveal what these plans will look like, lest they give them any more media attention than absolutely necessary. The CRTC sent out a memo last week reminding companies of the deadline, and agency boss Jean-Pierre Blais warned the cable industry to avoid getting too clever in terms of the upcoming packages:
“Cable and satellite companies should not view this change as an opportunity to replace business practices designed to maximize profits from captive customers with newer forms of anti-consumer behaviour,” he said in a speech to the Canadian Club of Toronto on Thursday. “Instead, I urge them to make the products they sell even better for Canadians.”
Needless to say, Canadian cable operators didn’t respond well to the CRTC’s demands, with one Bell exec even going so far as to refuse to show Blais’ face on TV after the ruling. And while only one major cable provider has detailed their skinny bundle plans, new tricks may still be an uphill climb for old dogs. Shaw’s new Limited TV skinny bundle provides 40 cable channels (more than a few of which are junk) for $25 a month. Of course, if viewers want HD they’ll need to pay $5 per month for an HD box. If you want a DVR (which most people do), you need to pay $15 a month.
Theme packs to get the channels users actually want are another $6 per month. And this is all before you tack on the inevitable below-the-line “insert completely made up justification here” fees, which means that once the bill actually comes — users won’t be seeing much of anything resembling a real value. Perhaps Canada’s foray into forced a la carte will provide something more (r)evolutionary later in the year.
Whether you can actually force the cable industry to evolve on pricing has been hotly debated. Here in the States, our brief obsession with forcing cable operators to offer a la carte channels (spearheaded at times by John McCain) ultimately died after industry claims that such a forced model would destroy niche programming and raise consumer rates became crowd wisdom. Of course prices have gone up regardless, and cable providers themselves have actually started pushing niche channels (and even less relevant content like The Weather Channel) off their networks to save money for sports programming.
And while US providers are also exploring skinny bundles to fend off cord cutting, like the Canadian implementation, these offerings tend to quickly lose value thanks to buried fees.
Regulators are then put in the position of needing to address misleading fees as a form of false advertising, something neither the FCC nor CRTC have been willing to do. And as TV providers lose income on the television side, their first instinct is to look to recoup those losses elsewhere — generally in the form of broadband usage caps and overage fees. So, as with the FCC’s new set top box push to Canada’s south, it’s relatively easy to be left wondering if regulators should be focused on the future (broadband) instead of the past (legacy television).
So the fundamental question remains: do you wait for Internet video to disrupt and dismantle the TV industry naturally, or do regulators try to force the issue with rules mandating lower prices and more flexibility? Whether you support the idea or not, Canada’s about to show us if the latter is worth the time and effort.