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.

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Comments on “Canada Forcing Cheaper, More Flexible Pricing On TV Industry March 1. Will It Work?”

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Ninja (profile) says:

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?

Force the dismantling with regulation by providing both competition (see mono/duopolies in the US) and a stable legal (ie: sane copyrights) framework for internet newcomers?

JBDragon says:

Re: My cable bill is as high as it needs to go

I cut the cord around 4 years ago. It was missed briefly, but now I could care less. I threw up a Antenna to get the Broadcast channels, and Netflix has a lot of content with a huge push of more Original content.

I still have cable, but it’s Internet only. I got tired of the ever increasing prices. Back 4 years ago I was paying $170 a month for slower Internet service and HD TV with a 2 tuner DVR. No premium channels as I cut Showtime I had to try and save a little money. Prices just continued to shoot up. That was just 1 TV and only ME. I hated that huge bill every month and for what? I couldn’t justify it any longer.

Sure you have your 200 channels of crap and it’s all in once location making searching for something simple, but you get used to doing things in other ways.

Anonymous Coward says:

I see both sides of the coin

lower prices because of COMPETITION is good, but ‘forced’ lower prices are bad. If the government can dictate your fees, as a company/corp., then the government owns your company/corp. Who wants state run cable?

3 changes that should happen in cable/ISP:
-you should be able to BUY (NOT RENT) cable boxes from multiple manufacturers (competition)
-you should be able to pick only the channels you want (a la carte)
-you should be able to choose from ALL of the cable companies/ISPs in each major US city, similar to how you have different gas stations or grocery stores in each major US city (competition)

Anon says:

Re: Below the line

I agree – anything below the line should be “this is not us, we are required by law to charge this for a third party”.

It reminds me of airline “fuel surcharges”. There’s no such thing as a fuel surcharge – it’s just a higher priced ticket. Similarly, anything not optional for a cable hookup falls in the category of “connection fee”.

Whatever (profile) says:

Wonderful work Karl, except that you fail to mention that the cable / sat / IPTV / etc companies are pretty much the only companies that also own cable channels (and the major TV network in Canada, and the second network, and almost all of the local stations, and so on down the line). They are also the ISPs and phone companies too.

Under that circumstance, forcing them to offer a skinnier package and to allow pick and play is most likely to lead to the cable companies ditching channels and limiting choice, and choosing not to add other optional services for which they are unlikely to get a big enough uptake.

It’s not like it’s a competitive marketplace and they are fighting for your business.

Anonymous Coward says:

Cut the cord around 13 or 14 years ago. Today I don’t own a tv. When I looked at what I was paying for what I was getting with the realization there weren’t but one or two shows a month I was actually looking forward to. It hit me I wasn’t getting value for the money I was spending and the tv was only supplying background noise. A radio does that without cost.

Now I look at all the people cord cutting and think of all the money I’ve saved over the years paying for something that did not provide me with things I wanted. I don’t miss it and doubt I will ever be in the market for another tv. I hunted up a radio station without commercials and I can’t tell you the peace of mind that brought into the house.

Not the peace of mind I do value.

crade (profile) says:

The numbers do not add up in any way that could benefit consumers realistically if looked at on it’s own.

What isn’t mentioned in the article is that cable tv is currently usually bundled with Internet and phone services here in Canada from the same provider and the expectation is that the other services will be universally ramped up among the 3 providers to “compensate” for all the loses they are going to be taking from this. All they have done is given them an excuse to jack up prices. As though they needed one.

gfc (profile) says:

Clinging to Sports

My vote goes to letting “internet video” sort this all out. But, as you allude to in the article, sports is one of the main draws that cable TV still has over internet video and the likes of Netflix, Hulu and such. The real push needs to come from the Sport Leagues themselves – a good example of this for Canada is the NBA. If I subscribe to NBA League Pass online service, the only games I cannot see are Toronto games. In this situation, I’m pushed to subscribe to cable as my only way to access these games in my house. I’m not willing to feed the fire, though.

Until it’s worth it for the NBA to sell to me directly I guess cable still has that card that it can play, and many people will pay.

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