Legal Issues

by Karl Bode


Filed Under:
a la carte tv, cable, canada


Canada Prepares To Force Cable Companies To Provide Cheaper, A La Carte TV

from the forced-adaptation dept

In March of last year, Canadian regulators announced they were combating high TV prices by trying something new: forcing the country's cable companies to offer "a la carte" (pick your own individual channels) TV. The CRTC's full ruling declared that by March 2016, all Canadian TV providers must provide a $25, discounted base bundle, letting users pick and choose individual channels beyond that. A la carte has long been a popular idea in both Canada and the States, where in the latter users receive on average 189 channels -- but usually only watch about 18 of them.

But while both Canada and the U.S. have long had an on-again, off-again love affair with the idea of a la carte TV, the pay TV industry has long argued the idea would damage the economics of pay television, eliminate jobs, kill off smaller niche channels while driving up prices and confusing customers. The problem is that niche channels are already dying; cable operators looking to battle tightening margins have dropped lower rated options like The Tennis Channel or The Weather Chanel. And prices, as you may have noticed, are skyrocketing at an unsustainable rate.

While U.S. regulators bought the industry's argument and backed off a la carte inquiries, Canadian regulators didn't, and their choice will be interesting to watch. It's effectively an attempt to force evolution on an industry caught in an unsustainable price-hike death spiral. And as the March deadline gets closer, Canadian cable and broadcast industry reps are begrudgingly admitting that the idea may lower rates for some Canadian TV viewers, but not if they enjoy sports:
"Clearly the most expensive [channels] will always be sports," says (Gary) Pelletier, president of the Canadian chapter of the Cable & Telecommunications Association for Marketing. "At the end of the day, for sports watchers, their cable bill will probably stay the same or increase, maybe.... In the case of someone who doesn't watch any sports at all, their bill will probably decrease."
In contrast, independent analysts have predicted that the average Canadian consumer will save anywhere from $5 to $21 per month. But Pelletier and the cable industry are quietly confident because they know that even if they lose money on tightened cable TV margins, they can always extract their pound of flesh by squeezing usage-capped Canadian broadband subscribers harder:
"While some consumers might be tempted to drastically reduce how much they pay for TV, Pelletier warns it could cost them in another way. Supplementing a slimmer cable package with a streaming service or two could increase data charges, Pelletier says. Plus, you may have to surrender any discounts you get from bundling cable with home phone, internet and/or wireless service. "If you cut your cable, then your internet is going to go up," predicts Pelletier."
And by "predict," Pelletier (whose organization is stocked with North American cable companies) means that's exactly what cable companies will do. In other words, your TV bill will be lower, but your broadband bill will be higher. And nothing really gets fixed if regulators don't address the lack of competition in the broadband space that lets usage caps (a glorified price hike) thrive in the first place. That's why this sort of thing could prove to be a regulatory slippery slope, when the easier path might have been to keep the focus on broadband competition -- and just wait for traditional cable service to slowly implode in the face of the cord cutting revolution.

Reader Comments (rss)

(Flattened / Threaded)

  1. identicon
    Guardian, Jan 6th, 2016 @ 8:42am

    ?? what is cable tv?

    no really ....oh ya 1996 i had that....moved on and haven't nor will i ever come back...no price is worth the garbage out there

    reply to this | link to this | view in thread ]

  2. icon
    hij (profile), Jan 6th, 2016 @ 8:46am

    Rogers Already Skewered Hockey Night

    Since Rogers took over Hockey Night the show has been shedding viewers. It will soon move to only cable, and the combination of the falling popularity of Hockey Night and the move to a la carte pricing should make for an interesting combination. Rogers already streams hockey, so they are going to have to make a decision about the future.

    reply to this | link to this | view in thread ]

  3. identicon
    DigDug, Jan 6th, 2016 @ 8:56am

    Governments can just "wait" on this idea...

    The cable companies are slitting their wrists and throats with their price increases, speeding the "cord-cutting" movement.

    I have to say that AT&T is quite nearly decapitating itself in grand style.

    With AT&T's purchase of DirecTV and continuing to advertise with their "Ditch cable, switch to DirecTV", and increasing prices for both AT&T's Cable offerings and DirecTV offerings would seem to be the equivalent of pouring lighter-fluid into an open flame.

    What is AT&T thinking?

    Here's my theory.

    AT&T's purchase of DirecTV gives AT&T a way to transmit cable programming without having to use earth-bound infrastructure. This frees up the cable infrastructure in such a way that it will eventually be mostly used for Internet service.

    AT&T would then work on migrating from satellite broadcast to cellular broadcast, at which time they would divest themselves of their land-locked cable infrastructure and orbiting satellite infrastructure while increasing costs for the programming carried over the cellular data networks 10 or more fold.

    Sounds crazy to me, but hell, AT&T does crazy-stupid shit all the time.

    reply to this | link to this | view in thread ]

  4. icon
    NeghVar (profile), Jan 6th, 2016 @ 9:06am

    here in the US

    Here in the US, Verizon began looking into the possibility of such options, but then received legal threats from ESPN.

    reply to this | link to this | view in thread ]

  5. This comment has been flagged by the community. Click here to show it
    icon
    Whatever (profile), Jan 6th, 2016 @ 9:25am

    yuck

    An absolutely atrocious article. Sorry Karl, but you miss the boat all over the place here.

    First and foremost, you forgot to explain the landscape. There are only a handleful of media, cable, and telephone suppliers in Canada - and they generally own all three (four if you count wireless). Rogers, Bell, Shaw, and Quebecor (Videotron) are all vertical market players. Bell is the biggest,as the phone company, sat and IpTV, internet, wireless, radio stations, TV stations, and owners of the largest TV netowrk in Canada. They are also owners of many of the cable channels.

    Rogers is similar, as is Shaw. Quebecor is even more outrageous, owning much of the french market in TV, radio, cable, wireless, newspapers, and the main owner is the leader of the official opposition in the Quebec National Assembly.

    The reason so many cable channels have been created in Canada has to do with a twofold issue: The requirement for Canadian ownership, and also the ratios of Canadian to "import" channels that cable, IP and Sat TV companies can offer. In order to have as many US services available, they basically created a whole range of channels similar to US offerings, and packaged them up in the required ratios. AS a result, there are many channels (such as Bell's Much (formerly Much Music, an MTV clone) which has 10 million subscribers but has never had more than 1 million tuned in, and that is for a single awards program each year. The rest of the time, their ratings are effective non-existent.

    Now the CRTC is changing the rules and the requirements, so they will have a la carte. However, since the US servers are popular and the mix requirement remains in place, it's unlikely that bills will drop that much in the long run.

    The Canadian market is interesting, but is not a free market. So using it to try to explain what might happen in the US is misleading at best.

    Sorry Karl, you need to bone up on the subject matter.

    reply to this | link to this | view in thread ]

  6. icon
    dpaus (profile), Jan 6th, 2016 @ 9:42am

    Fortunately, in most of the major markets, Canadians have the choice of ditching Bell/Robbers as their ISP and going with any one of several smaller ISPs that offer truly unlimited Internet - if only they're smart enough to do so...

    reply to this | link to this | view in thread ]

  7. icon
    Karl Bode (profile), Jan 6th, 2016 @ 9:52am

    "An absolutely atrocious article. Sorry Karl, but you miss the boat all over the place here."


    You say I miss the boat "all over the place" (atrociously, even) then proceed to really only make one point that isn't really much of a correction to anything in the actual piece: That the Canadian TV market is more vertically integrated and labors under different foreign ownership requirements than the US market.

    (As an aside, neither market is really "free," especially broadband).

    I certainly could have fleshed out the differences more, but there's also enough similarities over the border that a comparison is still apt, from vertical integration issues (from Comcast/NBC, to Time Warner Cable and Comcast's ownership of regional sports networks) to the relentless demonization of more flexible channel package options and pricing by an industry terrified of evolution.

    Regardless, I do apologize for my atrocious story.

    reply to this | link to this | view in thread ]

  8. icon
    Karl Bode (profile), Jan 6th, 2016 @ 9:52am

    Re: ?? what is cable tv?

    Cut the cord two years ago, and outside of the occasionally live NFL game, haven't regretted it for a second.

    reply to this | link to this | view in thread ]

  9. icon
    Karl Bode (profile), Jan 6th, 2016 @ 9:54am

    Re: Governments can just "wait" on this idea...

    I tend to agree. I tend toward balanced regulation and find the auto-anti-regulation position kind of a nnoying, but I agree that the government doing nothing here would probably result in the best possible outcome.

    The course is set, and Internet video will have a profound and painful impact on the legacy TV cash cow. Makes more sense to keep an eye on the broadband front, where usage caps are going to be the real pain point as streaming truly starts to take off...

    reply to this | link to this | view in thread ]

  10. icon
    Karl Bode (profile), Jan 6th, 2016 @ 9:56am

    Re: here in the US

    Yeah we're still waiting to see how that shakes out.

    The irony is ESPN's contracts with cable operators say that if ESPN creates a streaming option, that very provision in the contract restricting cable operators from taking ESPN out of the core tier evaporates.

    So ESPN's stuck between a rock and a hard place: launch a streaming video option and invite more cord cutting but adapt, or fight adaptation to protect your legacy cash cow.

    I think the former option is the only real path forward, but it will probably take ESPN another year to realize it.

    reply to this | link to this | view in thread ]

  11. icon
    Whatever (profile), Jan 6th, 2016 @ 10:02am

    Re:

    Karl, with due respect - you seem to miss it entirely. You cannot cut the cable in Canada entirely, because if you move away from cable and choose a streaming alterantive (like Crave TV) you are buying it from the same people! Even if you get it from an independent supplier, they are getting their programming from the big three or four and paying them for it.

    They own it from end to end - move to pure internet, and they own you there too. Drop wired in internet and go wireless and they have you there too. You cannot get away from them, period, at all.

    It's so different from the US market as to be beyond compare.

    Understanding that a la carte (which has been around in Quebec for a number of years already) really doesn't have as huge an impact as all that. You pay for less channels, but you tend to pay more for them. Net, it's not a truly big deal.

    Oh, and as for being "terrified of evolution", you need to pay attention: a la carte programming was not initially proposed by the CRTC - rather it's a pricing model started in Quebec by Videotron, one of those companies you think is scared to evolve. Again, without understanding the market or the history, you pretty much make mistake after mistake.

    reply to this | link to this | view in thread ]

  12. icon
    Brent Ashley (profile), Jan 6th, 2016 @ 10:21am

    Re: Re:

    Of course you can cut the cable entirely, if you are in a sufficiently large metropolitan area and don't need to watch sports. I have over 20 channels via antenna, and none of my streaming is from the Canadian cartels. In Burlington, I have DSL from TekSavvy on a dry loop, so Bell's involvement exists at an infrastructure level but is entirely incidental. If you are not addicted to a) the usual pap that passes for entertainment or b) the notion that you have to watch first-run everything, you can be quite comfortably entertained without indenturing yourself to the BigCos.

    reply to this | link to this | view in thread ]

  13. icon
    JoeCool (profile), Jan 6th, 2016 @ 10:49am

    Re: Re: here in the US

    ESPN has been advertising a mobile app that receives all ESPN material streamed since before Christmas. I guess they've decided which way they're going to go.

    reply to this | link to this | view in thread ]

  14. identicon
    Anonymous Coward, Jan 6th, 2016 @ 11:25am

    Re: Re:

    Well, here in Europe, you can get some a la carte too. Most 1-channeloffers are priced from 1.5$ to 6$.
    A standard package offers 15 specific cheap channels and 1 or 2 expensive at about 20$
    An advanced package adds about 10 more specific medium priced channels for about 35$
    A large package adds a huge amount of channels for a total of 50$

    Now, to get one channel you have to pay about 12$ for getting it. The advantage in picking specific channels are that you don't need to go for a large package to get the specific channels you want. If you want 2 medium priced channels from the medium package, you can pay about 20$ for them and get what you want. If you want 4 expensive channels from the large package, you can pay 36$ etc.
    While it is generally too expensive for people wanting 5+ channels, it is not a bad a bargain for the majority.

    We have a semi-monopoly in wired phones, mobile phones, wired internet, wifi and all the infrastructure. They do not own tv-channels. But they have a deal with a specific supplier of tv-channels and that ends up in the competition-situation being pretty much the same... It is not a question of having separate companies. That on its own is not solving the issue: The issue is that the expense of hardware and paperwork are freaky. Since hardware and paperwork are not shared and a separate competition parameter, the problem of the market is still there: Competing is too expensive since your cost of adding a user is nothing compared to the investment needed to enter the market. The only way to solve it seems to converge on demanding a separate entity to handle the basic hardware and much of the paperwork. Then the product on the market will have a price that better reflects supply and demand rather than a fixed price without much differentiation.

    And yes, that would cause a need for much more metering of data from the service provider, so pick your poison.

    reply to this | link to this | view in thread ]

  15. identicon
    Gracey, Jan 6th, 2016 @ 11:26am

    Re: Re: Re:

    In small-town central Ontario, antenna channels simply don't exist (We used to get Barrie's channel but not any more). Not everyone can get away from it if they want to watch TV (count in the gazillions of retirees who move north to escape high city costs because a lot of them don't even have wireless anything).

    For the amount we personally actually watch, I could probably do without cable altogether. Most of what I watch is available on the websites for each cable channel (I'd nix the sports, which I never watch anyways but I don't think the man would be happy if I did that).

    Whether or not there is any savings with the new system will depend on what each channel costs ... but I'm expecting it would actually cost more than our current package. Paying more for less is not a happy thought, and I'm fairly sure the $25 base would contain none of the channels we watch.

    Personally, I fail to see how this is going to be any better, and expect it to probably be worse for a lot of people.

    reply to this | link to this | view in thread ]

  16. identicon
    Anonymous Coward, Jan 6th, 2016 @ 12:35pm

    Growing up we had 5 channels that were free and had fewer advertisements. Now we pay for our cable TV, there are more sponsored commercials per hour, more strictly commercial channels, religious, and foreign language channels. We watch ten channels tops, and of those ninety percent of viewing is on two channels. Come hell or high water that cable will go this year, and if the internet goes with it so be it. I would rather pay each independent station a fee for access monthly than have the system that the cable company is offering today. While digital TV is offered over the airwaves and has about 40 channels utilizing a 60 mile range antenna, the two channels we do watch aren't among them.

    reply to this | link to this | view in thread ]

  17. icon
    crade (profile), Jan 6th, 2016 @ 12:44pm

    I also fail to see how it will make it any better.. Mostly because of the price. 25$ for basic cable + 9$ (or higher, whatever the ala cart price will be) for the 1 channel you actually want is close to what we are paying now anyway for the current basic package.

    Add to that the fact that often cable here today is bundled with phone and internet (from the same company) and you can guarantee they are going to claim this regulation is strangling them and are going to have them all using it as an excuse to raise their internet and telecom rates such that your bundle will cost more than it did before.

    I have a hard time seeing this ending with extra money in my pocket even if I want only a single channel.

    reply to this | link to this | view in thread ]

  18. identicon
    Anonymous Coward, Jan 6th, 2016 @ 2:00pm

    Re: here in the US

    Hmm... I wonder if ESPN could sue the Canadian government via trade agreement clauses (a la TPP, but US/CA already have one of these). After all, ESPN is one of the channels provided by all Canadian cable providers.

    reply to this | link to this | view in thread ]

  19. identicon
    Ethan Hunter, Jan 6th, 2016 @ 2:45pm

    big mac, mcDLT, Filet O'Fish, a hamburger, A happy meal

    When I go to McDonald's I want to order the whole damned menu; even if I only want to get two cheeseburgers. I mean that's fair right? After all it's not like someone didn't go to all that trouble to invent a shit-stinking fish-burger and so McDonald's is in reality doing me a solid by forcing me to purchase it along with all the other crap-tastic food they offer. Do I want fries with that? Oh, hell yes! I mean alls I'd be doing is subsidizing an under-wanted product for the day when I actually DO want a stinking fish-burger. Until then, the fish-burger would go in the trash.

    Much like my $175/mo Verizon FIOS package forces me to pay for a channel entirely dedicated to Ethiopian religious programming in Amharic. I mean, I'm not religious and I'm not Ethiopian, and I also don't speak Amharic - but some day, I might and thankfully Verizon's got my back on that.

    Thanks Verizon!

    reply to this | link to this | view in thread ]

  20. icon
    Whatever (profile), Jan 6th, 2016 @ 5:13pm

    Re: Re: Re:

    Brent, you realize of course that for what you pay Teksavvy, Bell ends up making the lion's share of the money, provides the infrastructure, and still really does control your traffic. You can't get away from them. They set the rules and network operations that Teksavvy offers, and in turn takes most of the money.

    So yes, you can stick up the antenna... but it won't help you get the NHL games or the like which are now all but exclusively on cable.

    If you are getting streaming from outside of Canada, beware - the CRTC will work to shut down non-canadian sources in the same manner they worked to stop US sat companies from having their equipment in Canada. It doesn't always stop it, but it just keeps getting harder and harder to get it.

    reply to this | link to this | view in thread ]

  21. icon
    PT (profile), Jan 6th, 2016 @ 5:41pm

    Re: here in the US

    More than 20 years ago a small cable company in Florida - in Sanford, I recall - offered its subscribers a la carte, along with an extremely innovative video on demand service that you could pause and rewind. It only existed a couple of months until pressure from Disney, which owns ESPN, forced them to abandon the idea. You had to take the whole ESPN/Discovery/other crap bundle or you could have nothing.

    Around the same time, or shortly before, I recall a bill going through Congress that attempted to rein in the cost of cable. I waited with anticipation, but when it passed my cable company (Time Warner) found an innovative way to increase my basic cable bill by about 10% for exactly the same content.

    reply to this | link to this | view in thread ]

  22. icon
    Ninja (profile), Jan 7th, 2016 @ 2:38am

    I have mixed feelings here. We need regulations that protect new entrants in the market and give incentives to network upgrading with nasty fines.

    The companies should be severely and painfully fined in the nuts/profits for their misdeeds. You don't scare a Comcast with a fine sized in the few millions. This is more than compensated by their sheer abuses in their monopolies. You need fines in the hundreds of millions, even the feared B. Even if it means selling part of their networks. See how fast they start behaving if it happens (or how insane will be the lobbying against such effort).

    reply to this | link to this | view in thread ]

  23. icon
    mattshow (profile), Jan 7th, 2016 @ 8:00am

    And by "predict," Pelletier (whose organization is stocked with North American cable companies) means that's exactly what cable companies will do. In other words, your TV bill will be lower, but your broadband bill will be higher. And nothing really gets fixed if regulators don't address the lack of competition in the broadband space that lets usage caps (a glorified price hike) thrive in the first place.


    Canadian regulators are making at least a passing effort to increase competition in the broadband space. The CRTC recently made an order that will require telcos and cablecos to license their infrastructure to smaller, independent operators. (They were already required to provide some access to coaxial and copper infrastructure, to a limited extent, but this recent order will also require them to provide access to more modern fiber infrastructure). Bell, of course, is fighting this, by asking the CRTC to reconsider parts of its decision while at the same time asking government officials to overturn it entirely.

    Another comment mentioned the choice Canadian consumers have with respect to who provides their Internet service. It's true that in some communities, Canadians might have one or two independent operators providing internet access in addition to the telco and cableco, but the telcos and cablecos still control about 95% of the broadband market. In the hearing leading up to the CRTC order, representatives from independent operators testified about how, even when they have the infrastructure to provide service, it's hard to make a serious dent in the market share of the telcos and cablecos. The combination of brand recognition, the ability to bundle services and consumer inertia is incredibly hard to overcome. Of course, those are "features" of the market that are a lot more difficult to regulate away, which means it's unlikely that the telcos and cablecos will feel any serious competitive pressure anytime soon, even with the CRTC's intervention.

    reply to this | link to this | view in thread ]

  24. icon
    Gourdman (profile), Jan 10th, 2016 @ 5:55am

    Too late for me

    Too late for me -- I've seen the light, dumped my bloated cable bundle, and moved on to far superior, ad-free streaming fare. My sister is also doing the same -- she witnessed the ease of my setup and my almost unlimited choices, and reacted to the latest Time Warner rate hike by saying sayonara to cable TV. Word gets around, and word among people who understand their options is that it's a bad deal to pay -- at any price -- for crummy programming that's 30-40% ads.

    reply to this | link to this | view in thread ]

  25. icon
    mb (profile), Jan 19th, 2016 @ 3:13pm

    Re: Re:

    Cut the cord.
    Do something useful with your time.
    Read a book.
    Take a class.
    Have a conversation.
    Go for a walk.

    reply to this | link to this | view in thread ]


Add Your Comment

Have a Techdirt Account? Sign in now. Want one? Register here
Get Techdirt’s Daily Email
Save me a cookie
  • Note: A CRLF will be replaced by a break tag (<br>), all other allowable HTML will remain intact
  • Allowed HTML Tags: <b> <i> <a> <em> <br> <strong> <blockquote> <hr> <tt>
Follow Techdirt
Super-Early Holiday Gear Sale

Advertisement
Report this ad  |  Hide Techdirt ads
Essential Reading
Techdirt Deals
Report this ad  |  Hide Techdirt ads
Techdirt Insider Chat
Advertisement
Report this ad  |  Hide Techdirt ads
Recent Stories
Advertisement
Report this ad  |  Hide Techdirt ads

Close

Email This

This feature is only available to registered users. Register or sign in to use it.