Changes to pick-and-pay service in final phase
Cable providers must offer à la carte option, according to federal broadcast regulations
A new era of choice is dawning across Canada’s TV landscape as the final phase of federal broadcast regulation reform kicks in, requiring cable and satellite service providers to offer stand-alone channel selections along with prepackaged bundles.
Beginning Dec. 1, all television service providers must give consumers the option of subscribing to channels à la carte, or in small groups, on top of a basic service package that cannot cost more than $25 per month before equipment rentals.
The latest move is part of a raft of changes initiated by the Canadian Radio-television and Telecommunications Commission (CRTC) aimed at increasing afford- ability and choice in the cable, satellite and Internet TV market.
Regulators have been intent on removing the shackles from consumers forced to subscribe to multi-channel bundles to get the programming they want.
In 2015, the CRTC unveiled the regulatory reforms that required the companies to offer by March 2016 a strippeddown basic bundle as n alternative to existing offerings.
The mandated entry level or skinny basic package must give priority to local and regional news programming and may also include affiliates of U.S. networks.
As of Dec. 1, consumers can choose to supplement the basic package of buying individual channels or through small bundles of up to 10 channels that can be geared to content such as sports and comedy, and they are also free to remain with their existing cable package.
Rates for individual channels or theme packs will be set by the cable and satellite TV providers.
Still, research has suggested that a majority of Canadian households will remain with bundled channels — smaller ones that better suit their needs — while others will cut the cable cord in favour of TV shows and other content streamed online.
Gerry Wall, president of Ottawabased economic consultancy Wall Communications, said distributors favour theme-oriented bundles since they imply greater recurring revenue than individual channels. He said the “smart” bundles could offer a compelling value proposition to consumers in cases where they can be purchased for only a few dollars more than an individual channel.
Providers, including Rogers Communications and Bell Canada, are already offering both pick-and-pay individual channel and bundle choices, with Rogers customers able to add premium channels to its $24.99 starter package or pay for theme packs. Bell made individual channels available à la carte with the launch of its skinny basic offering last February.
Montreal-based Videotron’s custom package system allows subscribers to benefit from volume discounts while building their own bundles, whereas Shaw offers individual channels staring from $3 per month.
Still, some channels are a lot more expensive than the average, with the Movie Network/HBO, for example, starting at $18 per month at Shaw.
As such, observers note that à la carte costs, on top of the required cable subscription, would result in bills that are higher than those for the more traditional multi-channel cable packages.
“So far, we’ve seen some people choose the Starter (basic) and theme packs, while other customers have opted for other packages that best fit their needs,” said Andrew Garas, a spokesperson for Toronto-based Rogers.
“It’s not ‘either or’ — we see people combine theme packs and à la carte on top of the Starter package. People also have the option to get à la carte channels separate from Starter.”
In addition to the theme packs and dozens of channels already being offered individually, Garas said Rogers will introduce a stand-alone channel selection by Dec. 1, starting at $1.99 per month.
“While not as popular as our Good, Better and Best packages, our Starter TV package is popular with custom- ers seeking the capabilities of Fibe TV along with a broad range of programming,” Bell spokesperson Caroline Audet said.
For consumers, adding channels can quickly inflate monthly costs, but pick-and-pay also poses a threat to specialty niche channels that could be orphaned if they are left out of the smaller theme packs.
Wall said the CRTC reforms offer a built-in protection in the form of a wholesale code aimed at helping independent producers negotiate fair carriage deals that, for example, allow independent programming to compete on an even footing with the content produced by the broadcast distributors.
Both Bell and Rogers are integrated communications and media companies whose holdings include both broadcast distribution networks as well as specialty programming assets. The CRTC-mandated code also provides recourse for consumers if they have objections to à la carte pricing — and requires that theme packs include at least one independent channel. But the code faces a challenge from Bell, which was granted leave to appeal in January.
“The appeal is critical,” said a spokesperson for the Independent Broadcast Group, which represents programmers, including the Ethnic Channels Group and Aboriginal Peoples Television.
The group, through a consultant, has registered as a federal lobbyist focused on the wholesale code of conduct for commercial arrange- ments that was enacted at the start of the year.
Wall said smaller, specialty channels have been squeezed by integrated distributors for some time, noting the failure in the past year of offerings, including The Pet Network.
After pay-movie service Super Channel was granted debt protection in an Edmonton court last May, the company’s president said the major reason for its $115-million debt was overcharging by the cable companies that carried it.
“Canadians will get more choice, but an unintended consequence is that some channels — perhaps less popular overall, but very popular with a small number of passionate fans — will go dark,” said Jay Switzer, co-founder and chairperson of the Hollywood Suite movie channels.
“One of the big risks is the reduction in independent voices in this new media landscape,” Switzer added. “I truly believe creating rules to allow the best and most creative of the independent services to grow and survive is . . . smart public policy.”
Ivan Fecan, former CEO of CTVglobemedia, said pick-and-pay won’t necessarily kill those less-watched channels, but it will force them onto the Internet. “Channels with audiences will be fine. But if it’s niche, look for it online.”
Bell argues that the code should be overturned since its attempt to regulate private sector commercial negotiations conflicts with the Copyright Act and exceeds the CRTC’s statutory power under the Broadcasting Act.
“Canadians will get more choice, but an unintended consequence is that some channels — will go dark.” JAY SWITZER CO-FOUNDER OF HOLLYWOOD SUITE MOVIE CHANNELS