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.
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Filed Under: a la carte tv, cable, canada
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?? what is cable tv?
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Re: ?? what is cable tv?
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Rogers Already Skewered Hockey Night
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Governments can just "wait" on this idea...
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.
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Re: Governments can just "wait" on this idea...
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...
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here in the US
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Re: here in the US
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.
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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.
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yuck
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.
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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.
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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.
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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 $25 base would contain none of the channels we watch.
Personally, I fail to see how this is going to be any better, and expect it to probably be worse for a lot of people.
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So yes, you can stick up the antenna... but it won't help you get the NHL games or the like which are now all but exclusively on cable.
If you are getting streaming from outside of Canada, beware - the CRTC will work to shut down non-canadian sources in the same manner they worked to stop US sat companies from having their equipment in Canada. It doesn't always stop it, but it just keeps getting harder and harder to get it.
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A standard package offers 15 specific cheap channels and 1 or 2 expensive at about 20$
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.
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Do something useful with your time.
Read a book.
Take a class.
Have a conversation.
Go for a walk.
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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.
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big mac, mcDLT, Filet O'Fish, a hamburger, A happy meal
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!
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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).
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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.
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Too late for me
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