Canada Forces A La Carte Rules On Cable Industry, Bell Pouts By Refusing To Show Regulator On Television

Politics

from the flexible-pricing-packages-are-the-devil dept

For years, the United States has had an on again off again love affair with the idea of a la carte television — or the ability to purchase only the channels you want to watch. After a ten-year debate, “common wisdom” appears to have largely decided against the idea, the public buying into the cable industry’s argument that selling channels individually would: a) kill niche television channels and b) drive up the cost of cable. Of course, the cost of cable TV is climbing skyward anyway, and the Internet has become the perfect place for those niche channels to flee to. Frankly, I’ve always wondered why there’s any hesitation when it comes to blowing up a sector in such dire need of meaningful disruption.

Thankfully, Canada has decided to go ahead and play the guinea pig for us in terms of exploring what an a la carte future would look like. After holding fifteen months of consumer hearings and waiting for years unsuccessfully for more flexible pricing options, Canadian regulatory agency the CRTC has decided to force the issue. The CRTC this week issued a ruling requiring not only that Canadian cable operators provide a discount $25 entry level core TV tier, but that above that, users are allowed to pick channels a la carte. In a statement, the CRTC explained it this way:

“Canadians, who choose to do so, will be able to supplement the entry-level television service by buying individual channels that will be available either on a pick-and-pay basis or through small, reasonably priced packages. If they so choose, they will have the option of selecting theme-based packages?such as sports, lifestyle or comedy?offered by their service providers.

By December 2016, Canadians will be able to subscribe to channels on a pick-and-pay basis, as well as in small packages. In addition, Canadians will have the choice of keeping their current television services without making any changes, if these continue to meet their needs and budgets.”

Of course, the ruling is being met with all manner of hand-wringing from opponents of a la carte and the cable industry about how this is going to “destroy television as we know it.” Canadian media has been flooded all week with stories about how this will only drive up costs, confuse consumers, harm the TV industry, result in cats and dogs sleeping together, and generally just wreak havoc on the TV ecosystem. Except, Canadian law professor Michael Geist points out that if you look past this breathy doomsday analysis in the press and actually ask real analysts, they point out the idea will probably save consumers money:

“Maher Yaghi of Desjardins Capital Markets says the changes could ?lead to a reduction of $5 to $10 in monthly [revenue per user] as customers get the option to choose the channels they want to watch and move discretionary money toward OTT (over-the-top) services such as Netflix.” Canaccord Genuity analyst Dvai Ghose suggests even bigger declines of $9 to $21 for some customers. In fact, Ghose notes that ?current entry-level TV monthly prices for the large BDUs are as follows: Bell Fibe TV $45.95, Rogers Cable $40.48, Shaw $39.90 and Videotron $38.00 and Telus $34.00 ($29.00 if bundled).? A $25 service is obviously going to result in reduced spending for those consumers.”

So yes, the claim that we should avoid a la carte TV because it will make TV bundles — already seeing hikes many times the rate of inflation — more expensive is just silly. So are the claims that forcing more flexible channel bundles on cable operators will somehow destroy quality television (“people will stop creating art if you don’t help prop up our failing business model” has long been an entertainment industry rallying cry). While there are a few folks in the media who seem to get it, there’s been a strange, overarching gushing adoration of the much-hated channel bundle in the media that’s rather inexplicable, and in no way really tied to what consumers actually want. “Be careful what you wish for,” the media logic seems to go, “or you’ll pay a lot of money for cable television!” they bizarrely warn.

Canadian cable operators obviously weren’t happy with the decision, but Canadian telco Bell apparently thought it would be a really good idea to ignore its editorial firewall, and “punish” the CRTC by pettily refusing to show CRTC chief Jean-Pierre Blais on bell-owned CTV:

“Mr. Crull became angry with the CRTC?s so-called pick-and-pay decision last week.According to sources close to the network who spoke on condition of anonymity, Mr. Crull directed senior news staff at CTV, the country?s largest private broadcaster, to exclude Mr. Blais from coverage of the story on Bell-owned networks. The ruling will give consumers more freedom to choose individual TV channels as part of cable and satellite subscriptions, but it could also affect Bell?s bottom line.”

After taking a media beating, Bell Media President Kevin Crull was forced to issue a mealy mouthed mea culpa stating he’d “learned a valuable lesson” about editorial control and really dumb decisions. Of course, Bell continues to insist the CRTC’s move will only raise rates for consumers. Because, you know, cable TV rates weren’t increasing under the current pay TV bundle model — and keeping consumer prices low is every giant cable operator’s top priority.

Meanwhile, those who’ve been claiming that a la carte TV will somehow destroy television as we know it now have an interesting petri dish to keep an eye on in Canada. Of course it’s very possible the regulations are awful or at the very least accomplish nothing. I think one fair point made is the people most attracted to this “skinny bundle” may have already moved on to cheaper streaming options. Still, the CRTC has made it clear that after fifteen months of public hearings, this is what Canadian consumers have told them they want.

With consumers facing bi-annual rate hikes for an abysmal assortment of mediocre content and awful customer service — isn’t it time to at least start experimenting? I’ve always been confused by the hand wringing over consumer interest in a la carte, as if it’s the consumer’s job to somehow ensure that cable companies continue to make the sort of bloated profits they’ve long grown used to. Their only job is to demand quality product at a reasonable price, something cable companies across North America have been failing spectacularly at for more than a decade as they grow ever larger, consolidate, and then jack up programming rates as if it’s going out of style.

Refusing to explore a la carte TV solely because we’re worried it might harm the bloated profits of an apathetic TV industry makes little to no sense to me. These companies, in the U.S. and Canada alike, had a decade to adapt and have fought pricing and package evolution (not just a la carte but any package flexibility) tooth and nail every step of the way. Why not try something different? And if the cable companies and their 300-channel bundles of reality television dreck struggle to adapt to the one-two punch of regulatory intervention and competition from Internet video? Just maybe it was time for their ungracefully-aging business model to sail quietly into the sunset instead of pouting like a chubby, petulant child.

Filed Under: a la carte, cable tv, canada, crtc, jean-pierre blais, kevin crull, petty, regulators
Companies: bell canada