Pick-and-pay cable TV would offer greater choice, CRTC boss says
Sep 2, 2014
Source: Huffington Post Canada
Eric Rosenquist is one of the people cable and satellite companies hope to lure back with pick-and-pay television.
A dedicated television watcher, Rosenquist cut the cord in 2012, after the cost of his Bell Satellite mid-tier package went from $52 to $74 in 11 years.
That's a 42-per-cent increase — well ahead of the rate of inflation.
"We put up a digital antenna and found that it was OK. We got 80 per cent of what we wanted over the air from the antenna and supplemented with Netflix," he said.
Rosenquist says he would go back to a television subscription, but only if the price is right.
And that’s the real question consumers need to ask about the unbundling of television subscriptions: Will it reduce cable and satellite bills?
CRTC proposes small basic package
In a discussion paper released two weeks ago, the CRTC proposed the creation of a small basic package of channels.
It would include local TV stations including CBC, educational channels, the provincial legislature and APTN (Aboriginal People's TV Network). U.S. channels such as ABC, NBC and CBS would no longer be part of the basic cable or satellite service. The package would cost between $20 and $30 per month.
By comparison, basic cable from Rogers currently consists of 192 channels and costs about $40 per month. That package includes dozens of radio stations, digital music and third language channels. Rogers is similar to other major television providers, which also offer basic packages stuffed with digital music and other add-ons.
What the CRTC is now suggesting is that consumers pay for the distribution of television, the pipes that bring it to your home, and a few local channels, many of which don’t get fees from subscribers. Everything else would be optional. You would pick and pay for the channels you want.
But while the CRTC has suggested a price for basic cable, it hasn’t mandated a price for the à la carte options.
Specialty channels guard their subscriber fee information closely, but through filings to the CRTC Individual Pay Television, Pay-Per-View, Video-on-Demand and Specialty Services 2009–2013 report, it’s possible to estimate how much Canadian specialty channels earn, on average, per subscriber.
- HGTV earns approximately $1.90 a year per subscriber, $0.16 per month.
- Showcase gets $3.50 per year, $0.29 per month.
- TSN gets $30 per year, $2.50 per month.
- Movie Central and Movie Network — which distributes HBO Canada — earn more than $8.00 per month.
That’s not what subscribers pay for the channels, though. For example, Shaw offers Movie Central for $18 per month, with about approximately half going to the channel and half to Shaw for distributing the channel.
Pick-and-pay could cost more
With those numbers in mind, it’s easy to see how a pick-and-pay package could add up.
"I've never promised that pick-and-pay would be cheaper," said CRTC chairman Jean-Pierre Blais.
"If you pick individually all your 60 channels, it'd be cheaper to get a bundle. But what I'm saying is that it's based on an individual's or family decision. If mom wants the sports channel and dad wants the cooking shows and the teenagers want the music channels and the kids want the cartoon channel at one point, the pick-and-pay model does not make sense."
There has been a range of reactions from the television providers. Rogers thinks the U.S. channels still need to be included in basic cable, while Bell doesn’t see it as necessary.
Shaw does not feel that its customers want a small basic package at all and feels that only 50 per cent of specialty channels should be offered à la carte.
There has also been negative reaction to pick-and-pay from U.S. channels, which typically have packaging requirements, meaning they have to be part of a bundle and are generally guaranteed access to a certain number of eyeballs.
If pick-and-pay does come to pass, there will be a thicket of contracts to be unwound.
Bundling arrangements go back decades, according to independent technology analyst Carmi Levy.
"What you're asking the distributors and broadcasters to do is unravel a process that's been evolving for the better part of the past 40 years — since cable TV became part of the broadcast landscape."
There is enough political will and consumer desire to make pick-and-pay television happen, but consumers should not underestimate either the cost or the complexity of bringing the concept to life.