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CRTC Should Put Consumers First and Drop ‘Must Carry’ Requirements

Canadians frustrated with ever-increasing cable and satellite bills received bad news last week with the announcement that the Canadian Radio-television and Telecommunications Commission will consider whether to require cable and satellite companies to include nearly two-dozen niche channels as part of their basic service packages.  If approved, the new broadcast distribution rules would significantly increase monthly cable bills with consumers forced to pay for channels they may not want.

My weekly technology law column (Toronto Star version, homepage version) notes that two issues sit at the heart of the broadcast distribution rules.  First, whether the CRTC should grant any broadcaster mandatory distribution across all cable and satellite providers such that all subscribers are required to pay for them as part of their basic packages. Second, in the absence of mandatory distribution, whether broadcast distributors should be required to at least offer the services so that consumers have the option of subscribing.

Twenty-two channels are vying for mandatory distribution status as part of the current review, which includes a comment period and a hearing scheduled for late April. Some have likened the process to winning the lottery, since mandatory distribution guarantees broadcasters millions in revenues. For example, 25 cents per subscriber – the amount the Aboriginal Peoples Television Network currently receives – generates $30 million in revenue in each year for the broadcaster (it wants the fee to increase to 40 cents per subscriber).

These proposed cash grabs could add hundreds of dollars to cable and satellite bills if approved. Sun TV News, which previously disavowed mandatory distribution by likening it to a tax on all cable and satellite subscribers, now wants the CRTC to require those subscribers to pay it 18 cents per month until 2017.  Starlight, a proposed new Canadian film channel, hopes to generate hundreds of millions in revenues from mandatory distribution, much of which would be used fund the creation of new Canadian films.  

While the financial benefits for broadcasters are enormous, the policy represents a near-complete elimination of consumer choice for the channels at issue. Rather than convincing millions of Canadian consumers that their services are worth buying, the broadcasters need only convince a handful of CRTC commissioners that their service meets criteria such as making “an exceptional contribution to Canadian expression.” That is supposedly a high bar, yet it is surely far easier than convincing millions of people to pay for your service each month.

Last year, CRTC chair Jean Pierre Blais emphasized that the Commission’s top priority was to “put Canadians at the centre of their communications system.”  The mandatory distribution rules do the opposite.  Rather than focusing on consumer interests and choice, the rules place broadcasters at the centre of the communications system by offering up the prospect of millions in revenue without regard for what consumers actually want.

There are few, if any, broadcasters that can be considered so essential as to merit mandatory distribution. Niche cultural broadcasters have a myriad of distribution possibilities and should be forced to compete like any other content creator or distributor.  In fact, even broadcasters that position themselves as “public services” can often be replicated by Internet-based alternatives.

While the anti-consumer mandatory distribution rules should be scrapped, the Commission can enhance consumer choice by making “must offer” the default for broadcast services.

Cable and satellite companies should theoretically welcome the chance to offer more options to subscribers, but the vertical integration between broadcasters and broadcast distributors may create anti-competitive incentives. With Bell, Rogers, Shaw, and Videotron each controlling a major broadcaster, it may make economic sense for those distributors to prioritize their own channels while offering their customers less choice.  

The role for a CRTC that places Canadians at the centre of their communications system is obvious – stop treating Canadians as ATMs for the broadcasters by dropping mandatory distribution altogether, while requiring broadcast distributors to offer all licensed channels to their subscribers in a pick-and-pay format so that at long last consumers get to decide what they want to watch and pay for.

35 Comments

  1. Scott Abercrombie says:

    Cable Cutter
    Amen! We are cable cutters for this very reason. I REFUSE to pay for a bundle of channels that will encourage more “Dawg the Bounty Hunter”.
    But if we could cherry pick our channels then maybe we’d think about paying for cable again. It would, of course, depend on the content.

  2. As I see it consumers are gouged either way. Cable companies bundle erratically so you will have to buy more packages for a few stations you might want. Regulators should look into that seriously.

  3. A la carte options is the only way I’ll ever come back to cable/satellite tv. The gouging needs to stop and the CRTC should start standing up for the citizens that pay for it’s existence rather than the greedy corporations padding dividends.

  4. blu-ray
    Bah…cancelled cable years ago, now I’m catching only the best shows on blu-ray. No more subsidizing outdated business models and content delivery systems.

  5. Dorkmaster Flek says:

    Nobody gets it.
    Geez, it’s almost like they want consumers to cut their cable cord! Seriously, increasing the size and cost of the mandatory basic cable package is supposed to entice me back to cable again? That’s one of the main reasons I dropped it in the first place.

    Look guys, I’ll make it simple for you. I don’t need cable. I can count the number of TV shows I watch regularly on one hand. What I need is a convenient, legal way to get those shows I do watch over the Internet. I’ll gladly pay for the privilege. Because keep in mind that right now, I do have a way to get those shows, but it’s only one of those two things. Your advantage is that while you can also give me the first thing, you’re the only ones who have the ability to give me the second thing as well. Use it.

  6. Videotron offer a la carte. Even then, there are channels that force you to take too, and there are a lot in the default package I never watch.

  7. series of tubes
    @DorkmasterFlex You nailed it.

    The content providers (cable companies) are just looking to add to their already-decent share payouts. The CRTC doesn’t seem to show any concern for the average customer’s needs or wants either.

    This is beginning to look like a feasible option (for US content) after the WTO ruled in favour of it:
    http://torrentfreak.com/antiguas-legal-pirate-site-authorized-by-the-world-trade-organization-130128/

  8. Stuck with cable right now but would cut if I could
    I seam to share the sentiment of most (possibly all) the posters. Given the choice, I would not pay for cable. Since I live in a condo that includes cable whether I want it or not, I have about 80 channels to choose from. I watch about 8 of the channels regularly. Of those 3 are available over the air, 2 of them could easily be replaced by a Netflix subscription (#8 a month, right?) and 1 has the one TV show I watch available online immediately after it airs. I’m sure I would live without the other two.

    Let me choose my own package of 10 channels at $2 a channel a month and I would keep cable. Make it $1 a channel and I would probably get 20 channels for some “just in case there’s nothing on” variety. In case you missed the theme, I wouldn’t pay more than $20 a month for cable or satellite.

  9. I am hopeful the CRTC will adopt these suggestions and, as they have alluded, put the consumer first on this issue. But in case they do not, rather than be roped into a bloated ecosphere, I suggest people seriously consider alternative methods to obtain their content. There are obviously ways to do so outside of official channels, and sometimes that may be the only way, but I would instead encourage people, as much as possible, to use what is legally available so to increase the viability of those choices.

  10. Don from BC says:

    The only solution….
    Is for consumers to cancel their cable. That will send a message to the CRTC and the cable companies that we are no longer willing to pay for bundles and must carry.

  11. Bell offers à la carte services in Quebec because Videotron does, yet are willing to do so in the rest of Canada. Some customer service. If a TV channel is good enough to attract subscribers, than it does not need help from the cable and satellite companies. Why should the consumer pay for TV channels that they do not want to watch?

  12. Citizen
    All this is just a symptom of the disease. They’re dying. New distribution options are blossoming all around and the old dogs can only fight to keep standing still. The sad part is that our leaders aren’t leaders at all. They just do what the money tells them to do. They make terrible decisions at almost every turn and stifle opportunity, innovation and real economic growth.

    Imagine if Canada decided to be a true leader in broadband distribution, content delivery. Imagine if, instead of making decisions that are so out of touch with the reality of the playing field, we took courageous steps forward for the betterment of the citizens, rather than the corporate interest.

    Anyway. I hate, hate, hate how much power and control these organizations have. I hate that our leaders aren’t smart enough or don’t care enough or aren’t courageous enough to be the clear voice of the people.

  13. “+1″
    @Brad “Imagine if Canada decided to be a true leader in broadband distribution, content delivery. Imagine if, instead of making decisions that are so out of touch with the reality of the playing field, we took courageous steps forward for the betterment of the citizens, rather than the corporate interest.”

    Well Spoken.

  14. Richard Avella says:

    Technologically Irrelevant, Vestigal Regulation
    I get my TV through an IPTV system. The provider can turn any individual channel on or off from a simple command at the central office.

    This regulation has its origin from when channels were scrambled, or not, by placing a physical filter in line with the coaxial cable. A channel occupied a certain frequency just like with the radio station dial, and a filter would block a group of those — hence the need to package channels into groups.

    Telus, Shaw, and Novus in Vancouver all only provide service with that comes with the mandatory cable box now.

    No more raw video signal over a coaxial cable — no more physical filter — no more need for this regulation at all.

    The CRTC should follow its own standards

  15. End all subsidies as well
    No channel or broadcaster should be subsidized by the taxpayer. No subsidies, al a carte channel selection and that would satisfy me.

  16. Basic cable is for the cost conscious
    Perhaps the CRTC is not aware that those of us who choose basic cable do so because we can’t afford to pay absurd amounts of money to get a premium bundle of channels to watch that one program on that one channel not on basic cable.

    Dear CRTC and Rogers, I swear on my mother’s grave that if you bundle in more channels I don’t watch and raise my basic cable bill, I will cut the cord. And you can take that to the bank. Oh wait, no you can’t.

  17. Choices
    I have cut my overall cable costs by 60% by using a combination of Hulu , Netflix ,Itunes and a service called UnBlockUS. I have given up on the cable monopoly and the CRTC in general to represent average Canadians . At this time in history we do have such a wide range of choices you dont have to over pay for services anymore.

  18. Quality / Price is the incentive
    I was with Rogers for 10 years. Every year they kept increasing the price of my cable pkg due to operational costs. I started off paying $26/mth for basic cable and 10 years later I’m paying over $40/ mth. When I canceled my cable and bought a roku they still gave me free cable for 6 months. The quality of programming is so pathetic that I called them to cancel my free tv. If crtc does the same with ubb Internet and lowers caps or cancels unlimited I will pull the plug on my Internet as well and attend the library. Who do they think they are?

  19. You think there would be an obvious answer. If a broadcaster applies for mandatory distribution, if they feel that the majority of Canadians need to have access to it, then the broadcaster should be doing so at THEIR cost. Ex. they should pay the cable companies to carry their station and make money off of the associated ad revenue it will generate by being viewed in millions of homes.

    Except for premium stations with no commercials (ex movie stations) I never understood the carriage fees. It may be a bit like the chicken and the egg, but cable companies should put together packages that people want to buy from them and in turn the broadcasters should be happy that the cost of their associated ad revenue went up with the increase in viewership. The current model seems like double dipping – charge the customers to view it AND rake in increased advertising revenue

  20. Richard Norwood says:

    Mr
    I am currently with shaw at a cost of $140 per month. I really only watch about 10 different channels. However for every 1 channel I want it seems that 6 or 8 more want to tag along for the ” bundle ” ride. I’m all for helping Canadian content stay alive, but I think my cost threshold may have been reached. With applications like netflix, bbc I player, PBS on line ect, I can’t see it being to long before I will be bypassing the CRTC almost entirely.

  21. Concerned Citizen—
    All these discussions neglect free digital over-the-air television and what a great alternative it is to cable television. All that is required is a television with an ATSC tuner and a roof antenna.

  22. @Alex

    Free over the air is great, for sure. I have it and watched all the Olympics in true HD (uncompressed like Rogers does). But it’s only broadcast, not cable. We’re talking about the specialty channels. Channels you will be forced to pay for, even if you don’t want them, in order to get any cable. You want TSN? You’ve got to take these 10 other channels too and yes, you will pay for them or you don’t get TSN.

  23. Poor digital transition
    I’ve never paid for a single cable since i’ve owned my own house. No need, since i Live in the capital. I don’t mind the mandatory channels, if only I would not be supporting outdated distribution methods that enslave viewers to certain hours of certain days. PVR’s are not attainable for everyone. Internet and great programs like tous.tv from radio-canada has gone a long way to sorting these problems out, however jerks like videotron and HBO require cable subscriptions to access their shows. Now wonder game of thrones was the most pirated, it’s very unavailable to everyone but the wealthy.

    Back to my point, a lot of canada was left out during the digital transition. In sudbury, I can only pick up some analogue signals. You now have entire swaths of the lower income population of Canada that are now going to have a hard time accessing public broadcasts, programming and culture.

    I reserve the right to comment on specialty channels like the aborginal network, however if the cable co`s do not need to reimbourse braodcasters via fee for carriage, they should be mandated to offer up any OTA channels they redistribute for the same price they pay. Free. Unincrypted signal to at least Radio Canada and CBC that anyone, no matter the age, income or location (provided they have a cable connection to the home)can watch for free on any t.v.

    It won’t help those who are in more isolated communities, however it would be a start. Not everyone can afford 20$ a month to be able to clearly watch news.

  24. Concerned Citizen
    The discussion is: How to prevent a luxury service delivered through a proprietary cable that not every Canadian can afford already from becoming even more expensive?

    The discussion should be: Making sure that free digital over-the-air television (a superior technology!) is accessible to all Canadians.

  25. Ramblin Rose says:

    The Basic N number of channels should be unscrambled digital and completely individual consumer choice
    It’s criminal that with Digital Over The Air signals the mandated as new normal that I must as an Analog cable customer be forced to use a Roger’s digital to analog box because they scramble the signal for fear in their words from a customer service rep who took a painful hour to first admit the signal was scrambled, that I might share that with my neighbour!

    Basic cable and satellite service should not include channels in a language that the customer doesn’t speak nor understand and so if the CRTC is going to mandate any number of “basic” channels, let the individual consumer choose what they are and not require any special equipment that is not needed if one was receiving over the air signals to an HDTV! They already down grade their signals because of bandwidth.

    While I’m at it…why do we still pay Bell $2.80 a month/$33.60 a year for touch-tone service?

    Does the CRTC still stand for Canadian Representation of Telecommunications Companies?

  26. Ramblin Rose says:

    And what Alex said!
    The discussion should be: Making sure that free digital over-the-air television (a superior technology!) is accessible to all Canadians.

  27. We’re voting with our feet
    Cable companies and the CRTC are ensuring that more of us will buy our TV a la carte from other non-Canadian providers like AppleTV or Amazon. They’re shooting themselves in the foot. I, like many other commenters here, cut my cable years ago and have no plans to go back. I subscribe to one or two series via ATV and get other content on Netflix or streaming video sites. What I have lost is local and national TV news, which I get from the internet (mostly Twitter); but even they still haven’t caught on and put their entire newscasts on line in a timely manner. I don’t mind paying for content, but I don’t like being gouged or forced to pay for more content than I want/need.

  28. It just goes to show that the more you get the more you are expected to pay; however, there should be some limits as to how much these companies are going to be regulated and forced to do certain things. It seems that those in power do not understand that someone has to pay for all of these rules and it is usually the customer who ends up having to pay; mostly for something they didn’t ask for. <div style=’height:84px;overflow:hidden’><div style=’padding:37px; margin:30px;’> </div> <div style=’height:214px;overflow:visible’><p> </p><h2>Seen this online casino?</h2><p><span>Watching your bankroll carefully is the only way to get the most out of any <a href =”http://www.onlinecasinogate.org”>online casino</a> poker game experience that you might have. </span></p></div></div></div>

  29. Well, this isn’t making me want to go back to cable anytime soon. Is making me consider how to get a media box setup so that I can catch all the various online streams that most TV stations have.

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  31. Canadian Culture Advocat says:

    Canadian Culture is not a Cash Grab
    You completely miss the point of the CRTC and the interests of Canadians to promote our culture through broadcast and communications media. So this so called cash grab notion kind of cheapens us a little bit, don’t you think? Maybe yiou want to say that some people don’t want to pay for things they do not like. What about taxes – let’s just pay for what we like in that regard. Why not only pay for roads that we use?

  32. Can’t Afford Basic Cable Culture!
    Shouldn’t national culture be accessible to even people that can’t afford basic cable?

  33. Geneva Nam says:

    which channels
    does anyone know which channels will be forced?

  34. CRTC try advocating for the Cdn Consumer NOT the Cdn Corp
    Digital should never be shoved down my throat unril the technology existed to bring it to my home at my disgression instead of forcing me to hook up more equipment that sucks more electricity which increases my bill let alone requires me to junk perfectly good reliable means of taping my shows to buy an expensive pvr…CRTC should open the market so there can be something called competition which surprise benefits me,the consumer.Besides, just because I live in a city they feel I deserve no choice between hd and analog?Who lines whose pockets?

  35. Regulator + Oligopoly are in masterbed, citizens are in dog hous
    Is ripping off millions of your average citizen to indulge fringe elements of society protecting culture? Is continuing to tolerate governmental bureaucracies and expert rip off artists that the cable and tel companies are deciding together what we watch, how much we pay, and just about everything else OK? Is having to cut your cable or bending over instead of having a properly competitive customer service oriented commercial environment what we have to choose between?