Canadians appear to have become so accustomed to an uncompetitive cable and satellite market typified by frequent price increases and restrictive options that many are failing to recognize the arrival of greater consumer choice. Last week’s launch of the new $25 basic “skinny” cable packages mandated by the Canadian Radio-television and Telecommunications Commission (CRTC) left many underwhelmed, as the patchwork of channels and hidden fees seemingly confirmed critics’ claims that consumers would be better off sticking with their existing, pricier packages.
My weekly technology law column (Toronto Star version, homepage version) acknowledges that there is plenty of room to criticize the cable and satellite companies. They have no intention of actively promoting the cheaper options and some seem determined to make them as unattractive as possible. However, the reality is that the combination of basic television service and the pick-and-pay model that must be offered by the end of the year is changing the marketplace for the better.
Start with the new cable and satellite basic packages, which differ significantly between companies. Cable companies such as Rogers and Shaw offer both Canadian and U.S. channels in their basic packages, making them viable choices for those looking for limited service that can be supplemented with streaming options such as Netflix. Bell, on the other hand, has loaded its package with French-language channels and none of the popular U.S. channels, thereby ensuring that there will be few takers among English-speaking households. Consumers looking for a cheaper option have a real (and obvious) choice.
Yet focusing solely on the value of a basic package misses most of the story.
First, the arrival of the basic package has sparked a re-examination of television packages more broadly, with the companies tweaking their more expensive alternatives to make them more attractive. For consumers who were thinking of cutting the cord, the changes may be just enough to stick with conventional cable or satellite services for now.
Second, the emergence of some product differentiation on even basic services should spark greater consumer willingness to shop around. Television services have long been exceptionally difficult for consumers to compare given the wide variability in packages and prices. The new CRTC requirements establish a level playing field, enabling consumers to finally make apples-to-apples comparisons among similarly priced basic packages as well as assessing the incremental costs of adding more channels or specialized services.
Third, the biggest benefits of the new system will come later this year when the full pick-and-pay requirements kick-in. Critics warn that consumers will be shocked by the high prices of some channels. However, early indications suggest that consumers interested in combining a basic service with some additional sports, news, or family-oriented channels will save hundreds of dollars a year when compared to bigger packages. Those larger packages obviously offer access to far more channels, but many consumers may place a very low value on channels they have never bothered to watch.
In fact, the choice is not limited to cable packages or pick-and-pay options. With numerous streaming alternatives, a growing number of consumers will rely on Netflix (or Shomi or CraveTV) for much of their entertainment programming and some may turn to sports streaming subscriptions directly from the leagues.
While not every company will offer an identical package, the CRTC’s mandated requirements have finally cracked open the door to competition and comparison shopping for television services. The new market will still take some time to unfold, but the benefits are likely to be felt by all consumers, whether content with basic services or willing to pay for access to hundreds of channels.