The regulator released a decision Thursday afternoon that paves the way for the so-called "skinny basic" option within a year, the first time it has regulated a basic cable package since 1998.
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That new cable package is capped at $25 a month and will consist of local stations and mandatory channels, such as APTN, TVO, CPAC, educational channels and accessibility channels, with the option to include up to four American "affiliate" channels (NBC, ABC, CBS and Fox), plus PBS.
Subscribers would then be able to choose the channels they want to add and either pay for them individually or create their own bundles, the so-called "pick a pack" or "pick-and-pay" option.
By comparison, the cheapest online advertised television package for Rogers customers in Ontario is $40.48 a month for "190+ channels," while Bell offers Ontario customers more than 150 channels on both Fibe and satellite options for an advertised price of $41.98 a month on its website.
CRTC chair Jean-Pierre Blais said the time is right for cable companies to change the way they offer cable channels.
"We had to make this change. We do it from a position of strength," said Blais.
"We have to get ready for the next wave and the next wave is new technologies that are coming up. In a sense we are forcing the industry to finally face that the world is changing."
The CRTC also announced Thursday that those who want to switch cable companies no longer have to give 30 days notice.
A code of conduct was also announced to help with disputes between programmers and cable companies starting in September 2015.
Deadline still a year off
The CRTC is giving the cable industry some time to adjust to the new rules, introducing them gradually over the next year and a half before they become mandatory in December 2016.
Service providers will have until March 2016 to offer the $25 basic package.
The full pick-and-pay option, where subscribers could both create bundles and buy individual channels, must be in place by December 2016.
News channels from CBC and CTV will not be included in the basic cable package. CBC News Network will be mandatory in Quebec, while French-language news channel RDI will be mandatory for Canadian provinces and territories outside Quebec.
Consumers will have the option of keeping the cable packages they already have.
Part of broader changes
The CRTC has been holding hearings into revamping cable options for consumers for the past year.
While there has been some resistance from the industry, there is a feeling that change is inevitable and the changes may help the cable and satellite industry keep the customers they have and maybe lure some back.
However, Blais did acknowledge the changes will be harmful to some.
"I won't say the result of this decision will mean that every service provider ... will survive in this new environment. There may indeed be services that will not survive and there will be job losses," he said.
"That's always sad, because it affects Canadians that may lose their jobs, but our view is that in this new environment which is far more competitive, good companies will find ways to innovate, compete and thrive if they are successful."
Government, industry reacts
Some of Canada's major telecommunications companies such as Rogers, Telus and Shaw said they're looking forward to giving customers more choice.
"While this new regulatory environment will not be without challenges, the CRTC has provided real opportunities for Shaw to continue delivering the best content experiences possible for our customers and viewers within a healthy, dynamic and competitive environment," Shaw CEO Brad Shaw said in a statement.
Canadian Heritage Minister Shelly Glover said in a statement the government welcomes the decision, having advocated for pick-and-pay in the past.
"It is our belief that Canadians should no longer have to pay for channels that they do not want in order to watch the channels that they do," she said.
"While we understand that the CRTC feels the industry needs time to adjust to the new rules, we call on all industry players to deliver the choice to Canadians that they deserve in a timely manner."
Both Liberal Party deputy leader Marc Garneau and NDP industry critic Peggy Nash told Power & Politics host Rosemary Barton they are curious to see if the changes result in savings for consumers.