CRTC hearings: How the outcome could affect your cable and internet bill

Unbundling, pick-and-pay cable subscriptions - whatever proposals Canada's broadcast regulator ends up adopting, it will still hit Canadians in the pocketbook, say experts.

Broadcast regulator hearing arguments on pick-and-pay subscription model for cable, among other things

While Canada's broadcast regulator hears from various stakeholders on the idea of pick-and-pay cable subscriptions, Nelson Cardoso says he dumped Rogers Cable 18 months ago in favour of an HD Antenna. He says he now watches Netflix and Crackle and saves $70 to $80 a month that would normally go to cable.

Canada's broadcast regulator is holding hearings on a series of proposals that many observers say could dramatically change Canada's TV landscape.

Having received input from about 10,000 Canadians, the Canadian Radio-television and Telecommunications Commission (CRTC) has convened a special hearing called "Let's Talk TV" in Gatineau, Que.

Over the next two weeks, the CRTC will hear from industry representatives as well as private citizens on a host of broadcast issues. Canadians have until Sept. 19 to submit their opinion to the CRTC on the future of TV in Canada.

The most-publicized proposals include a plan that would require cable and satellite providers to offer a basic service made up primarily of local Canadian channels, as well as a strategy to disentangle subscription packages to allow consumers to pick and choose individual channels.

Whichever proposals the CRTC ends up adopting, observers say it's likely to affect the pocketbooks of Canadians. Here's a closer look at what's at stake.

What are the main proposals?

While there are a number of proposals in play, the CRTC hearings address two main themes: giving consumers more choice and flexibility and promoting Canadian — especially local — content.

To achieve these aims, the CRTC is looking into two proposals that have received a lot of publicity:

  • Providing consumers with a basic TV package that mainly consists of local Canadian channels
  • Unbundling cable packages to allow for a "pick-and-pay" model

Unbundling is a good thing, right?

Well, it's complicated.

Right now, when you buy a cable subscription from Canada's major cable providers – such as Bell, Rogers, Shaw or Videotron – you can opt for different packages. You're paying for the channels you want, but also for a bundle of channels you may never watch.

CRTC chair Jean-Pierre Blais said his goal is to modernize the regulator to adapt to a new TV landscape. (CBC)

While being able to separate the channels you want from the ones you don't seems logical, there's a reason channels are packaged this way. Bundling popular channels with more specialized ones is a way of helping subsidize the smaller channels.

The cable companies have argued that unbundling could mean smaller channels, which would not have as many subscribers, could become orphaned and disappear.

The advocacy group Friends of Canadian Broadcasting has issued a similar warning. It recently released a statement saying that the pick-and-pay model, in conjunction with other proposed changes, "will likely harm local broadcasting, especially local news, which is the kind of programming Canadians think is most important."

OK, some channels might perish. But overall, cable subscriptions should become cheaper, no?

Likely not. If channels were unbundled and consumers had the ability to buy individual stations, the prices for specific channels would probably go up.

"When you buy anything in bulk, it's cheaper on a per-unit basis," says Greg O'Brien, editor and publisher of CARTT, a Canadian broadcast industry news site.

He uses the example of someone who buys a cable subscription to get sports channel TSN and also ends up with W, the women-focused lifestyle and movie channel. By involuntarily subscribing to W, TSN fans help keep the price of subscribing to W low, while the W fans keep the cost of a TSN subscription a little lower.

O'Brien says that some companies, such as Videotron in Quebec and Eastlink in the Maritimes, already provide pick-and-pay options in a limited form. But he maintains that there hasn't been a huge public movement in favour of unbundling.

Forum Research recently conducted a poll of 1,202 Canadian cable subscribers that found 48 per cent prefer the current model of cable subscriptions, while only one-third desire the CRTC's proposed pick-and-pay system. (The poll was based on an interactive voice response telephone survey of randomly selected Canadians 18 and older. The sample is considered accurate within three percentage points, 19 times out of 20.)

O'Brien says that given the potential costs of unbundling, and the fact that many consumers buy cable subscriptions to satisfy multiple family members, most people will still opt for the big bundle. O'Brien likens it to the consumption of junk food.

"Most people shop at Costco because they know they're going to have to buy a big box of potato chips rather than just one or two bags."

Canadian television market share

Click on the chart to see more about TV market share in Canada.

I've heard that the CRTC is trying to implement a cheap basic package. What's that about?

The CRTC is looking to force broadcasters to offer a basic monthly cable package that emphasizes Canadian content and costs no more than $20 to $30.

The so-called "skinny basic" would likely include Canadian over-the-air channels such as CTV, Global and CBC, as well as specialty channels such as APTN (the Aboriginal Peoples Television Network) and the Weather Network.

O'Brien says it's an "artificial limitation," because the Canadian-centric package will likely exclude the main U.S. networks, which means getting those channels could be an additional cost.

"Most people expect their basic package is going to have some of those U.S. channels: NBC, ABC, Fox and PBS," says O'Brien. "So if all of a sudden you're going to say, here's a skinny basic, but all of these U.S. channels that you're used to are gone, that's going to upset some people."

How do they plan to protect and promote Canadian content?

In addition to making Canadian programming, especially local content, part of a basic cable package, the CRTC is looking into "redefining broadcast revenues."

In order to help create Canadian content, the telcos have to pay into the Canadian Media Fund, a pot of money that helps pay for domestic TV and film production. In 2013, cable and satellite providers contributed $266 million to the Canadian Media Fund.

The CRTC is hoping to tweak this system to compel online video streaming services to also contribute. The biggest of these is Netflix, which has about four million subscribers in Canada.

But O'Brien says that requiring Netflix to do this carries all sorts of legal hurdles. The U.S. company offers a Canadian version of its service, but it doesn't have a Canadian office and pays no taxes here.

Even if the CRTC were somehow able to compel Netflix to contribute to the Canadian Media Fund, O'Brien says the company would likely pass the cost on to consumers in the form of higher subscription rates.

"That's what everyone else does," says O'Brien.