Regulator may also end simultaneous substitution
The CRTC is proposing that cable and satellite companies offer discretionary programming services on a pick-and-pay basis, but would allow them to retain pre-packaged options for customers who are happy with their current offering.
In a report issued last week, the CRTC suggested a new model for the distribution and packaging of TV services that would require cable and satellite companies to offer a “slimmed down” all-Canadian basic service that “gets back to basics.”
The proposed package would include only local Canadian conventional television stations, channels of public interest that must currently be distributed to all subscribers (such as CPAC and APTN), provincial educational services, as well as in some cases the community channel and the provincial legislature programming service.
The CRTC report also proposed that satellite and cable companies be required to:
• Promote this small basic service to Canadians so that they are aware of its availability;
• Allow subscribers to select all discretionary programming services on a stand-alone basis (pick-and-pay); and
• Allow subscribers to build their own custom packages of discretionary programming services (build-your-own-package)
The proposed approach would also allow distributors to continue to offer programming services in pre-assembled packages. “Those who are not satisfied with the status quo would be offered alternatives, including the choice of smaller packages or customization on a pick-and-pay basis,” said the CRTC in the report.
“The proposed approach is designed to respond to consumer demand for more flexibility by requiring that all discretionary services by offered on a pick-and-pay basis,” said the report. “Under this approach, subscribers would not have to pay for discretionary services they do not wish to receive and could allocate their financial resources mainly to the services they or their families wish to receive.”
The CRTC said there is compelling evidence that consumers favour the pick-and-pay approach. Since it was introduced in 1999, for example, Videotron’s build-your-own-package has gained “considerable popularity” among Quebeckers. The option saw a 141% increase in take-up between 2006 and 2011, with Quebecor reporting that approximately 70% of all new subscribers selected this option.
While other distributors such as Bell and Cogeco have offered similar flexibility to Quebec subscribers, they have not made similar offers available outside of the province, said the federal regulator.
With the price of cable, satellite and IPTV distribution services outpacing the rate of inflation in recent years, providing subscribers with increased flexibility would give them more control over their bills, said the report.
Studies have suggested that the cost of individual services could increase under a pick-and-pay model, which the report says is common to any type of retail good or service purchased outside of a package.
While the CRTC acknowledged that some channels might not survive in an environment of greater consumer choice, particularly as advertising revenues are shifting away from the traditional broadcast system, it said that the proposed approach is intended to lessen the impact and could force some services to innovate and improve their programming.
The regulator also floated the possibility of eliminating simultaneous substitution, noting that it has received “numerous” complaints from Canadian viewers because of substitution errors, particularly during live sports events such as the Super Bowl.
Eliminating simultaneous substitution would offer Canadian broadcasters more flexibility to schedule and promote homegrown shows, particularly in prime time, instead of having their schedules tethered to those of American networks, said the CRTC.
It also plans to explore whether an audience-measurement system drawing information from TV set-top boxes should be created, noting that it could assist the industry in responding more effectively to the changing needs and interests of viewers, while at the same time protecting their privacy.
The CRTC is inviting the public to share their views on these topics by June 25, in advance of a public hearing scheduled for Sept. 8.
