By Lesley Hunter
OTTAWA – While Friday’s CRTC rulings may indeed eventually pave the way towards more choice for consumers in the selection of TV channels, what remains unclear is whether that “choice” will truly be driven by Canadian viewers or continue to be shaped by the country’s biggest broadcasters and television service providers.
Friday’s CRTC decision, which chose Bell Media’s final offer over the one presented by the Canadian Independent Distributors Group (CIDG), noted that “both parties’ offers moved in the direction of providing more consumer choice”, plus contained “incentives to provide a wide choice of programming in the broadcasting system, and the opportunity for greater consumer choice and flexibility”.
What that decision did not say, specifically, was that Bell Media’s offer was selected because it allows the BDUs which carry its 29 specialty services more choice and flexibility in how they are offered to customers. But that’s how Bell Media is describing it. Calling the decision “a significant victory for consumer choice and packaging flexibility in Canada", president Kevin Crull told Cartt.ca that “the quality and variety of programming available would have been diminished” had the CIDG’s offer won out, ostensibly because consumers could finally select – and pay – only for the channels that they truly want. That means that less popular channels, some of which are propped up by the strength of the programming package that they're placed in, may not survive.
“Consumer choice is great as long as you have a lot to choose from and today, there’s 250 very high quality and wide variety of niche programming channels in Canada to choose from”, he said. “If we had adopted choice, but not done so in a balanced way, consumers might have had 50 channels to choose from in a few years.”
While the terms remain confidential, Crull said that the deal allows BDUs to offer smaller theme-based programming packages and ‘pick-a-pack’ options, where customers may, for example, pay a flat fee for 20 channels of their own choosing. However, he acknowledged that if offered that way, those channels would be priced significantly higher than if they were selected as part of a larger bundle. Subscription television customers would, of course, foot that higher bill. Choice, in Canadian television, is costly.
“CIDG will now pay a rate that’s variable based on the volume that they buy”, he added. “This is a well-known and widely adopted principle and why we all shop at Costco: the more that you buy of something, the lower your unit cost. And that was really the fundamental difference between our two offers.
“We said, when you offer packaging flexibility, if you buy very little Discovery Channel because very few of your customers pick Discovery Channel, your unit costs for that channel will be higher. If you buy a whole lot of Discovery Channel, because your customers adopt it widely, then your unit costs will be lower. It’s kind of surprising to me that something so fundamental and such a basic commercial principle was resisted and had to go a year in dispute resolution, but in the end that’s what happened. Had they got their way, they would have paid the same price whether they bought a few units or a million units.”
The CIDG, comprised of Cogeco, EastLink, the CCSA and MTS, has yet to comment publicly on the decision. But at a CRTC hearing into the matter in March, the group told the Commission that Bell Media’s proposed agreement actually prevents them from creating their own themed packages, as those packaging decisions are subject to that company’s prior approval. It also said that Bell Media's refusal to include multi-platform and non-linear rights in the deal significantly undercuts the choices that they can offer their customers.
At least one independent BDU is savouring a victory that it says allows it to continue to offer what its customers want. In its second ruling, the CRTC chose Telus’ final offer over Bell Media’s for its “unique packaging and pricing model, which offers consumers greater choice”.
Ted Woodhead, VP of telecom policy and regulatory affairs for Telus, told Cartt.ca that the decision allows its Optik TV service to continue to offer Bell Media-owned TSN in a small sports-themed programming package, and not forced in to a larger, basic theme pack. He added that Optik’s smaller programming packages provide a marketing advantage over its cable competitors.
“It’s a Telus win and a consumer win”, he said of the decision. “The key issue in this thing was that we wanted packaging flexibility in order to give our customers a choice on services like TSN in a discretionary sports pack - we’re the only service in the country that offers that kind of choice. This decision affirms that the CRTC stands for choice and agreed with Telus that choice and evolution in packaging away from 'big basic' to 'smaller basic' and providing more discretionary programming in the hands of consumers is the way to go.”
While the CRTC certainly appears to be pro-consumer on this issue, it's important to note that this decision doesn't require vertically integrated BDUs to change their traditional way of offering TV services - tiered channel packaging - to offer channels on an affordable a-la-carte basis. In fact, it is still far from certain that other BDUs, especially the CIDG, will be able to offer true consumer choice. And if they do, it won't come cheap.