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Changes coming soon to Canada's distribution rules for cable and satellite specialty television packages are expected to result in more a-la-carte offerings for consumers.
"We're certainly going to see more a-la-carte options," Gregory Taylor, a broadcasting expert based in Montreal, said in an interview.
"But I don't think we've seen exactly how these are going to be offered by the BDUs [broadcasting distribution undertakings] at this point."
Canada's broadcasting system could soon become more fragmented with a new distribution regulatory framework announced in a 2008 CRTC decision.
Right now, distributors have to carry one Canadian specialty service for every non-Canadian specialty service offered in a package and one Canadian pay service for every five non-Canadian pay services carried in a package.
But according to the commission's new distribution policy framework, those rules will be dropped after Aug. 31, 2011.
Under the new rules, distributors can arrange the content of packages or unbundle content as they see fit, but must ensure that each customer receives a majority of Canadian programming services in their overall subscription.
But most channels included in mandatory basic packages are Canadian, so that consumers will have the option to select fewer Canadian and more foreign specialty and pay services.
In a report issued following the CRTC's value for signal decision last March, the commission said the changes will "enable BDUs to respond better to consumer demand for pick-and-pay and other packaging options."
Some distributors are already offering a-la-carte options.
For the past eight years, Quebecor Media Inc.'s Videotron cable service has permitted its customers to assemble their own packages of 15, 20 or 30 specialty or pay channels.
The company says that about half its customers now choose that option instead of subscribing to thematic packages.
Telus Corp. pointed out the offerings listed on its website. Subscribers with the company's Internet protocol television (IPTV) service in Alberta and British Columbia subscribe to 45 individual channels at $2 each per month.
Subscribers are required to purchase the digital basic package at $23 per month before they can add additional channels.
Rogers Communications and Bell Canada declined to comment.
Cable and satellite providers say customers pay less per channel when they buy a package than they would if they had the option to buy channels individually.
John Doyle, The Globe and Mail's television critic, said in an interview that if cable and satellite providers offered more a-la-carte options to consumers, it could hurt small broadcasters.
"If the unbundling was to proceed as an option for consumers, then it would obviously put some channels in jeopardy," Doyle said. "Niche channels with a smaller number of viewers would be obliged to fight...for every subscriber."
But some industry observers say the option to unbundle television packages could benefit consumers by letting them buy only those channels they want to watch.
"If I have to buy something, I should have the right to choose what I buy," Howard Bernstein, a former television producer who has worked for the CBC, CTV and Global Television, said in an interview.
"I don't go into a grocery store and someone says to me, "It's mandatory to buy the Kelloggs Corn Flakes." Well that's what they're basically telling us with television products."
Bill Roberts, CEO of ZoomerMedia Ltd., which operates the channels Vision TV, One and JoyTV, told The Wire Report he would be surprised if the cable and satellite providers decided to offer more a-la-carte options.
"The experience in the United States...is that it's a huge pain in the ass because there is so much churn," he said. "People will try one channel for two weeks and another channel for four hours so it makes much more sense to offer the most [channels] in some sort of basic package."
The new distribution regulatory framework will mean that Category A licences - which guarantee mandatory carriage with distributorsm - will be more valuable as consumers are given more choice.
Channels receive their fees according the number of subscribers they reach, and some services could suffer under other changes to the distribution rules.
Taylor said under the new distribution regulatory framework, channels with Category A licences will be evaluated regularly for their contributions to the Canadian broadcasting system.
"They're going to come up for regular review in ways they weren't before," Taylor said.
Quebecor recently applied to the CRTC for a standard Category 2 broadcasting licence for its Sun TV News channel. Category 2 licences require that carriage for the channel is negotiated with distributors.
Quebecor is also seeking an initial exception to receive mandatory carriage for the channel during its first three years of operation.
The company is not asking for mandatory carriage on digital basic, but anywhere on the dial.
In a written response this summer to questions from the CRTC, Quebecor said getting an initial three-years of mandatory access for Sun TV News would be necessary for the channel to launch.
"If mandatory access for a maximum period of three years is not granted to Sun TV News, one or more major cable or satellite providers might decide to not offer this service," Quebecor wrote.
"This would be fatal to our business case...and would likely result in the cancellation of the Sun TV News project."
Source: The Wire Report, 09/17/2010
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