Financial Post: Big telcos warn of ‘market shake-out’ if pick-and-pay TV model adopted

Big Telecoms Rogers and Shaw are lobbying against the so-called 'a la carte' model that would allow customers to pick and pay for individual channels. The CRTC also expressed concern over the pick-and-pay system saying that a lack of choice and flexibility could lead to consumers leaving the broadcasting system. Wait - isn't Canadians dropping TV for the more participatory medium of the open Internet a good thing? Why does the CRTC see it as it's job to protect old business models and top-down culture? On the flip side: In the 21st century shouldn't the CRTC's priority be to increase open and affordable access to the Internet? Article by Jamie Sturgeon for Financial Post: TORONTO — BCE Inc., Rogers Communications Inc., and Shaw Communications Inc. which together control two-thirds of the $8.3-billion broadcast distribution market, are lobbying against the so-called “a la carte” model that would allow customers to pick and pay for individual networks, arguing the change would have disastrous consequences for programmers, such as Bell Media and Shaw Media.

“A regulation requiring that all programming services must be made available to consumers on a stand-alone basis would have far-reaching ramifications,” BCE, whose Bell owns 30 specialty networks, said in a submission to the Canadian Radio-television and Telecommunications Commission. “Undoubtedly, a market shake-out, causing many specialty services to exit, would ensue.”

The three big players, led by BCE, have told the CRTC they support the status quo of “tied selling,” or the practice of grouping weaker-performing networks in with a popular channels, versus a new approach to sell channels individually.

“Bundling of services remains one of the most important tools to remain competitive,” Jean Brazeau, Shaw’s senior vice-president of regulatory affairs said. For a cable operator, it is also an important tool in making money.

In the race for subscription dollars, rates for TV services across providers have risen sharply over the last decade as the number of specialty channels, each commanding its own fee, has soared. Net costs to subscribers climbed another 2.6% in 2011, while average bills now hover around $60 a month.

A tapped out consumer, coupled with the emergence of unregulated online broadcast alternatives, has regulators worried the decades-old model — and more importantly the subsidies it feeds Canadian content production with — is in danger.

“The commission is concerned that the lack of of choice and flexibility could motivate consumers to leave the regulated broadcasting system,” the CRTC said in a directive to Rogers, BCE, Shaw and Quebecor Media Inc., asking them to draft solutions.

In 2011, cable, satellite and telco television providers steered $489-million, or 6.5% of subscriber revenues into the creation of Canadian programming, according to CRTC figures released Wednesday. Without change, the thinking goes, an exodus may unfold which would undermine the hodgepodge of subsidy vehicles that support CanCon on the small screen.

With a smaller collection of television assets led by a strong-performing Sportsnet property, Rogers appears more amenable than the other two telecom and media behemoths to unbundling tiers into individual channels.

“The rising cost of service has put pressure on consumers,” Pamela Dinsmore, vice-president of regulatory affairs said. “We recognize that more can be done.” Read more »

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Read more at financialpost.com

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