Canada Prepares To Force Cable Companies To Provide Cheaper, A La Carte TV

In March of last year, Canadian regulators announced they were combating high TV prices by trying something new: forcing the country's cable companies to offer "a la carte" (pick your own individual channels) TV. The CRTC's full ruling declared that by March 2016, all Canadian TV providers must provide a $25, discounted base bundle, letting users pick and choose individual channels beyond that. A la carte has long been a popular idea in both Canada and the States, where in the latter users receive on average 189 channels -- but usually only watch about 18 of them.

But while both Canada and the U.S. have long had an on-again, off-again love affair with the idea of a la carte TV, the pay TV industry has long argued the idea would damage the economics of pay television, eliminate jobs, kill off smaller niche channels while driving up prices and confusing customers. The problem is that niche channels are already dying; cable operators looking to battle tightening margins have dropped lower rated options like The Tennis Channel or The Weather Chanel. And prices, as you may have noticed, are skyrocketing at an unsustainable rate.

While U.S. regulators bought the industry's argument and backed off a la carte inquiries, Canadian regulators didn't, and their choice will be interesting to watch. It's effectively an attempt to force evolution on an industry caught in an unsustainable price-hike death spiral. And as the March deadline gets closer, Canadian cable and broadcast industry reps are begrudgingly admitting that the idea may lower rates for some Canadian TV viewers, but not if they enjoy sports:

"Clearly the most expensive [channels] will always be sports," says (Gary) Pelletier, president of the Canadian chapter of the Cable & Telecommunications Association for Marketing. "At the end of the day, for sports watchers, their cable bill will probably stay the same or increase, maybe.... In the case of someone who doesn't watch any sports at all, their bill will probably decrease."

In contrast, independent analysts have predicted that the average Canadian consumer will save anywhere from $5 to $21 per month. But Pelletier and the cable industry are quietly confident because they know that even if they lose money on tightened cable TV margins, they can always extract their pound of flesh by squeezing usage-capped Canadian broadband subscribers harder:

"While some consumers might be tempted to drastically reduce how much they pay for TV, Pelletier warns it could cost them in another way. Supplementing a slimmer cable package with a streaming service or two could increase data charges, Pelletier says. Plus, you may have to surrender any discounts you get from bundling cable with home phone, internet and/or wireless service. "If you cut your cable, then your internet is going to go up," predicts Pelletier."

And by "predict," Pelletier (whose organization is stocked with North American cable companies) means that's exactly what cable companies will do. In other words, your TV bill will be lower, but your broadband bill will be higher. And nothing really gets fixed if regulators don't address the lack of competition in the broadband space that lets usage caps (a glorified price hike) thrive in the first place. That's why this sort of thing could prove to be a regulatory slippery slope, when the easier path might have been to keep the focus on broadband competition -- and just wait for traditional cable service to slowly implode in the face of the cord cutting revolution.

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