Last week Canada’s cable TV companies were required by the Canadian Radio and Television Commission (CRTC) to introduce a basic cable package for $25 per month.
The regulation was derived from feedback at public hearings held last year. The intent was to allow consumers the opportunity to pay the basic minimum costs to get a cable connection (to cover the companies infrastructure and maintenance costs) . This then allowed consumers to select and pay mainly only for the channels they wanted as opposed to getting a bundle which included channels you never watched and wondered why you were paying for them.
Why Change the Business Model
With advent of internet based streaming and entertainment services the number of cable subscribers continues to drop.
The CRTC , in forcing a more pick and pay solution, is driving cable TV providers to what they view as a more sustainable approach. The CRTC believes the increased flexibility will somewhat address this shift from cable to other sources for video entertainment over a three to five year horizon.
The cables companies only see an impact on immediate term profits and are following the letter of the regulation but not its intent.
Shaw cable for example has inluded about 30 TV channels in their basic package for $25. Generally these are low demand channels. They continue to have three bundled premium packages. One of these has about 60 channels for $43 a month. If you take the basic package for $25 and then add 30 more channles at $3 each then 60 channels would cost you $115 a month. However most of the channels in the premium package cannot be purchased individually anyway so if you want them (and they include the more popular channels ) you need a premium bundle.
Not to mention that Bell has been outed in the media for advising their customer representatives to not mention the basic package and only talk about it if requested.
A failed attempt
The companies are cleverly resisting the CRTC mandated change (although appearing compliant) while maintaining their cuurent profitable business model for the moment.
I for one won’t sympathize when their cable businesses collapse in five years or so.