Will it Be an Election Promise, a Distraction or Both?

by chris on October 15, 2013

HarperThe Harper Government leaked over the weekend some of the items they plan to detail in the Throne speech that will be delivered from 4 p.m. on Wednesday (October 16th). One of the most talked about items today both on social and traditional media is a plan to force cable and satellite TV providers to offer consumers “pick-and-pay” services.

But this needs to be seen for what it is, the beginning of a long election campaign which will end when Canadians go to the polls on Monday, October 19, 2015, providing the current minority government last the full term. Without wanting to sound like a cynic, these throne speeches tend to be short on detail and lack a time frame for implementation. Don’t be surprised if it is 12 to 24 months before you see any changes to your monthly cable bill. It may also be an opportunity for the Tories to change the story and draw attention away from Senate scandals and toward more consumer-friendly pocketbook issues.

If this “pick and pay” model ever comes into being it could see consumers paying for only the cable channels they want and not be forced to purchase a bundle as currently happens with most cable companies. Industry Minister Moore said “We don’t think people should be forced to buy bundled television channels when they’re not interested in watching those channels and those shows. We should have a pick-and-pay model when it comes to television channels.”

But don’t be surprised if consumers end up paying about the same as they currently do, which is about $75 a month for cable. You may have the luxury of deciding which channel you want, but there will be a price per channel of anywhere from $4 to $6 a channel per month. So using the high end of this pricing model would  end up choosing 12 channels and still paying the same about per month.

Back in 2011 the C.R.T.C encouraged cable and satellite companies to adopt this “pick-and-pay” pricing model when it unveiled new regulations aimed at preventing television broadcasters from restricting consumer choice. Companies such as Rogers experimented with an à la carte pricing model in the winter of 2011-2012, offering consumers in London, Ontario a “skinny basic” package for about $20 a month. They charged an additional $26 or more to customers who wanted to pick 15, 20 or 30 extra channels. Companies such as Videotron in Quebec are moving in the pick-and-pay direction, largely because consumers are shying away from traditional TV and are instead watching over the Internet.

If you have flicked through the channels recently you will notice a lot of channels running the same content either at the same time or a few hours later depending on which province the channel originates from. The argument for the current model is the revenue derived from bundling some good channels with others that are unpopular allows those fringe channels to stay in business. But in a free market those channels should succeed or fail on their ability to attract both an audience and advertising revenue. If there were fewer of these fringe channels perhaps that revenue would be spread across other media and radio could benefit.

Recently, our cable, internet, home phone contract came up for renewal, so we went shopping and talked to the two companies that offer services in our area. Having done some research on-line our preference was for the company that televised a number of the high school football games in the area because one of my sons plays on his high school football team (go Patriots!). However, it was clear the sales person at this cable company had very little room to move and the price was the price even bundling phone, internet and cable together. So it was off to the other company who were more eager to do business. I can report that we struck upon a very knowledgeable sales rep who saved us money and coached us on how to save even more money via the “retention specialist” we phoned while in the store. In the end we dropped the home phone and got an upgraded fiber service for cable and internet for less money than we had paid previously. I only tell you this because at the time it struck me as odd as to why they would do a deal that only ties me to them for 12 months. Perhaps they knew this throne speech was coming!

The challenge for the telco’s is that more and more consumers are saying goodbye to the land line, saving between $30 to $48 a month. Many are also  saying goodbye to cable service altogether. We have friends who 12 months ago cancelled their cable service and get everything they need from Netflicks or the internet. They pay $7.95 for Netflicks and pay about $40 a month for lots of internet bandwidth. We have other friends who use Apple TV and others who have installed an HD external antenna to pick up a number of the “free to air” digital channels. So with a little effort and research the average consume has options to get all the content they want without shelling out more than $30 a month.

What will be interesting when all the details finally come out of this “more consumer choice” election promise is if the cable channels will still be required to carry CBC as part of a mandatory basic package, or will it be a true pick what you want service. In short, don’t hold your breath, and don’t be surprised if your cable bill is still about the same long after the next election.

By the way, both Canada and the USA pay some of the highest fees for cable, internet and cell phone service in the world. In many cases we  actually pay much more for inferior service compared to their global counterparts.

In his book, The Fine Print: How Big Companies Use ‘Plain English’ to Rob You Blind, Pulitzer Prize-winning reporter David Cay Johnston makes the following points:

  • North Americans pay four times as much as the French for an Internet triple-play package—phone, cable TV and Internet—at an average of $160 per month versus $38 per month.
  • The French get global free calling and worldwide live television. Their Internet is also 10 times faster at downloading information and 20 times faster uploading it.
  • America has gone from #1 in Internet speed (when they invented it!) to 29th in the world and falling.
  • Bulgaria is among the countries with faster Internet service.
  • Americans pay 38 times as much as the Japanese for Internet data.

Two other things to look for in this speech on Wednesday is a cap on domestic cellphone roaming fees, which should come as no surprise given the  Conservatives have made it clear they want to see more competition in this space. “We think roaming fees have been a long standing concern for not only consumers but for competition within the telecom sector,” Industry Minister James Moore said in an interview with The Canadian Press.

Also look for some information about a plan to ensure air travelers are somehow compensated when they are inconvenienced by airline overbooking.

I predict the Government will take a leaf out of radio’s book tomorrow and this speech will do a good job of “teasing” and building TSL (time spent listening). Don’t be disappointed it it is  many months before we know the exact details.

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