Cable, satellite customers will have more options but will still have to buy Canadian content

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BY ALAN COCHRANE
TIMES & TRANSCRIPT STAFF

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Changes to CRTC regulations on TV package bundling will probably offer customers more choice in three years, but it is highly doubtful that we'll see a reduction in our monthly bills, the vice-president of the Canadian Consumers Association said yesterday.

"It's kind of like cellphone packages where you always seem to end up paying more than you think you should," Mel Fruitman said yesterday. "But until we actually see what happens in pricing, we won't know if this is good, indifferent or bad. But it is highly unlikely that our bills will go down."

The Canadian Radio-Television and Telecommunications Commission announced yesterday that it was making sweeping changes to regulations that control the way cable and satellite service companies provide bundles or packages of channels.

Jan Innes, a spokeswoman for Rogers Communications, said the changes will give cable and satellite TV customers a bit more choice of channels, but they will still have to buy basic packages that maintain the tradition of Canadian content.

"This really takes the shackles off how we offer packages to consumers," said Innes. Rogers which provides cable TV service to over 2.3 million customers in Ontario, New Brunswick and Newfoundland.

The changes won't take effect until Aug. 31, 2011, when the broadcasting system in Canada officially switches to digital service.

Innes said the changes will allow cable operators like Rogers to offer more choice of channels to consumers, but they will still have to abide by the CRTC's golden rule of Canadian content. For example, all customers will still have to purchase a "basic cable" package that will likely include local or community channels, a legislature channel and others. After that, consumers and cable operators will have more flexibility in the variety or bundles. But she said the 51 per cent Canadian content rules will mean consumers will still have to buy at least one more Canadian channel than foreign channels. So if your total package has 39 foreign channels, you will have to have 40 Canadian channels.

She said some consumers want to be able to pick and choose only the channels they want, but cable operators insist that packages or bundles offer better value for consumers, especially families whose members have different interests like sports, entertainment, movies, news, lifestyle programming, video-on-demand, and the music channels that form a popular part of digital TV packages.

While Rogers was quick to offer comment, other TV service providers are going with the "wait and see" approach to the changes to CRTC regulations.

Isabelle Robinson, a spokeswoman for Aliant, said the company will take time to study and assess the changes before making any decisions.

"It's a very complex decision and right now it is difficult to see what changes will be in store for the end user." Aliant provides IPTV (Internet Protocol TV) to customers in Moncton, Halifax and Saint John through its Internet service. The packages and bundles are comparable to what Rogers is offering.

Jacqueline Michelis, a spokeswoman for Bell Expressvu, which provides satellite TV services to customers in Ontario, Quebec and Atlantic Canada, said that company is also still in the process of studying the changes. She said the changes will likely be a topic of discussion when the Canadian Association of Broadcasters meets in Ottawa for its national convention next week.

Another major part of the CRTC announcement was increased levies on cable and satellite providers to raise money for local programming. Distribution companies currently pay a tax of five per cent of their gross revenues, with the money going toward production of Canadian-made television programs. The CRTC will increase that to six per cent, which will create a $60-million fund allocated to a new Local Programming Improvement Fund. This works out to an average of 50 cents per subscriber.

"I doubt very much that the cable companies will swallow that one," Fruitman said. "I expect they will pass that extra cost through to consumers."

Innes said Rogers isn't too happy about the idea of paying more of its gross revenues into a fund that probably won't do much to help its company-owned stations. She said community stations like the one in Moncton probably won't get anything from the fund.

Fruitman said the lack of competition between cable companies provides no incentive for them to lower their costs for consumers. He believes more competition would help bring down costs but doubts if that could happen because of the enormous infrastructure costs associated with setting up a distribution network.

Fruitman said the CRTC's Canadian content rules have been in place for a long time and it is unclear how much they are actually helping consumers. The idea behind the practice -- which is also regulated in the radio industry -- is to provide a level playing field where the Canadian music, film and television industries can compete with foreign productions. But many consumers and businesses have complained it stifles choice.

"There should be mechanisms in place to protect the Canadian industry, but I'm not sure how much it should be regulated. If you ask us what we actually do, you'd probably get a different answer."