STARTING SEPTEMBER 7, BROADCAST distributors (a.k.a. cable, IPTV and satellite TV providers) will go before the CRTC trying to convince the regulator they are providing consumers with the choice required under rules adopted last year and that no further regulation is necessary.
Groups representing consumers will be there too, arguing, among other things, the way BDUs are offering the new so-called skinny basic package is inadequate. The Consumers Association of Canada (CAC) and the Public Interest Advocacy Centre (PIAC) say the Commission needs to address the issue of unfair practices being employed by some BDUs.
The groups say that the Commission’s choice policy was designed to give consumers more say over TV services (and hopefully lower monthly costs), but some BDUs are thwarting it with their marketing practices. CAC/PIAC say this relates to making certain discounts and services available to all customers – with the exception of those subscribed to the entry level packages.
This, say CAC/PIAC, deters “customers from switching or subscribing to the small basic service. These types of practices subject small basic service subscribers to an undue disadvantage and should be prohibited,” reads their submission.
The two associations argue not making bundling discounts available to basic package subscribers runs counter to certain parts of section 3(1) of the Broadcasting Act, namely the “efficient delivery of programming at affordable rates, using the most effective technologies available at reasonable cost;” and “reasonable terms for the carriage, packing and retailing of those programming services.”
“Practices intended to deter Canadian customers from subscribing to specific packages which would best suit their household’s choice and affordability needs by taking away or making unavailable bundling discounts normally available to all other BDU subscribers hinder the achievement of those broadcasting policy objectives,” argue CAC/PIAC.
There is also a certain level of confusion from consumers with respect to the number of and specific channels included in an entry level package. For example, Shaw and SaskTel explain their respective packages differently – Shaw says it offers up to 40 channels while SaskTel’s is over 16 channels. CAC/PIAC contend that BDUs should better explain their packages on their web sites.
“CAC-PIAC believe BDU web sites should clearly state the number of SD and HD included in the small basic service so that consumers can better compare packages,” they say.
That type of thing is irrelevant to the proceeding, argues Bell Canada in its submission. The Commission set the channel requirements for an entry level package and BDUs are following them.
“Therefore despite these interveners' wishes, including all Canadian and all US channels or discretionary channels such as CBC Newsworld or TSN is not permissible, nor is removing the mandated 9(1)(h) channels such as TV5/Unis or CPAC,” it argues.
Bell adds that “it is important to understand that the Commission determined the maximum price of the basic package after taking into consideration the very high fixed costs that BDUs have in terms of infrastructure, customer equipment, customer acquisition and customer support and service.”
More generally, broadcast distributors disagree with arguments put forth by CAC/PIAC. The BDUs contend there are plenty of options available, both regulated and exempt, to consumers to receive broadcast TV. This means, they say, there is incentive for BDUs to compete for customers.
“Accordingly there is no need for the Commission to intervene any further in the offer of the entry-level package by BDUs, unless to it is to address concerns related to the incentive and opportunity for vertically integrated broadcasting undertakings to act anti-competitively,” argues Telus.
“It makes perfect sense for a distributor to establish incentives for purchasing bundles of programming services that decrease the overall cost to the BDU that are, in turn, shared with bundled consumers.” – Telus
The company says CAC/PIAC’s concerns around the ineligibility of basic package subscribers to get bundle discounts defies logic. Bundles are designed to reward customers who purchase larger packages by receiving a discount on the price of the larger package.
“For this reason, it makes perfect sense for a distributor to establish incentives for purchasing bundles of programming services that decrease the overall cost to the BDU that are, in turn, shared with bundled consumers,” argues Telus.
Other BDUs argue that they do, in fact, allow their basic TV subscribers to take advantage of bundle discounts. Rogers Communications says the way it set up its Starter package and makes discretionary services available provides the flexibility that consumers and the Commission are looking for.
Its $25 Starter package “establishes a low-price entry point for consumers who are then able to supplement the small basic service with discretionary services selected under a variety of flexible packaging options, including small packages and standalone channels.”
Shaw Communications also notes its entry level (Limited TV) subscribers can avail themselves of bundle discounts. Its submission includes a screen capture from its website showing how consumers can get those discounts. “Shaw places ‘bundle discounts’ on the third service (phone) by reducing the base rate from $30 to $15 ($31 to $16 as of August 1st 2016). The $5 HD Box rental is also waived for Limited TV ‘triple-play’ customers. Any Limited TV customer who has all three services (video, internet, phone) is eligible for these discounts,” the company says.
SaskTel took issue with CAC/PIAC’s contention that basic TV customers should get access to HD for free. The company argues HD is a value-added service and therefore has to monetize it. “This fee allows customers to gain access to the HD version of all channels they subscribe to, if an HD version of the channel is available,” says the Crown corp. “This point, in and of itself, is justification for charging for this service.”
The hearing is scheduled to run on September 7 and 8 in Gatineau. Cartt.ca will be there.
