Also offers up new best practices: PIAC says not far enough
GATINEAU – While noting Canadian subscription TV carriers are operating within the rules, the CRTC made the unprecedented decision to renew the large carriers' broadcast distribution undertaking licenses for just a single year, as opposed to the usual seven-year term.
To the CRTC, this continues its efforts to put consumers at the centre of the Canadian broadcasting system. In the November 21 decision, the Regulator offered what it sees as the best practices that broadcast distributors should undertake to ensure that Canadians are aware of small basic packages, their limits and offers related to them.
Broadcasting Decision 2016-458 said the BDUs (which were called on the carpet in September) are generally operating within the policy objectives of providing consumers more choice. However, given the number of consumer questions and complaints, the Commission said small basic and pick and pay channel flexibility need “to be more clearly and effectively communicated.”
For example, broadcast distributors shouldn’t downplay entry level packages or avoid providing information on them. Rather, BDUs should clearly communicate all relevant information on small basic and include the arrival of pick and pay coming on December 1. As well, they should let consumers know that if they switch to an entry level package, they may not be able to return to their previous package.
Throughout the proceeding, the Consumers Association of Canada and the Public Interest Advocacy Centre (CAC-PIAC) argued that the broadcast distributors were limiting the packaging and features available to small basic subscribers. The BDUs offered a number of reasons why entry level customers couldn’t avail themselves of features open to tier 1 subscribers.
It would be inconsistent with the policy for “a BDU to discourage subscriptions to the small basic service by unreasonably withholding value-added services, such as VOD, free preview channels, ‘watch anywhere’ applications and discretionary services, or by offering discretionary services under terms and conditions that differ from those that apply to subscribers to the first-tier offering,” said the CRTC.
The Commission reminded BDUs that starting on December 1, section 23(4) of the Broadcast Distribution Regulations prohibits them from distributing a service or package that would require a subscriber to purchase services other than those in the small basic package, in order to get other services. Essentially, if you want skinny basic and movie channels, you can make that choice, rather than having to purchase tiers of services in between, as had been past practice.
Decision 2016-458 also warned BDUs whose licences don’t expire next year that using approaches inconsistent with policies could result in the Commission imposing new conditions of licence banning such practices for five years into the BDU’s current licence term. This authority stems from section 9(1)(c) of the Broadcasting Act.
Access to bundling discounts for basic TV subscribers was also an issue raised by CAC-PIAC in the proceeding. The group argued that just as tier 1 customers get discounts for taking multiple services, so too should entry level subscribers. BDUs such as Telus and SaskTel countered that bundling was an acceptable commercial practice used to reward higher value customers.
The Commission noted in its decision that discounting practices that don’t also apply to small basic packages amounts to penalizing customers who opt for entry level service.
“Given that bundling discounts are generally designed to reward and promote the purchase of a larger quantity of services, the Commission considers that it makes little sense to exclude small basic service subscribers who subscribe to additional services from bundling discounts, since they may be receiving as many services or spending as much money on their TV subscription as consumers subscribing to a larger tier as an entry-point,” it said.
Set top box practices were an issue in the proceeding with consumers arguing for a different approach to rental. They said it should be done on a depreciation basis, much like is done with wireless devices. The BDUs said this won’t work because it fails to take into consideration things such a usage fee for the box and the maintenance BDUs provide.
The Commission pointed to the Shaw rent-to-own approach as a model to follow. Therefore, as a best practice, the Commission said BDUs should offer “consumers various options such a rent, rent-to-own or purchase for renting or buying set to boxes as to accommodate different household budgets.”
The requirement of some customers to subscribe to a BDUs Internet offering was also addressed in Decision 2016-458. It acknowledged that Bell had decided to make its entry level package available without Internet, but said tied selling of TV and telecommunications doesn’t align with the policy.
“Specifically, the Commission considers that it would be contrary to the intent of the Policy for a larger service provider to take advantage of its competitive position to tie its TV services to the subscription of an additional service such as Internet,” it said.
Decision 2016-458 renews some BDUs for one year, which the Commission says, will enable it “to closely monitor the TV providers’ practices as they implement new TV choices.” Licence renewals examining broader issues will take place next year.
The BDUs contacted by Cartt.ca weren’t offering too much information on their reactions to the decision.
“We’re looking at the decision in detail, but Bell always complies with the regulations of course,” a Bell spokesperson told Cartt.ca
“Don’t put the onus on the consumer to go and be Mr. Tough Shopper." – John Lawford, PIAC
Added Rogers: “We know everyone has different needs and that’s why we’ve been adding more choice with simple options. We’re glad the CRTC agrees we have implemented the new flexible packaging rules properly. We’ll be launching standalone channel selection in the coming days and even more improvements to our TV experience in the coming months.”
The Public Interest Advocacy Centre didn’t think the Commission went far enough in its decision. In fact, the organization argued it didn’t do anything at all except delay any potential real action for a year.
If the CRTC thought bundling discounts was a problem, “they should have outlawed it instead of saying we’d really like you to not do it anymore,” said John Lawford, executive director and general counsel at PIAC.
That consumers have to do “all the heavy lifting” in researching the best packages for their needs isn’t helpful, he added.
“Don’t put the onus on the consumer to go and be Mr. Tough Shopper,” said Lawford. “Make them offer something that looks like a real skinny basic, not give them a whole bunch of loopholes and then tell customers to try to hold them to account.”
