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Does the New CRTC Move on Unbundling Distribution Really Offer Consumers a Better Value Proposition?

by User Not Found | Mar 24, 2015

The Canadian Radio-television and Telecommunications Commission (CRTC) announced last week the decision to mandate pay TV operators to offer TV subscribers a basic package priced at no more than C$25 a month ($20 USD). According to CRTC, the decision reflects ongoing viewers’ changing habits and preferences. The CRTC decision will supposedly give consumers a more affordable choice via the pick-and-pay option starting March 2016.

While current pay TV subscribers are forced to pay expensive packages for a large number of channels that they never watch, the new entry-level TV service will prioritize the local and regional news and information programing plus educational channels capped at C$25, and give subscribers the option to add individual channels on a la carte basis. However, while this ruling will give consumers cheaper options for local and regional programing, subscribers opting to pay for just a couple of entertainment channels will quickly pay more than if they had selected a package from a pay TV provider as consumers get exposed to the true market cost of each channel.

We have seen recently U.S. broadcasters and cable networks including CBS and HBO develop direct-to-consumers OTT service costing $6 and $15 month respectively. When consumers start adding entertainment channels on an a la carte bases they will quickly see that pay TV packages such as Shaw Communication’s 73 channels for C$35 is not such a bad deal after all.

The CRTC chairman and CEO, Jean-Pierre Blais defends the new ruling alleging benefits to various groups of TV viewers including college and university students, young urban professionals and families, as well as retired citizens who may be interested in smaller selected packages. Some service providers also support the ruling as it could potentially bring higher revenues on a la carte basis. While according to CRTC these changes in pay TV landscape in Canada will give consumer flexibility to build their own packages at a better value proposition, the question surrounding this mandate is whether this better value-proposition is real. Canadian consumers will most likely end up paying more for the a la carte option. One certain consequence is that the true cost of programming will be exposed, and it will not be pretty as we have already seen with the launch of stand-alone OTT services from broadcasters and cable networks in the U.S.

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