Starting March 1st, 2016, cable companies are mandated by the CRTC to offer Canadians a skinny television package for $25. Canadians are paying the highest rates for Television and Internet services in the world. Why is that? Why are the cable companies so reluctant to even advertise the new package? More importantly, what does the future of television look like?
Root of all Evil
The Canadian Radio-Television and Telecommunication Commission (CRTC) was formed in 1967 to regulate and supervise the broadcast system in Canada. In later years, its role extended to include the telecommunication and cable company industries. Among one of its mandates was to protect Canadian culture from the bombardment of American programming.
The CRTC is supposed to be an independent public organization. Far from it. Even though Federal government cabinet appoints members of the commission, it is filled with former broadcasting and telecommunication executives. In essence, it is a publicly funded lobby group for the broadcast, cable, and telecommunication industries. Rarely does the CRTC mandate regulations that serve the public good. The $25 skinny package deal is one of those publicly served illusions.
Within days of the $25 skinny package being enforced, the CRTC received over 600 complaints from cable and telecom subscribers. Most of the complaints were about not getting enough information about the new package or that the new package would cost much more than their current package. The response from CRTC was basically a shrug stating that it will take a “wait and see” approach. How did we get into this mess?
The Age of Consolidation
It might be a surprise that 74% of Canada’s Top Media, Internet and Telecom companies are owned by five companies. According to Canadian Media Consolidation Research Project – Quebecor, Shaw, Telus, Rogers and BCE (Bell) are the major players. See graphic above. You’ll have to download the PDF and zoom in to find out which companies own which TV channels. Except for Telus and now Shaw – which recently sold Global Television Network and their other content assets – the three remaining companies not only control the content but also the delivery system. The same could be said for the US, although only two companies control the delivery systems – Comcast and TimeWarner Cable.
Powerful industry lobby groups with lots of money influenced governments into easing anti-competition laws allowing media, broadcasters and Internet providers to merge. In the US, the media conglomerates are opposed to Net Neutrality and trying to change recent regulations put into place to prevent restricted or filtered Internet content. In Canada, Net Neutrality is a bit half-baked. Bell and Rogers are not only wireless and Internet providers, but they are also the content producers and distributors. Both companies give unlimited free access of their content over their wireless networks to their own TV subscribers. Some may argue this is a cool thing to do, but it doesn’t provide open access to all Internet content.
Last year, the CRTC put out a report claiming that more Canadians watch less TV through their TV subscriptions. Instead, they are using Netflix or online web content to view their favourite TV and movies. However, the CRTC isn’t doing much to foster the future of television or a change in people’s viewing habits. To their credit, they have asked the public for their input on the Let’s Talk TV website. Again, this is just an illusion in order for the CRTC to give the perception that they have the public interest in mind. They are still protecting the out-dated business model of TV and Internet providers like Bell and Rogers.
Canadians are paying some of the highest rates for useless TV content. Sure there are over 200 channels but most of the content are repetitive. The specialty channels are on an 8-hour rotation 3 times a day. Popular Canadian TV series like Holmes on Holmes are constantly repeated over different channels owned by the same company. This is done to meet CanCon (Canadian Content) rules that the CRTC has in place without investing money in or purchasing new Canadian productions then they need to. It is not surprising that Canadians are turning to on-demand programming like Netflix or other online sources for their TV shows
Government Needs to Push for Change
As we progress through the 21st century, changes need to be made. First, I am in favour of nationalizing high-speed broadband like Australia did. Australia like Canada has a sparse population over a vast country. The Australian government took over the infrastructure and maintain it to provide Internet access to 95% of the Australians. Like Canada, rural communities were under-serviced because it would be costly to private companies to provide reliable high-speed access in those communities. The Internet Service Providers (ISP) compete for the last mile to the end consumer.
Canada might move in this direction. A ruling by the CRTC in July of 2015, extended rules to provide “open access” for other ISPs to Bell’s fibre high-speed infrastructure. Mayors from Calgary, Toronto and Ottawa weighed in on the ruling. Calgary’s mayor, Naheed Nemshi; summarized the city’s 28-page document submitted to the CRTC by stating
without some form of network access for competitors, there would invariably be challenges to grant all providers the necessary municipal infrastructure to construct their networks. Given limited capacity of municipal right of ways, the market might be limited to a few large competitors.
The second thing the CRTC and the Trudeau government should do is break up the media companies. Customers have no real choices when companies own the content and are also the gatekeepers of that content. It amazes me how this could happen. Governments and companies like Bell and Rogers have to face reality as Generation Xers and Millenials get their entertainment and news from online sources. Due to the consolidation I mentioned earlier, media companies with news outlets whether TV, radio or newspaper have laid off many reporters. Now the news mostly comes from a central source. The erosion of local news is one of the main tragedies of media consolidation.
Third, CRTC will have to revisit the CanCon rules and ease the restrictions or eliminate them completely. As more content is available online, it is impossible to preserve Canadian culture these CanCon rules are supposed to address. More attention should be spent in promoting Canadian productions and culture to the rest of the world.
Finally, the Government should appoint consumers or advocates like Michael Geist so that the CRTC can have an equal mix on the commission. It would give a better representation of what the public wants and the industries it regulates.
Time to Cut the Cord
I talked about how we got here and what changes need to be made. Let’s get back to the $25 Skinny package. I think a lot of complaints stem from the misconception of what the skinny package is supposed to do. Michael Geist wrote a good article about the merits of the new TV package. I agree with Michael that the package is meant for consumers who just the want basic channels, because they can access specific programming via Netflix or other streaming sites online. Although, Cord-Cutters may find some roadblocks as Global, CBS and some other networks require a valid TV provider/cable subscription to access full episodes of their favourite TV shows.
Some people have resorted to accessing American streaming services like Hulu Plus. It is only available in the US thanks to exclusive Canadian re-broadcasting rights made by Bell, Rogers and Shaw (Global TV). Canadians can only watch Hulu via IP spoofing services like UnoTelly and UnBlock-US. These services trick Hulu and other major US TV networks into thinking you are accessing the service from the US.
Hulu is a joint partnership between Disney (ABC), Fox, and NBC Universal. They run current episodes from these networks the day after they air. They also have 500 other content providers. Hulu has two plans – limited commercials for $8 US and $12 US for commercial-free.
The yearly cost of cutting the cord is approximately $252 US – $4.95 US (UnoTelly)+$7.99 US (Hulu)+$7.99 CDN (Netflix) over 12 months. Far cry from spending $1,080 a year for typical TV services with Rogers and Bell.
The other option is to purchase an Android TV box, There are many websites and independent computer stores that carry them. They range in price from $90 to $260. They pre-loaded with software that scans various websites and streaming services so you can watch your favourite TV shows and movies for free. AndroidTVBoxesCanada has seen a 20-30 times increase in sales this year alone. It seems Canadians have had enough with high-priced TV subscription with little value.
Television Providers Need to Change Their Business Model
TV networks and providers are not eager to change with the times because their current business model is highly profitable. According to a Huffington Post article, they should not only be concerned about the increase in “Cord Cutters” year after year but another set of the population. Millennials will make up the bulk of “Cut-Nevers” that will never sign up for cable. Unlike Generation Xers who grew up with television, Millennials grew up with the Internet. Most of their entertainment and news, along with their social activities comes from the Internet.
Despite Netflix being forced to block Canadians from accessing their broader US Content, their goal is to have a worldwide broadcasting license. This would enable Netflix to serve the same content in every country.
Steve Jobs stated “he cracked TV” before he died. We later found out from Apple’s CEO Tim Cook that it meant Apps were going to the crack the vise that TV providers had on us. Media companies are reluctant to work with Apple, fearing that Apple would have a foothold like they do with Music and iTunes. This is despite Apple saving the Music industry by making it affordable to buy music instead of stealing it. Apple has been trying to do the same thing with TV and movies. It will be interesting to see how HBO’s $30/mth subscription via an App will play out. The monthly fee is high, $10 would be more reasonable.
We will come to a full circle with our TV viewing. I remember the days when TV was free and we had to watch commercials. You couldn’t skip through commercials as there were no PVRs. I think the Hulu subscription service is the best way to make everyone happy. I don’t mind paying $8 a month and sit through commercials. It is far better than paying $100 a month for a whack of channels that still plays commercials. People want on-demand programming and may pay a reasonable price for it. I think they are sick of paying a high price for TV that they are not even watching.
The future of television is on-demand programming and the current way of broadcasting will be a thing of the past. Governments should break up the media/distributors companies like Rogers, Bell, Comcast, and Time Warner. I would even suggest governments take over the backbone broadband infrastructure to preserve Net Neutrality. This will make sure all citizens have access to an affordable and non-bias Internet.
Feature Image: Photo by Flash Pro courtesy of Flickr CC 2.0 https://flic.kr/p/7kikbm. Check out my Pinterest board “Future of TV” for articles I used for this post, along with other articles related to this topic.