10 things that might disappoint you about skinny basic and pick-and-pay TV

It’s March 1, 2016, which means the Canadian Radio-television and Telecommunications Commission’s new rules about TV packaging take effect.

To explain it, I wrote this piece for Tuesday’s Gazette, which also lists exactly what you’ll find in a skinny basic package in Montreal.

But in hearing people talk about the new rules, it seems there are some misconceptions or assumptions that people have that will cause disappointments when they actually try to take advantage of the new rules. Here are the ones I can explain so far:

1. In Quebec, not much changes

Videotron, the market leader here, has offered a small basic package and build-your-own bundles for many years now. And until December, when it has to offer almost all channels à la carte, they really don’t have to change how they operate.

Videotron’s new $25 a month basic package is pretty similar to the old one, with a few exceptions:

  • RDI is not included. CBC News Network is, because of an order that news networks be distributed in minority language communities (at reduced prices). Outside Quebec, it’s the reverse: RDI is mandatory, CBCNN is not.
  • Stingray music channels are not included
  • Some out-of-market over-the-air channels are not included. The CRTC rules say stations from other cities can only be included if there are fewer than 10 local stations, and even then can be added to reach a total of no more than 10. That means Montreal’s basic package loses CJOH (CTV Ottawa, included for historical reasons because the station’s transmitter in Cornwall reached into western Quebec), Granby and Sherbrooke lose Canal Savoir, and Gatineau loses most Montreal stations. Videotron asked for special permission to keep these stations, but was denied.

2. The $25 maximum doesn’t include set-top box rental, installation fees or taxes

The CRTC is clear that the $25 price is for programming only. Renting a set-top box will cost between $5 and $10 a month depending on provider, and if you’re not already a customer you’ll need to pay extra for installation.

3. Providers aren’t offering special deals or discounts on skinny basic

It’s very clear that none of the major TV providers are really promoting this new package. CBC even found out about Bell ordering its customer service representatives not to discuss it unless asked, even though that’s a clear violation of the CRTC’s rules.

Other attempts to downplay are more subtle. Most providers list the package at the bottom of web pages. Shaw calls it “Limited TV”, Rogers calls it a “Starter package” as does Bell Fibe. Telus calls it “Lite”.

But even if the CRTC forces them to offer the same amount of visibility, they aren’t obligated to offer the same deals. Free equipment rental, new customer discounts, customer retention discounts, even bundle discounts don’t apply to this package (though Telus offers it at $5 off if you bundle with other services).

New IPTV providers are more aggressive, however. Zazeen, which is used by Distributel in Quebec, offers an Internet-based basic package for $10 a month if you prepay for 12 months. VMedia (which isn’t available here yet) offers it for $18 a month.

4. The channels you want to add will be the most expensive

If all you care about are TSN and Sportsnet, because everything else you can watch online, well I have bad news for you. The wholesale prices for those channels averaged $3 per subscriber per month in 2014, and they’re going up. Those costs are being passed on to you. To get them on Videotron you need at least the basic + 10 channels package, which is $50 a month. Shaw customers can add them for $8 each or $12 for both.

While the retail cost of the basic package is regulated at $25 a month, the cost of add-ons isn’t regulated at all. And nothing requires all channels to be offered at the same price. You could be charged $5 a channel or $20 for a pick-your-own package with a lot of exceptions.

5. No, you can’t get HBO for 1/5 the price of The Movie Network

While most channels will be available à la carte, in some cases there are multiple channels tied to a single licence. That’s the case for TSN, the four main Sportsnet channels, and The Movie Network. If you spend $15 a month for TMN and its five channels, you won’t be able to get just HBO Canada for $3 a month.

The CRTC is reviewing its rules for multiplexed channels and will remove the requirement that they be sold as one unit. But don’t expect HBO Canada to be offered anywhere near that cheaply.

6. It’ll probably be cheaper for you to keep your current package

If you’re interested in more than a couple of channels, chances are you’re better getting a big bundle, even if it might have some channels you don’t care about. It’s in the providers’ interest, and the broadcasters’, that as many people subscribe to as many channels as possible to spread the cost around. Simple economics will encourage you to buy more, just like a grocery store encourages you to buy in bulk.

7. Some channels will die

This is particularly true of independent channels like Vision, OUTtv and iChannel, that don’t have free advertising on CTV, Global or TVA. Some CRTC rules encourage providers to carry them, but if their number of subscribers goes down, they’re in big trouble financially.

8. Many channels will try to generate maximum demand at minimum cost

Consider a channel like AMC or FX. They’ve got some expensive must-watch shows during primetime, but the rest of their schedules are largely filler, with old movies or reruns. Expect a lot of channels to have one or two high-quality shows to get you to subscribe, but not much else for the other 22 hours of the day.

9. It’s competition, not regulation, that will really bring prices down

Part of the problem with TV service in this country is that because very few places have more than one incumbent cable company, there’s little competition (there’s satellite TV, but that has technical limitations). Bell and Telus are doing their part building up their fibre-optic networks to allow them to offer IPTV service.

But what would really make a difference are more independent third-party IPTV providers like Zazeen, VMedia and Colba.net. Those are still in their infancy and lack the kind of channel selection and quality the big guys have.

The CRTC has been doing a lot to make it easier for these guys to start up. New TV providers, even those operating in big urban centres, don’t need to have a licence until they reach a large enough subscriber base. Such exempt services also don’t have as many rules to follow. Plus they can use existing telecommunications infrastructure, similar to the way independent Internet providers do. And new rules about how the big broadcasters negotiate carriage will create less headaches for independent providers when signing carriage contracts.

But we’re still a while from these independents creating real competition for established TV providers.

10. No one really knows what the TV market will look like after this

We know that it will be more expensive to buy a set number of channels individually than in a bundle. We know that skinny basic will make less money for providers if they don’t have lots of add-ons. But how the economics will look exactly isn’t known.

Will we see channels go high-quality and expensive, like HBO, TSN and Sportsnet? Will they go cheap to maximize the number of subscribers? Will we see an explosion in the number of channels as the big guys try to maximize subscription revenue by splitting up their most in-demand programming? Will free previews be more or less common? Will this encourage more over-the-top offers for specialty channels wanting to bypass TV providers all together?

We’re not following the U.S. here, even though politicians there are trying to push for more consumer choice. So we’ll have to wait and see.

But it’s still a good idea

Skinny basic and packaging choice are good things. There are a lot of channels out there (*cough*BookTV*cough*) that survive almost solely on being included in large packages and have had nothing new to offer for years. Those deserve to reform or die.

But TV providers are going to do whatever they can to protect their bottom lines so long as they don’t have to worry about competition. So, unless you only want a few channels, and you don’t like sports, don’t expect to save too much under these new rules.

Instead, be happy that the money you pay is more likely to go toward channels and programming you care about than zombie services that profit from resistance to change.

UPDATE (March 1): I had a discussion with CBC Radio’s Q about the changes and what they mean for consumers.

12 thoughts on “10 things that might disappoint you about skinny basic and pick-and-pay TV

  1. Bill

    9. It’s competition, not regulation, that will really bring prices down

    lol…that’s so cute……………..you know this is Canada, right?

    #OligopoliesRule

    Reply
  2. NaBUru38

    “Will we see an explosion in the number of channels as the big guys try to maximize subscription revenue by splitting up their most in-demand programming?”

    I think yes.

    “Will this encourage more over-the-top offers for specialty channels wanting to bypass TV providers all together?”

    I don’t know, but I hope so. Television, which is immensely competitive, should not be tied to internet providers, which are immensely anticompetitive.

    Reply
  3. Dilbert

    Great post, and great questions…

    “Will we see an explosion in the number of channels as the big guys try to maximize subscription revenue by splitting up their most in-demand programming?”

    To some degree, yes. But this of course depends on getting CRTC approval for the new channels, and for getting coverage and distribution for them. The distribution hurdle is enough to discourage many of the players from bothering, and would kill any independent channels from starting up.

    Over the top services and alternate IP TV systems will not work until the Canadian public is getting unlimited internet connections. With usage caps, it’s unreasonable to consider using an IP TV system (aside from the ISP’s own usage cap exempt service). Canada’s internet market place is solidly set up to keep you on cable, just the way they need it to maximize profits.

    You have to remember that it’s incredibly unlikely that any of this happens too quickly. Many consumers are on contracted rate plans for upwards to two years. In many cases, it’s a certain service level of internet tied to the tv package, or the other way around. Bundling and such is a big negative against skinny basic, as consumers may see the loss of the bundle benefits as being too significant. When you combined those things, you are looking at a slow evolutionary process, and not overnight distruction.

    Of course, there may be a sudden and sharp drop for many as their first starts. If even 10% of consumers move to a skinny package, the repercussions would be felt particularly strongly on channels that are depending on subscription money to pay the bills. It may be enough even in the very short term to make these channels economically nonviable.

    There will of course be rapid rebranding, and possibly more channels ditching their narrow focus theme for a more populist line of programming. It may work short term, but long term it may just split the market up too much and create multiple stations going out of business.

    The end result is consolidation. The method by which to make a channel the most profitable is to have less competition, and more of whatever it is people are willing to pay for in one place. Change a relatively premium price for it, and aggregate a big enough audience to be viable for national advertisers to buy space. 10 channels averaging 1000 viewers an hour is way more expensive to put on the air than 1 channel with 10,000 viewers an hour. Consolidation is the easiest and more obvious business strategy towards an improved bottom line.

    Reply
    1. Fagstein Post author

      But this of course depends on getting CRTC approval for the new channels, and for getting coverage and distribution for them.

      CRTC approval isn’t hard, and it’s not even necessary unless new channels start out with a large subscriber base. Distribution is harder, because of having to negotiate with various providers and because many of those providers have limited bandwidth and have to make choices.

      Over the top services and alternate IP TV systems will not work until the Canadian public is getting unlimited internet connections.

      Netflix seems to be doing pretty well. I think there’s a future for IPTV-based TV providers, provided their software is good and they offer competitive programming and prices. And major providers are offering unlimited Internet options now.

      You have to remember that it’s incredibly unlikely that any of this happens too quickly. Many consumers are on contracted rate plans for upwards to two years.

      Unless those plans include subsidized equipment (like a free set-top box), the law says they can cancel any time.

      Reply
      1. Dilbert

        “Distribution is harder”

        Distribution is all but impossible, unless you are going to let the cable company take all the money. Why would they want to run an indy channel when they can run sometime from their in house owned channels? With limited channel space, it’s a no brainer.

        “major providers are offering unlimited Internet options now.”

        I just checked Bell Fibe internet for Quebec, the only unlimited packages are either their $150 a month very high speed, or as a $10 upgrade if you also paid for Fibe TV, essentially negating the need for most of the over the top services. Yup, Netflix is an exception here.

        “Unless those plans include subsidized equipment (like a free set-top box), the law says they can cancel any time.”

        it’s why most packages include equipment. It’s also a given that consumers are not aware of their options, and are not likely to cancel even if they have a very easy out.

        Reply
    1. Fagstein Post author

      But I can buy my own set-top box, right?

      Yes, but the models of boxes you can purchase are limited, and it costs a few hundred dollars, depending on which type and whether you want a PVR included.

      Reply
  4. Ted Duskes

    After checking what I was paying over $55 for (with Bell Satellite), I compared it with their $25 plus $5 time shift.
    Now my cost is $30 and I cannot seem to find any channels that I actually watched that would be missed.
    With so much available online and netflix, even with the skinny pack there is more television than I can watch.
    While it may not serve the heavy duty TV fan, it is superb for those who really want a basic package.

    Reply
    1. L-Rod

      as a never-cabled, I am looking at skinny basic because in my part of Outremont the OTA reception of digital tv is terrible. But I would like, at least, PBS from US. Still, with Netflix + Tor as the lower-cost alternative, I conclude that skinny cable isn’t doing it for me quite yet.

      As for all the crtc staff who were convinced that skinny basic + pick&pay would suddenly cause Canadian media delivery companies to halt their business model of screwing customers to the maximum possible, well, how’s that working out?

      Reply
      1. Fagstein Post author

        As for all the crtc staff who were convinced that skinny basic + pick&pay would suddenly cause Canadian media delivery companies to halt their business model of screwing customers to the maximum possible

        I don’t think anyone at the CRTC seriously had that impression. And I’m unaware of anyone who works for that organization who has said such a thing.

        Reply
      2. ClearChannel

        Unfortunately, Outremont is on the wrong side of Mount Royal compared to Verdun where reception is excellent and you’re looking at 24+ channels and all the American border stations and their sub-channels. You’ll have to put up with Pay TV and what they are offering.

        Reply
  5. ClearChannel

    All I can say is I use an antenna and I’m getting 24 channels at present 13 of those are American primary channels and their sub-channels. All are Digital and most are HD with stunning clarity. For the amount of time I watch TV these days and being retired meaning lower income I find it good enough for me. And the cost can’t be beat at $0 Dollars per month. Being a 30+ year veteran of Pay TV I know what it means to spend money or flush it down the drain if you will on Pay TV. I had cable and then satellite with the 300+ channels at $125+ per month and ended up only watching 10 or 12 channels regularly. One thing no one has suggested that are on Pay TV is a system whereby people pay only when their TV is switched on. With the present system you may only watch TV 6 hours a day but pay for 24. That would reduce costs but obviously would meet with resistance from Pay TV.

    Reply

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