Well, this is interesting. Depending on how a coming CRTC hearing in April shakes out, cable bills could soon be going up nationwide.
The hearing’s public comment period is now underway and refers to services (channels) that are up for mandatory inclusion on basic cable packages offered by broadcast distribution undertakings (BDUs) such as Bell, Rogers, Shaw, Videotron, etc. Sixteen new channels have applied to be included as mandatory and another six are up for re-inclusion.
Some of the new services include Sun News, ZoomerMedia, Canadian Punjabi Network and Canadian movie channel Starlight.
At present, there are 10 channels that are mandatory, including CBC News Network (French or English depending on territory), Aboriginal Peoples Television Network, Cable Public Affairs Channel and Accessible Media. These channels fall under a classification known as 9(1)(h) within the Broadcasting Act.
“Winning a 9(1)(h),” as it’s sometimes called, is coveted because it can generate millions in automatic revenue. Each service receives a fee for each subscriber to the basic cable package. The fees vary from service to service and currently range from $0.04 at the low end for AMI-audio to $0.25 at the high end for the Aboriginal Peoples Television Network. If all the new channels are added to basic cable, how much higher could your bill be? Taking an average of the cost of the existing channels and multiplying by the number of new channels (English language) returns about $2.08 in increased wholesale cost. According to sources, the BDUs typically mark up 100%. That means the final retail cost to the consumer could be $4.16—or higher if some channels get the fee increases for which they’re asking. (According to Peter Miller, an expert lawyer on CRTC regulatory affairs, the BDUs are technically forbidden from marking up 9(1)(h) services. But they get around that by marking up on basic cable rates, which are deregulated.)
Bell declined to comment on its position on mandatory inclusion and said it would be participating in the hearings comment period “at the appropriate time.” Telus and Shaw also declined for similar reasons. Rogers would not comment, but pointed out that in the last round of hearings for 9(1)(h) applicants in 2007, the company said it “strongly opposes all of the applications.” Sources I spoke with confirmed that the BDUs typically oppose any new channels being granted mandatory inclusion.
That said, it’s not easy to win this classification, as applicants must demonstrate a high degree of cultural value, especially in terms of providing explicitly Canadian content. The last channel to get it was the Weather Network and additions are infrequent. One industry source, who requested anonymity, said it’s unlikely most of the new applicants will pass muster. He also cited what he feels is a changing attitude at the CRTC, which is less inclined to regulate. “It’s a new world and forcing people to take channels is kind of the old way of doing things,” he said. “The CRTC chairman has come across as being very pro consumer, so there’s a lot of people that think this is going to be a real uphill battle for a lot of channels to come in and get this mandatory distribution.”
There could be at least one other organization that hopes the channels—and the increased costs—are made mandatory: Netflix. When well-known Internet law specialist Michael Geist wrote about the issue, the comments were immediately filled with readers promising that higher cable bills would only drive them to cut their cable subscriptions and seek content elsewhere. Guess who’s waiting with open arms?