Cable and satellite TV services must offer more consumer choice, says Moore

OTTAWA – The federal government will unveil plans this week to force cable and satellite TV providers to offer consumers so-called pick-and-pay services, says a prominent cabinet minister.

The move will be part of a consumer-first agenda to be included by the Conservatives in this week’s speech from the throne.

Consumers are frustrated over being forced to buy large bundles of channels they don’t want when they sign up for satellite and cable TV services, says Industry Minister James Moore.

Companies such as Videotron in Quebec are already moving in the pick-and-pay direction, largely because consumers are shying away from traditional TV and are instead watching programming over the Internet.

As viewer habits evolve, there’s no reason why all television service providers can’t offer consumers the ability to pick and choose the channels they want, says Moore.

“We don’t think people should be forced to buy bundled television channels when they’re not interested in watching those channels and those shows,” Moore said in an interview with The Canadian Press.

“We should have a pick-and-pay model when it comes to television channels.”

The two largest cable and satellite TV service providers — Bell (TSX:BCE) and Rogers (TSX:RCI.B) — offer subscribers basic packages that include the main television networks and selected other channels. But upgraded packages, at a higher cost, have channels bundled together by category or viewing interest.

Quebec’s Videotron (TSX:QBR.B) has recently offered subscribers the ability to choose five individual channels at a time from a list of choices, on top of their basic service. Bell has also offered a similar pricing structure, but only in Quebec.

Canada’s broadcast regulator, the Canadian Radio-television and Telecommunications Commission, urged cable and satellite companies in 2011 to adopt a pick-and-pay pricing model when it unveiled new regulations aimed at preventing television broadcasters from restricting consumer choice.

In response, Rogers experimented with a type of a la carte pricing in the winter of 2011-2012, offering consumers in London, Ont. a so-called “skinny basic” package for about $20, then charging an extra $26 or more to customers who wanted to pick 15, 20 or 30 extra channels.

But others, including Shaw Communications Inc., resisted such a pricing model and it was never made mandatory. Moore said it’s about time for that to happen.

“It’s not a command economy, we’re not going to put in place onerous regulations. We’re a government of deregulation,” Moore insisted.

“But from time to time, we think that the best interest of consumers need to be enforced in the marketplace.”

The Rogers test run in London proved very popular among subscribers, the company’s vice president of regulatory, Kenneth Engelhart, said Sunday.

But if Ottawa orders service providers to offer pick-and-pay pricing across the board, it’s also going to have to convince the content providers to be more “flexible” in how they charge for shows, he added.

“They can’t ask us to guarantee their revenue,” Engelhart said.

“If it’s popular and people buy it they’ll make more money, if it’s not popular and people don’t buy it they make less,” he said.

“That’s the way the rest of the world works and I think it should work that way in TV, too.”

Some critics have also questioned whether a pick-and-pay regime will result in lower overall prices for television services.

As well, analysts note there are about 20 channels that TV distributors must carry, including the CBC and Radio-Canada.

The throne speech will also lay out the government’s plans for ensuring air travellers are somehow compensated when they are inconvenienced by airline overbooking.

Whether that includes enforced, specific compensation amounts remains to be seen, said Moore.

But the Conservatives have in the past adopted consumer protection measures that were voluntary, rather than mandatory, something Opposition NDP consumer affairs critic Glenn Thibeault said blunted regulations.

The Tories also rejected legislation introduced by the New Democrats that included an air passenger bills of rights.

“For five years I’ve watched the Conservatives vote against, time and time again, any bill, any type of motion, any legislation that we have brought forward to help consumers,” said Thibeault.

“Every time they have come out with something, it’s toothless, or they don’t do anything about it.”

Moore said the government will also move to increasing competition in the wireless sector, a reference to the upcoming wireless spectrum auction.

The 700 megahertz auction of radio waves has been called the equivalent of “beachfront property” by analysts.

The previous auction in 2008 raised $4.3 billion and brought more competition to the cellphone market. But so far a competitor to the big three wireless companies has not emerged for the next auction in January.

The throne speech could also include references to capping domestic cellphone roaming fees.

But the speech is not expected to include a plan for dealing with the credit card interchange fees that have been villified by small business.

The federal Competition Tribunal threw the issue into the government’s hands in July when it struck down a complaint against Visa and Mastercard over the processing fees they charge businesses for using their cards.

Finance Minister Jim Flaherty later convened a special meeting of the government’s FinPay Committee to discuss the issue, but no easy solution to the dispute has emerged.