March 19, 2015 4 years 7 months ago

LET’S TALK TV: BDUs must offer skinny basic with a-la-carte, small bundles; penetration based rate cards must be "reasonable"

GATINEAU - The CRTC continued to remake the Canadian broadcasting system in its latest Let’s Talk TV decision. Broadcasting Regulatory Policy 2015-96 forces TV distributors to offer a $25 entry-level package along with pick and pay and small bundles for discretionary services.

The highly anticipated decision is the second-in-a-series that have ushered in considerable changes to the domestic broadcasting ecosystem, one that has seen the dramatic rise of on-demand viewing to the detriment of appointment linear TV. This latest decision focuses to a much greater extent on consumers and how they will interact with TV programming and their TV servcie providers.

Front and centre in BRP 2015-96 is the imposition of an entry-level or skinny basic package. The Commission provided an explanation behind its decision to price it at a maximum of $25. It added that the price doesn’t include the cost of equipment, aka the set top box.

The decision indicates that “aside from the cost of OTA services, which can be retransmitted pursuant to a tariff, the bulk of the cost of providing this service consists of network access costs (ie capital expenditures for network construction, maintenance overhead, and back-office and consumer service costs.)” This, says the Commission, means the $25 maximum price is sufficient to allow BDUs to recoup their associated network costs for those subscribers who choose to take the entry level offering.

Broadcast distribution undertakings (BDUs) will have one year to prepare for the arrival of skinny basic before offering it by March 2016. The service will consist local and regional stations, the US 4+1 channels, the 9(1)(h) services and community and educational channels.

The Commission acknowledges that, in some cases, communities won’t have an adequate supply of stations and therefore will allow terrestrial BDUs to offer in communities with fewer than 10 local and regional stations “other non-local/regional Canadian OTA stations for a maximum of 10 OTA stations.”

Children’s programmers will be disappointed with the decision, though. The CRTC has indicated that because TFO, TVO, Tele-Quebec, CBC and SRC offer this type of programming, kids discretionary services won’t be mandated in the entry-level package.

The CRTC notes that despite objections from some parties for the exclusion of the US signals in basic, they will be included in the skinny basic package because they are available to Canadians over-the-air, to a large degree. The Commission added that having these channels in entry-level basic shouldn’t impact the package’s price. “Moreover, the inclusion of these services should not significantly increase the price of the entry-level service offering as there is no fee for the retransmission of these services separate from the single tariff set by the copyright board,” the Commission said.

Children’s programmers will be disappointed with the decision, though. The CRTC has indicated that because TFO, TVO, Tele-Quebec, CBC and SRC offer this type of programming, kids discretionary services won’t be mandated in the entry-level package.

Pick and pay will also become a reality across Canada with the Commission making it mandatory for all discretionary services, including the non-Canadian services, by December 2016. By that time, all licensed BDUs will be required to offer all discretionary services either on a pick and pay basis or in small reasonably priced bundles. The bundles can be a 'build your own' with a maximum of 10 channels or be pre-assembled by the distributor - all licensed BDUs will have to offer both options.

To ensure that consumers have the maximum amount of choice possible, the Commission noted that customers will only need to buy the entry level package to subscribe to any discretionary services they want. BDUs “will not be allowed to require subscribers to buy any services other than those in the entry level service offering to access any other service or package.”

Minimum penetration and revenue guarantees are out too as are unreasonable volume and penetration based rate cards.

Non-Canadian discretionary services will have to be available on a pick and pay basis, said the Commission, noting that this “is essential to ensuring a level playing field between Canadian and non-Canadian services available to Canadians in the context of a competitive, consumer driven environment.”

The CRTC is also adding some new protections for independent programmers by ensuring that affiliation agreements don’t prevent Canadians from enjoying the greater choice in services. BDUs won’t be able to impose terms that prevent the distribution of channels on a pick and pay basis or in 'build your own' bundles. Minimum penetration and revenue guarantees are out, too, as are unreasonable volume and penetration based rate cards.

“The changes being made reflect the trend towards increasingly competitive and customizable on-demand options, while taking into account the need to bridge old and new approaches to allow for maximum flexibility in how content in distributed and consumed,” reads the March 19 decision.

The final decision from the TV Policy Review proceeding will come next week, and will speak to consumer protections, a BDU Code of Conduct, an industry ombudsman, and issues affecting the disabled.