September 26, 2016 2 years 11 months ago

SKINNY BASIC: Why no more new rules are needed

GATINEAU – Canada’s broadcast distribution undertakings (BDUs) say they are doing what is required of them to meet rules on an entry level small package of TV channels, and that calls from consumer groups for additional provisions on promotions and set top box prices are unwarranted.

Eastlink noted its in final reply that a request from the Consumers’ Association of Canada (CAC) and the Public Interest Advocacy Centre (PIAC) to include comparison charts explaining the differences between tiered services and the small basic package should be denied.

“As noted by other parties during the hearing, when one takes into account both grandfathered offerings and the large variety of options available to consumers under current packaging and promotions, it would be extremely challenging (if not impossible) to create a tool that would provide the type of comparison chart proposed by the consumer groups,” said the company.

SaskTel agreed that the comparison chart requirement is unneeded. It added suggestions the BDUs are steering customers away from the skinny basic is forgetting that very few customers are interested in the lowest priced package.

“To assume that it is only the lowest prices that drive decision making is not correct. Requiring the broadcast television service providers to focus primarily on price or on price only would do a disservice to the customers for whom price is a smaller consideration. Customers chose their providers and buy their services for many different reasons, including price,” wrote the company.

In fact, focusing on price may run counter to the CRTC’s choice policy.

“To require that the TVSP (TV service provider) try to prefer the basic television service offering in their communications with consumers is tantamount to depriving the consumers of a broader choice of content, which is exactly the opposite of what the Commission has tried to achieve in its decisions,” added SaskTel.

During the hearing and in their final submission, CAC-PIAC called for greater regulation of set top box pricing through amendments to the TV Service Provider (TVSP) Code of Conduct. The broadcast distributors countered that the TVSP code is already clear and that no further action is required to regulate set top box offerings.

Shaw Communications noted the Code isn’t coming into force until September 2017 and while changes may be required in the future, they aren’t now.

“This usage charge is no different than other rental fees for other products where the rental fee compensates the owner for use of the product, for example, renting a car.” – Bell Canada

“Although it may be necessary to re-visit the TVSP Code after implementation, it is not necessary at this time, nor is it appropriate to introduce new terms – or identify specific new terms for exploration – as part of a licence renewal proceeding,” said Shaw.

Both Bell Canada and Rogers Communications agreed with Shaw that no further action on set top box pricing is required now. They also said that the concept of depreciating the value of a set top box over time doesn’t work in this situation. “Flawed” was the way Bell described CAC-PIAC’s argument, noting the rental fee also includes a charge associated with the use of the box.

“This usage charge is no different than other rental fees for other products where the rental fee compensates the owner for use of the product, for example, renting a car. In addition, while policies differ between BDUs, the rental fee typically includes a warranty and STB (set top box) upgrades,” said Bell.

Bundling discounts for small basic subscribers was one of the main topics explored at the hearing earlier this month. Suggestions from CAC-PIAC that there was any undue disadvantage are wrong.

Nothing of the sort is true, said Rogers, noting that all customers are treated the same. Some because of their deeper commitment to Rogers get discounts in return while others simply enjoy a low priced entry level package.

“Our approach does not even qualify as a preference or disadvantage, let alone one that is undue,” the company wrote in its final reply. “Every customer that wants to subscribe to a Rogers TV service has the same choice. They can take the TV service that presents the lowest cost and receive all of the benefits associated with that choice or they can subscribe to the TV service that qualifies for a bundling discount and/or VAS offerings. No customer is treated differently.” 

Rogers had originally proposed that Starter customers wouldn’t be eligible for bundle discounts, but the company changed its stance at the hearing, saying entry level service customers will get bundle discounts when they buy three products from Rogers starting in the first quarter of 2017.