OTTAWA – The CRTC should keep a close watch on how much television service providers pay broadcasters to distribute their programming to ensure greater competition and increased choice and flexibility for Canadian viewers, the Competition Bureau said Monday.
Responding to the Commission’s consultation on a new wholesale code to govern the commercial arrangements between television service providers and television channel owners, the Bureau’s submission took aim at the use of a sliding-scale of prices that a television service provider pays to a channel owner in order to carry a particular channel. These penetration-based rate cards (PBRCs), as they are known, may incent television service providers to bundle channels together to increase subscriber penetration for all channels in the bundle, rather than offering more choice, resulting in consumers paying for channels they may not want.
“…the lack of choice and, implicitly, the large bundles and tiers created by BDUs reacting to PBRCs, are important drivers of what has led the CRTC to review how BDUs package and distribute programming services, as discussed in Broadcasting Regulatory Policy CRTC 2015‑96”, reads the submission. “These incentives to limit consumer choice are exacerbated by the presence of vertically‑integrated BDUs with broad ownership of so‑called “must have” programming services.”
The Bureau added that the CRTC should also take the following factors into consideration in determining the reasonableness of a PBRC:
– Whether the PBRC allows BDUs and programming undertakings to share the potential risks and costs associated with lower penetration levels of programming services in a world of increased choice and flexibility;
– Whether the PBRC applies to an independent programming service or one operated by a vertically‑integrated BDU;
– Whether a PBRC applied to a programming service operated by a vertically‑integrated BDU raises rival BDUs’ costs above those of the vertically‑integrated BDU;
– Whether the PBRC applies to a programming service that is considered a “must‑have”; and
– Whether the PBRC applies to a programming service that is newly licensed, and if so, the duration of that PBRC.
“While the above is a non‑exhaustive list, where a consideration of these factors suggests that the PBRC likely induces a BDU to limit consumer choice and flexibility, the PBRC should be found to be unreasonable”, the submission added.
