Canadian Telcos Lobby Against Pick-and-Pay TV

silentbrad writes with an excerpt from the Financial Post: "BCE Inc., Rogers Communications Inc., and Shaw Communications Inc. which together control two-thirds of the $8.3-billion broadcast distribution market, are lobbying against the so-called 'a la carte' model that would allow customers to pick and pay for individual networks, arguing the change would have disastrous consequences for programmers, such as Bell Media and Shaw Media. 'A regulation requiring that all programming services must be made available to consumers on a stand-alone basis would have far-reaching ramifications,' BCE, whose Bell owns 30 specialty networks, said in a submission to the Canadian Radio-television and Telecommunications Commission. 'Undoubtedly, a market shake-out, causing many specialty services to exit, would ensue.' The three big players, led by BCE, have told the CRTC they support the status quo of 'tied selling,' or the practice of grouping weaker-performing networks in with a popular channels, versus a new approach to sell channels individually. ... In the race for subscription dollars, rates for TV services across providers have risen sharply over the last decade as the number of specialty channels, each commanding its own fee, has soared. Net costs to subscribers climbed another 2.6% in 2011, while average bills now hover around $60 a month."

This is why I stopped watching TV

[Dakiraun]

It's been around 10 or 11 years now since I stopped watching TV. The ridiculous monthly costs combined with the facts that 2/3 of the channels are uninteresting and those that are are filled with up to 40% commercial time, I just thought to myself one day "Why am I paying for this?"

Since canceling my cable, I chose to watch shows that I was interested in by on-line streaming or by just getting the DVDs, and that's worked out great so far. The added perk is that I'm not exposed to ANY commercials at all. The big Telco's have got to come to the realization sooner or later that embracing the more modern ways of media distribution is a lot more profitable and beneficial than constantly opposing them. They seem to forget that it is the consumer than "wants" the shows, and their job to deliver what the consumer wants, not what they think the consumer wants.

If they don't step into the 21st century soon, more and more folks are just going to do what I did and stop giving them any money at all. Personally... I think it was one of the best things I've ever done; I haven't a clue where I'd find time to sit in front of a TV nowadays.

A (Hopefully) Better Explanation for Bundling

[LordNicholas]

I work for a major cable network- here's a hopefully better explanation of why we've stuck with the bundling model.

A cable channel gets its revenue from two main sources- cable subscription fees from the cable provider (~70%) and ad revenue (~30%).

Let's assume we have a cable channel that is currently bundled, and in 100% of households with TVs, with revenue of $100 million a year. We're getting $70 million from cable subscriptions, and $30 million from ad revenue.

Now let's say we switch to a-la carte, but 100% of households still want to subscribe at a price that leaves us revenue-neutral. The cable channel says "great! we're still getting $70 million from subscriptions and $30 million from ad revenue. Everybody wins."

But, let's say only 50% of households would be willing to subscribe, but they're willing to pay double the price because they love the channel. We're still making $70 million from subscription fees. However, we're now only in 50% of households, which means we're much less attractive to advertisers. We're not going to keep making $30 million from ad revenue, because advertisers often need a "critical mass" of households reached in order to make a deal. This isn't a linear relationship- 50% of households doesn't mean 50% of ad revenue, it could mean 0% because we don't have the scale to make an ad deal worthwhile for the advertiser.

So now we've only got $70-85 million a year, which means we have less money to spend on programming. Program quality suffers as a result, and so the next year maybe only 25% of households are willing to subscribe. We're now in a downward spiral.

TL;DR - unbundling has the unfortunate side effect of reducing program quality for specialty channels. Only the cheapest shows (ie, crappy reality shows) or the ones appealing to the lowest common denominator (ie, CBS's entire lineup) might survive in the long-term.

Re:Dur

[R3d M3rcury]

To me, it's a tricky call.

I'm one of those weird people who pays for lots of channels--I have a bunch of the tiers and movie channels and the whole bit. So I got home last night, made a sandwich, and started scanning the channels. Ended up watching a neat program on the Titanic sinking on the Smithsonian channel, which is a channel that I probably wouldn't have ordered a la carte. Sometimes I find old and fun programs being shown--Trio used to show Laugh-In reruns--on networks that I probably wouldn't normally order a la carte.

The sad thing about a la carte is that the smaller "channels" would probably go out of business. You'd end up with a bunch of the "branded" channels--Comedy Central, SyFy, ESPN--doing very well and channels like CurrentTV, Bravo, Smithsonian, and Sundance going out of business.

On the other hand, I can understand the desire to not have to pay for programming that you don't watch--especially considering that cable companies tend to group these things for maximum profit and not necessarily because they make sense. My personal favorite was when my cable provider decided to move Game Show Network into the "obscure sports tier" next to Bow Hunting, Fishing, and Camping. Huwha!? About six months later, they decided that was ridiculous and put it back.

I look at it as a "taxes" type of thing. Yeah, I end up paying for channels that you watch and you end up paying for channels that I watch.