Some of the television industry's most sacred cows may be on the chopping block, after the federal broadcast regulator signalled on Thursday that it is mulling a total regulatory overhaul to give viewers "maximum choice and flexibility."
The Canadian Radio-television and Telecommunications Commission said it is exploring a way to force cable, satellite, and Internet-based TV providers such as Bell Fibe to offer a "skinny basic" package that subscribers could then top up with their own selection of discretionary services.
While some TV distributors have taken steps toward that kind of offering in response to consumer demand, many industry leaders say channel-bundling helps keeps costs down for viewers and gives a fighting chance to services that provide diversity, which might not otherwise survive.
The regulator is mulling other changes, such as eliminating the simultaneous substitution of U.S. broadcasters' signals by Canadian channels owning domestic broadcast rights to the same program. "Simsub" enables networks such as CTV to maximize advertising revenues when buying U.S. programming such as Fox's The Following, but it is a thorn in the side of Canadians who grouse every year that they cannot watch U.S. Super Bowl commercials.
The CRTC also suggested that genre protection, which restricts competition for about 60 specialty services holding privileged licences, might be eliminated. It also suggested eliminating a rule that requires a majority of channels taken by subscribers to be Canadian in origin . The commission is also considering a move to allow all non-Canadian services into the country unless a Canadian channel could prove it would suffer "an undue negative impact" from the entry of a particular foreign channel.
The proposals are part of a long-running consultation process with viewers and members of the industry that will include hearings in September. The CRTC announced its Let's Talk TV program last fall to help confront a rapidly changing media ecosystem in which viewers are getting more of their TV programs from unconventional sources such as Netflix.
While cord-cutting – the phenomenon of viewers shedding traditional cable or satellite hook-ups in favour of more flexible and less expensive online-only viewing – is growing in the U.S., it has not been viewed as a major threat to the Canadian system.
But on Thursday the CRTC said for the first time that "overall growth in BDU [broadcast distribution undertaking] subscriptions has been slowing year by year and, according to the commission's preliminary data, declined for the first time in 2013 as some Canadians choose to opt out of the traditional system entirely."
In part that is because consumers have seen their channel lineups explode with what they say are unwanted services. Over the past few years, "basic" lineups have become bloated as the media divisions of companies that also own TV distributors, such as Bell Inc. and Rogers Communications, have bulked up. Currently, subscribers to the "Good" package of Bell's Fibe TV service are forced to pay for TSN, CP24, CTV News Channel, CTV2, and E! Entertainment Television, all of which are owned by the company's media division. Similarly, subscribers of what is identified as Rogers's "basic package" in Ontario receive Sportsnet Ontario and The Shopping Channel, both of which are owned by Rogers Media.
The proposed skinny basic package would have only local Canadian broadcast channels and a handful of others, including so-called "mandatory carriage" services such as APTN (Aboriginal Peoples Television Network) and CPAC (Cable Public Affairs Channel). Those channels, which the CRTC has determined fulfill important policy goals but would be unlikely to survive without regulatory assistance, cost each TV subscriber about $2 per month.
Still, even as it hopes to reduce regulation, the CRTC said it was concerned about removing safeguards that protect independent services, such as those not owned by vertically integrated companies such as Rogers and Bell.
And the CRTC is not backing away from regulation any time soon. Beginning next month, it will require all cable and satellite companies to give preferential treatment to all Canadian national news specialty services. The move, announced last December, was widely seen as giving a leg up to the Sun News Network after the channel failed in its bid for mandatory carriage last summer.
Bell owns 15 per cent of the parent company of The Globe and Mail.