Daily Brew

Ottawa’s cable-TV unbundling plan: Will it really take us to viewing paradise?

Daily Brew

As the government takes a tentative step into the brave new world of more TV choice, I keep thinking of that Bruce Springsteen song from the 1990s – 57 Channels (And Nothin' On).

I just wonder whether after all the consultation and talk of empowering Canadian consumers, we're going to end up with nothing really new.

After telegraphing it for a week, the Conservative government's throne speech promised it would require cable and satellite operators to allow subscribers the option of buying individual channels, rather than being required to purchase a bundle of channels to get the ones they really want.

This week, the Canadian Radio-television and Telecommuncations Commission (CRTC) launched its "Let's Talk TV" initiative, aimed at getting feedback from viewers about how they want to buy and consume TV.

Canadians already have an "unprecedented choice" of programming from Canada and the world, and some still like what networks have to offer, CRTC Chairman Jean-Pierre Blais said in the watchdog agency's news release. But the CRTC has perceived viewing habits are changing, so this is a chance for Canadians "to tell us what they think of their television system and how they would like to see it changed."

[ Related: Federal government wants to unbundle cable packages ]

The CRTC wants our opinion on three things: How do we like what we're seeing on TV, what do with think of the ways we receive programs and do we know enough to make informed viewing choices and find solutions when we're not satisfied? We've got about a month to let the commission know what we think.

Political observers see it largely as a cynical vote-getting tactic by a Conservative government two years away from the next election, but arguably this outreach is overdue.

The question for a lot of Canadians is whether this process is going to produce something close to the supposed TV paradise they see south of the border, with more channels and more ways to receive the programs they broadcast.

High-speed broadband Internet service has opened the door to streaming TV services such as Netflix and Hulu. It's allowed viewers not just to time-shift, à la VHS or PVR, but choose only those shows they want to see to download and watch at leisure, sometimes an entire series at once.

Netflix, which has moved into producing its own programming such as House of Cards, recently surpassed HBO in U.S. subscriber numbers. It's cashing in without the overhead cost of supporting a network or specialty channel infrastructure.

The Toronto Star reported Friday that 17 per cent of Canadian households, roughly 2.5 million, have Netflix subscriptions after just three years here.

But right now the Canadian version of Netflix is a shadow of what our American cousins get and we don't have access to Hulu at all. Will that change?

The Hollywood Reporter, in a story last August, noted Canadian cable, satellite and phone carriers lost almost 20,000 TV subscribers in the second quarter of 2013, up from about 5,400 in the first quarter.

“Interestingly, the cord-cutting situation in Canada mirrors what is happening south of the border,” Mario Mota, a partner with Boon Dog Professional Services, told the Reporter, referring to U.S. subscriber declines over three consecutive quarters.

Even if Canadians demand parity with the U.S., will the CRTC get pressure from the big cable and satellite providers to ensure the current steady defection of subscribers doesn't turn into a flood?

Unbundling cable and satellite TV channels may be seen as a potential solution, but neither the providers nor many of the less popular channels are in love with the concept.

While offering channels à la carte sounds good, it may sink many channels that have an audience but not enough revenue to sustain themselves without being indirectly subsidized by the big draws such as HBO and AMC.

The much larger American cable operators are facing the same pressure to unbundle, the website Outside the Beltway reported last July.

But analysts say consumers likely won't save any money as providers charge the true market rate for the most popular channels, which will actually have fewer overall subscribers.

CBC News noted that a report done for U.S. investment and asset-management firm Needham and Co. suggested that, for example, unbundling ESPN's sports channels would push the monthly subscription cost to $30 a month from $6 because of a net drop in the total number of subscribers.

[ Related: Netflix passes HBO with 31 million U.S. subscribers ]

The report also noted that most channels aren't advertising-free like HBO, and get half their revenue from ads, with the rest derived from subscription payments. Without being bundled, even HBO might not survive on subscription payments alone unless the fees grow sky-high.

In a column in the U.S. entertainment bible Variety, digital editor-in-chief Andrew Wallenstein also noted the average U.S. home dials up only 16 channels per month but subscribes to 135.

À la carte is a "conceptual slippery slope," Wallenstein said. Given the opportunity to unbundle, viewers might just decide it's only certain programs they're interested in.

"If I just want one hour of a channel, why would I pay for 23 others I don’t want?" he questions.

"À la carte confuses the true brand currency of the TV kingdom: it’s the shows, not the channels. The programming-to-pricing ratio will be out of whack as long as the channel model holds sway."

Which of course brings us back to Netflix and its brethren, doesn't it?

Let the conversation begin.

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