Cable companies hike prices, but stay mum on upcoming pick-and-pay model

As the Canadian Radio-television and Telecommunications Commission’s March 1 deadline nears for Canadian cable providers to start offering “pick-and-pay”-style packages, little talk has come from the providers about how the programs will look.

Well, unless you count the rate boosts subscribers are now finding out about.

Last month, Shaw Direct boosted the price of its TV packages by an average of $3 per customer; Bell followed raising monthly TV prices by $2 and both Rogers and Telus will do the same closer to March with $2 to $3 increases.

“I don’t know what the rational for the price hike is, but there is no research that shows that pick-and-pay will lower prices,” says Irene Berkowitz, an expert on the Canadian TV industry and instructor in Ryerson University’s MBA program at Ted Rogers School of Management.

Whether or not it was the big cable provider’s intentions, the price hikes penalize subscribers who choose not to follow the more than half of Canadians that have already “cut the cord” and dropped their television subscription according to CBC research.

“We know that cable is dropping faster than the polls indicate and you also have to compare that to new housing starts,” says Berkowitz. “It has become very obvious that people buying new houses are not ordering cable – that’s a trend that’s very significant.”

Last March the CRTC, issued a series of rules to “foster a healthy, dynamic TV market.” The policy, a result of insight collected during the Let’s Talk TV: A Conversation with Canadians campaign, called on cable providers to offer a “skinny” basic package priced at $25 or less which includes mandatory local and regional stations, as well as public interest Canadian channels. Providers can tack on U.S. networks like NBC and PBS, but they aren’t allowed to charge more for them.

In addition to these packages, subscribers can pick and pay for individual channels or “reasonably priced” small bundles. By December, providers need to allow subscribers both options.

The recommendations also include elements like no more cancellation fees and bolstering access for Canadians with disabilities to content including closed captioning, described video and accessibility hardware.

“Pick-and-pay can either be seen in Canada as a litmus test on what consumers really want or it could be seen as a lifeline to the industry,” says Berkowitz, who’s been following the CRTC’s overhaul closely. “I think to some extent, the CRTC (recommendations) are sort of a pivot from protecting incumbent business models to protecting the rights of consumers.”

There’s no doubt television is at a turning point.

While services like Netflix have dominated fiction and documentary streams, online platforms are still trying to figure out how best to deliver sports, live events and news. In a sense, it still creates an offering that Canadians may be willing to pay that $25 for, but big Canadian cable providers know that the market is changing.

Rogers’ and Bell’s entrance into the streaming sphere with Shomi and CraveTV, respectively, at a lower price point than Netflix are illustrations of that struggle to keep pace with the changing ways we consume.

“This is a historic disruption and we’re right in the middle of it but it’s pretty clear what’s declining and what’s growing,” says Berkowitz. “There’s no going back on the transformation to online delivery.”