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CRTC's Fee-For-Carriage/Value-For-Signal Report: Minority Report Steals the Show

By Michael Geist

The CRTC released its follow-up report to cabinet yesterday on the consumer impact of new fees associated with fee-for-carriage/value-for-signal (as a side note, the Commission's approach on releases - the financial reports on broadcasters and BDUs last week, the broadcast policy on Monday, and the consumer impact the following day - feels far too manipulative and staged.  There was no good reason not to release the broadcast policy and its consumer impact simultaneously).

The Commission conclusion amounts to an acknowledgement that prices will go up, but it believes that Canadians will continue to pay based on past experience of steady price increases imposed by cable and satellite companies.  It states:


It does not appear, however, that significant affordability issues would be created by a VFS regime that resulted in modest price increases, as both subscriber levels and average per customer BDU subscription revenues have steadily increased since 2002...While the Commission recognizes that low income households would feel the impact of an increase in the price of basic television services to a greater extent, the reality is that, for most Canadians, the price of such services would still remain low relative to overall personal disposable income. This suggests that many Canadians may be opposed to an increase in the price of basic television services but are still able to afford it. For those consumers, the decision to retain such services is one based on a number of factors and not solely on affordability.

In other words, the Commission simply doesn't believe Canadians will change their television purchasing habits if faced with new additional fees.  In fact, the CRTC believes Canadians will continue to pay even though "a VFS regime, as proposed by broadcasters, may not increase consumer value in local programming because, as currently conceived, it does not guarantee incremental local programming or greater consumer choice."  Guided by these views, the Commission proceeded to reject calls for greater consumer choice in the form of "skinny basic" or a "pick-and-pay" approach.

There are additional noteworthy recommendations (the creation of a new complaints agency, urging the government to step up its action on the digital transition), but far more interesting is the stinging minority report from Commissioner Michel Morin.  Morin does not mince words in calling out the CRTC's failure to genuinely address consumer concerns:

The ramifications of the new basic service subscription rates will only be established through negotiations among the parties. The Commission defends the interests of the industry to the detriment of consumers who, for their part, remain powerless.  These consumers are the same 11 million Canadian subscribers who have been hit since September 2009 with the first bill for the $100 million resulting from the establishment of the Local Programming Improvement Fund (LPIF) (1.5% of the BDU's bill to the subscriber) with no guarantee as to any increase in content. How much will the bill be this time? $100 million? $200 million? $300 million?

Morin argues that a cheaper, skinny basic service is needed, not only to provide a lower-cost alternative but also to better reflect the reality of the current environment:

A limited basic service - one that would be less expensive because it would include a reduced number of imposed discretionary channels - would have fit in perfectly with this shift toward the pull culture, one of freedom of choice for the consumer. This service would have resolved the problem of affordable access by giving the consumer the option of subscribing and therefore paying for a private conventional channel which, because of a recognized value assigned to its signal, would no longer be offered free of charge.

Morin closes by blasting a proposed new complaints commission, noting that the consumers are seeking greater choice, not a new way to complain about their service.  Canadian Heritage Minister James Moore has indicated that the consumer perspective is his top priority on the fee-for-carriage issue.  One can only hope that he reads the Morin minority report.

Full post as published by Michael Geist on March 24, 2010 (boomark / email).