OCT. 16, 2013 • The Canadian government is sending signals that it wants new rules that require Canada cable television carriers operating in the country to offer consumers unbundled pricing of channel content as an option. “We want to unbundle television channels and allow Canadians to pick and pay for the specific television channels that they want,” minister of industry James Moore said Sunday on the Question Period program aired by the CTV network. Vancouver-based Telus Corp. has been offering a la carte pricing plans for several years already following the a move by the Canadian Radio-Television and Telecommunications Commission to strongly encourage telecommunications companies to provide more-flexible content packages to consumers. No new regulations have been put in place yet, nor did Moore provide a timetable for their creation.
Impact: When the topic of unbundling channel packages comes up the cable industry usually retorts that at best what consumers pay per month will remain the same, and at worst their monthly bill will rise. What’s happening already in Canada is not a strict either/or proposition, however, with many hybrid packages being promoted. For example, a basic TV package from Telus without sports channels is priced at $29 per month to customers who also subscribe to either phone, mobile or Internet service. Other cable channels can be added for an extra $4 each up to a total of 50 total non-package channels. Such hybrid pricing could be an easy sell to U.S. households where channel package costs, DVR lease fees, HD fees, and modem lease fees routinely send monthly bills soaring over $100. Bundling obscure channels in with high-demand channels such as HBO or ESPN does make it possible to fund and carry the former. And we admit, many of those obscure offerings will likely fade quickly into the ether should unbundling take hold. Yet such a Darwinian weeding out may be a good thing. Many of these lesser channels are only carried at the behest of content providers that force them on carriers in order to secure the best channels. Another positive of less content bloat is that enough bandwidth might be freed up to increase the resolution of programming. Currently many channels are only delivered at 720p, with the rest at 1080i, while most HDTVs are supporting 1080p. Right now about the only 1080p content a cable subscriber will see is pay-per-view.
Despite the cable industry’s protestations, we tend to think competition and common sense will see monthly bills dipping somewhat with more hybrid unbundling. Internet streaming services like Netflix and Hulu are educating consumers on how to enjoy content at much cheaper price points, and the free-to-play online games model is similarly encouraging a pay-as-you-go relationship. What’s more, these anti-subscription tendencies are flourishing in just the young adult demographic cable and satellite carriers need to attract most. The results of Canada’s push for unbundling will shake out the variables in order to arrive at a point where sustaining profitability and boosting consumers satisfaction are assured. And looking ahead, unbundled cable TV is just the kind of content delivery scenario new consoles such as the Xbox One and PlayStation 4 can excel at managing in the living room if either Microsoft or Sony can arrange the order and payment processing relationship with telecommunications companies.
