Trials and Tribulations Of Cable TV in Canada
AN 18-inch satellite dish strapped to the chimney of a house in Riverdale, a district of Toronto, amounts to a protest. The protest is not only against a jump in cable TV charges, but against the entire Canadian cable TV system.
The annoyed dish owner bought the device to get a satellite TV service, though that service is outlawed in Canada. While not for sale in Canada, the dish and the service can be bought in the United States.
``I was fed up with the latest cable rates. So I drove to Buffalo and bought this dish for $700,'' this protester (who we'll call Perry) says. He asks that his real name not be used out of concern that the American satellite company he subscribes to, Direct TV, will cut off his service. He has a billing address in Rochester, N.Y. Perry says he was so furious at the byzantine world of regulated Canadian TV that he doesn't mind spending the money.
Canadians are among the most ``cabled'' people in the world; about 90 percent of homes have cable TV. Its popularity stemmed from a desire to get clear pictures from US border TV stations. But with success came government regulation and complex rules for paying to watch cable TV.
The cable business has different tiers of service: basic, which includes Canadian and American networks; and extended basic, which includes other services such as Cable News Network and the Arts and Entertainment Network (A&E), both of which are popular in Canada. The industry is dominated by Rogers Cablesystems Ltd., in Toronto, which has captured 40 percent of the cable business in Canada.
The rate hike that so bothered Perry and other Canadians was an increase of $3.40 (Candian; US$2.42) a month to cover six new Canadian speciality channels that began broadcasting this month. ``It would have raised my bill to $45 a month,'' Perry says. ``None of it was worth it.'' His satellite service provides more than 40 channels for $42 a month plus the cost of pay-TV service.
The regulator of cable service in Canada, the Canadian Radio-Television and Communications Commission (CRTC), hands out licenses, sets rates, and dictates which channels are and aren't on cable. It has also ruled that satellite service from the US can't be sold to viewers in Canada.
The six new channels approved last year by the CRTC include Discovery (Canadian version), Life Network, and the Woman's Network. The services were added to the ``extended basic'' service; if cable subscribers didn't want them, they had to phone or write the cable company and cancel the service. But by canceling the extra stations, viewers also lost CNN, A&E, and a few others. This is called negative-option marketing. Subscribers have to say ``no'' to the option of spending more and getting more channels. There was a public outcry, and Ontario and British Columbia began preparing legislation to ban negative-option marketing.
Last week, Rogers Cablesystem announced that it was changing the plan. ``We now know we have made a mistake, and we apologize,'' says Colin Watson, president of the company. Subscribers can now keep their favorite channels and skip some or all of the new channels.
But not everyone thinks Rogers and the CRTC are at fault. ``This is one consumer backlash where the consumers are wrong,'' says Finlay MacDonald, a Halifax-based communications consultant. ``They are going to pay more in the long run, and some of the new speciality channels are going to go out of business. So far, only 2 of the 6 new channels are getting any audience to speak of. The Discovery Channel gets 140,000 a night, and the Life Channel gets 40,000.''
Rogers says its decision not to force-feed the new channels to the public will cost the company about $30 million. It won't take that loss forever, and even Rogers has hinted that some of the new services may go under. ``We wont be making any money on these channels for at least five years,'' says Phil Lind, a high-ranking Rogers executive.
Analysts say to survive, the new services need to get 75 percent of subscribers chipping in their 30 cents each. But they might not be able to do that without being tied in to the existing American channels.