Beware of the Scare Tactics, Part Two: CRTC Unveils Cheap Basic Service and Pick-and-Pay - Michael Geist
As expected, the CRTC ruled yesterday that it will require cable and satellite companies to offer a mandatory basic service capped at $25 per month (which may include U.S. channels) and a pick-and-pay alternative for individual channels no later than December 2016. As also expected, the doomsayers are out in full force, trying to explain why a low priced service and more consumer choice will lead to higher cable bills. The Globe and Mail's Kate Taylor predicts "my bet is that most Canadians will find themselves piecing together a smaller cable package that will cost just about the same as the old behemoth." The National Post's Terrance Corcoran says that no one will buy the basic bundle and that "what is clear is that, when viewers start picking [bundles and channels], the amount they end up paying could go up." Yet that analysis runs counter to what business analysts expect to happen. Maher Yaghi of Desjardins Capital Markets says the changes could "lead to a reduction of $5 to $10 in monthly [revenue per user] as customers get the option to choose the channels they want to watch and move discretionary money toward OTT (over-the-top) services such as Netflix." Canaccord Genuity analyst Dvai Ghose suggests even bigger declines of $9 to $21 for some customers. In fact, Ghose notes that "current entry-level TV monthly prices for the large BDUs are as follows: Bell Fibe TV $45.95, Rogers Cable $40.48, Shaw $39.90 and Videotron $38.00 and Telus $34.00 ($29.00 if bundled)." A $25 service is obviously going to result in reduced spending for those consumers."
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