No financial justification to increase skinny basic rate from $25 to $28: CRTC

The CRTC denied an application by BCE Inc., Bragg Communication Inc.’s Eastlink, Saskatchewan Telecommunications Holding Corp., and Cogeco Inc. to increase the price of basic television service from $25 per month to $28 per month with yearly indexing tied to inflation due to a lack of evidence to suggest that the current rate “is no longer economically viable for them as retailers.” “Irrespective of whether or not it is viable, the basic service is an instrument that was designed to benefit the consumer by facilitating choice and economic decisions in a marketplace where broadcasting distribution undertakings (BDUs) have multiple options to recoup their costs,” the CRTC further wrote in its Tuesday decision. The rates have not increased since the skinny basic service launched in March 2016 to provide consumers “the choice between a reasonably priced entry-level offering and the television service provider’s first-tier offering.” The companies filed the Part 1 application in Jan. 2022 requesting the $3 increase with an annual adjustment for inflation based on the annual Canadian consumer price index. Quebecor Inc., Rogers Communications Inc., Telus Corp., and Shaw – were made parties to the proceedings so they could file documentation that would help the regulator determine the impacts of the changes. In December, the regulator extended the intervention period because the parties collectively submitted that a minimum of 1.5 million subscribers would be subject to the price increase, but “multiple parties indicated that they had not yet ruled out applying the increase to other subscriber segments, which could ultimately lead to a greater impact on Canadian BDU subscribers.” The CRTC reopened the intervention period for interested parties to make submissions regarding the new information. The majority of the public opposed the proposal – including organizations such as the Consumer Association of Saskatchewan, the Public Interest Advocacy Centre and the National Pensioners Federation, the Forum on Research and Policy in Communications, the Ministère de la culture et des communications; Independent Broadcast Group, and Anthem Sports and Entertainment – due to the negative impact it can have on low-income subscribers and a lack of evidence to support the incumbents’ positions. Access Communications Co-operative Limited, the Canadian Communication Systems Alliance, Pelmorex Weather Networks Television Inc., Corus Entertainment Inc., and Rogers all supported the application because it would provide BDUs with a better chance of competing against the digital streamers, and the adjustment to inflation would help offset operating costs. In its analysis, the commission found that the applicants provided inconsistent information regarding the number of subscribers that currently receive the basic package, and it was not clear enough to allow the CRTC to make a determination on the current number who would be affected by the proposal. The commission also found that the “vast majority” of subscribers bundle their basic service with another service. “In the end, this provides additional revenues to BDUs,” the CRTC wrote. “The basic package brings intangible benefits to BDUs that extend beyond the $25 rate because additional business opportunities materialize as consumers pursue the convenience of bundling their services with a single provider.” The commission further noted that Canada’s broadcasting industry continues to “yield strong operating margins,” above 14 per cent as of 2021, despite declining revenues and subscriptions. The CRTC added that expenses continue to decline except for sales and promotion. “The commission considers that BDU expenses are unlikely to increase significantly over time. Apart from programming costs, the infrastructure costs for BDU services are largely fixed…,” the CRTC wrote in its decision. “There is not a financial justification for the proposed increase that would outweigh the goal of providing Canadians with an affordable entry-level basic service.” – Reporting by Jenna Cocullo at jcocullo@thewirereport.ca and editing by Phalen Tynes-MacDonald at pcreed@thewirereport.ca.

No financial justification to increase skinny basic rate from $25 to $28: CRTC

Broadcast | September 5, 2023

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No financial justification to increase skinny basic rate from $25 to $28: CRTC

Broadcast | September 5, 2023

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