Pick-and-pay TV: Consumer choice, but at what cost?

Cable à la carte is finally on the menu, letting TV viewers order the channels they crave without charging them for programming they never wanted to consume in the first place.

Just be wary that under the new rules, the bill could come as a shock.

"Sure, you might be getting more choice," said tech analyst Carmi Levy. "But the nasty surprise is you may have to pay more to get exactly what you want and avoid what you don't want."

CTRC Chairman Jean-Pierre Blais speaks to media at the CRTC offices in Gatineau, Que., on Thursday, March 19, 2015. The regulating body announced Canadians will have access to a new basic cable package capped at $25 with further "pick-and-pay" options after that. (THE CANADIAN PRESS/Sean Kilpatrick)

Under the new combination "pick-and-pay" system announced by the CRTC on Thursday, "everyone will be able to find an option or a bundle that suits their household," Jean-Pierre Blais, the federal broadcast regulator's chairman, told reporters.

Cable subscribers must now give Canadians the option of buying a "skinny basic" package for no more than $25 a month.

This entry-level bundle, which includes a baseline of local stations and educational channels, could then be supplemented by channels added on a pick-and-pay basis.

The decision settles a matter for consumers who have long felt constrained by television "bundling," a regime that forced consumers to pony up for huge programming packages that lumped in dozens of networks they could care less about.

"Canadian sensibilities being what they are, we felt ripped off," said Levy, who writes for the tech site Voices.com. "It's like going to the supermarket with the intention of buying butter, but before you buy butter, you're stuck buying products you're never going to eat or drink."

Trading choice for price?

Subscribers content with their service may keep their bundles.

"But for consumers who weren't happy with their bundles, now they have better bundles," said Alysia Lau, legal counsel for the Public Interest Advocacy Centre in Ottawa (PIAC).

"We think this is a great basic package. You still get access to your local news, CBC, CTV, Global, your community channels, your provincial educational channel," she said. "And if they want, consumers can decide what they want to add on top of that."

The announcement of a new pick-and-pay model for cable providers may have come too late for Canadians who have already dumped cable in favour of online streaming solutions.

That's good news, perhaps, for a Walking Dead fanatic who never tunes in to the faith-based VisionTV network. Or a cable subscriber who only watches 24-hour news but resents having to pay for niche programs like Dogs With Jobs and Gospel to Go.

"But in getting what they've long wished for, Canadian consumers may find there are some tough economic realities of leaving bundling behind," said Levy.

Once the "shackles of bundling" are lifted, Levy said, "the prices Canadians pay for any individual channel might increase significantly because now they'll be paying the market rate."

Smaller channels at risk

Rogers TV packages in Ontario begin at $40.48 a month for about 190 channels. Bell offers Ontario customers more than 150 channels for $41.98.

A 2014 national PIAC poll found 90 per cent of 1,000 consumers polled were willing to pay an additional $1 a month per channel, while 54 per cent would be willing to go $3 a month, and 21 per cent would be willing to pay $5 a month for an additional channel of their choosing.

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Technology analyst Carmi Levy, who writes for the tech website Voices.ca, says that although he supports pick-and-pay, consumers who choose the new model when they subscribe to cable TV should brace for bigger bills. (Courtesy Carmi Levy)

How dramatically cable bills may change will depend on whether customers "cord shave," or drop enough channels to lower costs, said Howard Law, the spokesperson for Unifor National, Canada's largest private-sector union.

"It could be that less popular channels will now cost so much, if they survive, that a customer can drop a lot of unwanted channels and still pay more," Law said, reasoning that bundling of packages keeps such channels affordable through cross-subsidization.

Pick-and-pay proponents have argued that small channels earning guaranteed income from subscriber fees will have to elevate their programming, giving consumers better content in order to stay afloat.

Law believes that may be true for some channels, but others won't have a chance.

"Some will simply go down. No number of swimming lessons will help them," he said, adding that Unifor expects 10,000 jobs will be lost — an estimate the CRTC dismissed.

APTN part of skinny basic

Diane Wild, who publishes the Canadian television blog TV, Eh?, noted that the CRTC decision includes a provision to ensure cable and satellite companies "offer independently-owned channels in at least one pre-assembled package."

By 2016, however, cable companies will have to offer individual channels as well as small bundles.

"So that's when we might see things like BookTV disappear if no one picks them. Which I find it difficult to be upset about," Wild said.

Diane Wild, who publishes the Canadian television blog TV-eh?, cut the cord four years ago. She would consider coming back to cable under pick-and-pay, but she has since found alternate ways to watch her preferred programming. (Courtesy Diane Wild)

The Vancouver TV blogger, who cut the cord four years ago, said she would consider switching back to cable under the new rules. She says live telecasts such as the Oscars tempt her every year, as do competition shows encouraging real-time social media discussions, such as The Voice.

But it's a tough call now that she's spent time building a digital solution to catch her favourite shows.

"I'm quite happy with my set-up," she said of her patchwork of Netflix, iTunes downloads, an over-the-air antenna and other digital subscriptions.

May be too little, too late

"But I do miss not having APTN," she admitted.

The aboriginal-focused network is a must-carry channel on skinny basic.

"It has Blackstone, it has Hard Rock Medical, and I don't think you can get APTN over the air," Wild said. "It's certainly not available in my area, so there are advantages to skinny basic."

With so many Canadian cord-cutters becoming savvy about finding online workarounds to catching TV, the CRTC decision has been long overdue, said Levy.

"The irony is that it might be too late as the market continues its headlong rush towards purely online alternatives," he said.

Had the pick-and-pay model been introduced six or seven years ago, Wild believes she may have kept her cable.

"Industry is so slow to adapt to what consumers want, so consumers find a way to live without that industry," she said. "I think that's what happened to the Canadian TV industry more rapidly than they're willing to admit."