Every day more and more Canadians turn to the internet as their source for media content. This has forced traditional cable providers and content producers to justify the outdated state of their current offerings. With the ease of finding premium content online, for free, safeguards around traditional content are doing more to drive customers away than they are to keep them around. The CRTC recently concluded a series of hearing designed to establish, among other things, whether regulating the unbundling of current TV packages could allow for greater consumer choice in terms of what they are actually paying for.
While basic cable TV packages are not extremely over-prices, they are rarely the only package customers subscribe to. In order to get the most desirable channels such as HBO and AMC, customers have to first subscribe to not only the basic package, but also a premium channel bundle before they can add HBO to their cable subscription. This means that in order to watch just HBO, customers often pay upwards of $80/month. While this is extremely expensive for consumers, this bundling practice is extremely lucrative for cable providers and TV content producers.
The proposed unbundling of cable packages would mean that customers would only be required to subscribe to the basic package, which includes local and “must carry” channels, before being allowed to pick and choose the other channels they would actually like to pay for. This poses a problem from content producers because much of the content on their less popular channels is only watched when people are channel surfing. The idea that people could choose to ignore these channels all together, and in effect stop subsidising them, is such a threat to the profits of the content producers that one of the biggest names in TV content production, Viacom, is threatening to pull out of the Canadian market entirely should this new structure be put in place.
While pulling out the Canadian market altogether is an extreme threat, they have also proposed moving to offering their content solely through online streaming. Thankfully, Viacom moving their TV offering online could actually be one of the most important shake-ups in Canadian cable TV and Internet in a long time.
If Viacom moves to a streaming based service it will cause a ripple effect through Canadian TV and internet offering like never before. TV providers like Rogers will have lost not only their monopoly on television content, but the ability to offer those channels through their traditional cable setting.
What many people have failed to consider though is the implications that the likes of online streaming will cause. Netflix has been in a constant fight with cable providers such as Rogers, to gain access to consumers. Internet providers like Rogers are the gatekeepers to consumer content, and with their own TV offering a direct competition to the likes of Netflix, it is in their best interest to hinder their competitors. When Rogers offers a cable TV package the customer is actually getting an network connection, not unlike the one used to connect to the internet, and using it to stream their TV channels. When you watch a show on Netflix you are doing almost exactly the same thing, the only difference being that while the show on Netflix uses up your data from your precious internet download allowance, your cable TV watching doesn’t. This discrepancy in billing practices has meant companies like Rogers can offer unlimited Cable TV packages using bandwidth Netflix can only dream of.this problem is a whole lot worse when you consider Rogers internet customers are rarely blessed with enough bandwidth to do basic web browsing, let alone watch Netflix. This means that Rogers can make it extremely prohibitive for media companies they are competing against, like Netflix, to compete on a fair playing field. And here in lies the problem for Viacom, should they move to an online streaming model their customers will end up racking up huge amounts of data overage charges with their current Rogers internet plan. Very few customers will understand, or care, about the nuances of the differences between the ways cable and streaming affect how they consume content, all they care about it that they would be paying more for effectively the same service.
Thankfully there is something good to come out of this while deal. Rogers may very well choose to bundle the Viacom streaming package with their existing cable offerings. In this regard they have two options, either change the caps, or change the way customers are billed for the streaming by allowing Viacom to connect directly to Rogers’ internal servers. With increased bandwidth customers who are currently being choked out of watching Netflix due to data caps will now be able to. If Rogers chooses to allow Viacom to connect directly to their internal network, to avoid the practice of billing only traffic going to the outside internet, then Netflix would also be able to take advantage of this as well, meaning they too could offer bandwidth free streaming.
So what Viacom seems to not understand is that by moving online they are leaving the cushy world of traditional TV that they have helped develop, and entering the hostile world of online content. Here they will face the same uphill battle against the policies made by companies just like themselves, designed to make online streaming infeasible. By putting themselves on the same playing field as Netflix they will be helping out not only the company they hoped to defeat, but consumers at large.