Bill Virgin: Canada will be testing ground for future of TV

We’re continuing our Grand Tour of contentious Tacoma issues, having tarried at such stops as methanol and the port’s maritime operations, with return visits ahead for KPLU and (yes, again) Haggen.

But first let’s spend a few moments with one we’ve neglected for a while — Click.

You remember Click, the city-owned cable television and Internet-service provider that is serving up a full menu of questions about its existence and fate, including: Is the cable-TV side losing money? How much? Does it make sense for the city to continue being that business? If so, under what structure, and who pays? If not, should the city lease it to someone else or unload it entirely? Under what terms?

And did “The Wired City” ever amount to anything more than a once hip but now outdated marketing slogan?

The city, having absorbed an earful of complaints about plans for Click, decided to punt the issue to a study committee that is looking at issues such as whether Tacoma should double down on its bet by getting into the Internet service business itself, instead of merely being the conduit through which outside companies provide that service to homes and businesses. That committee is due to report its findings next month, which should provide a momentary diversion from some of the other pitched battles on the city’s agenda.

The cable-TV portion of the debate takes place against a backdrop of upheaval in that business: cord-cutting, cord-shaving, the rise of TV-via-the-Internet services such as Netflix and Hulu and program-production companies such as the broadcast networks going directly to viewers via the Web. If anything, that backdrop is — in theatrical terms — elbowing its way to center stage, shoving the players such as Click and other cable operations into the wings.

Consumers are leading the drive from cable and broadcast just as they did from landline telephones to wireless devices, and for much the same reasons. Cost is a huge one, with consumers totaling what they spend every month for communications and entertainment and being horrified at the result. More features and more customization also factor into the decision to cut the cable, ditch the dish and look for alternatives.

The industry could stem the erosion if it gave consumers what they want, a radical concept known as a la carte. Instead of paying huge sums for bloated bundles of channels and networks they don’t want and will never watch, the argument goes, customers should be able to assemble their own channel line-ups. Have no interest in sports? Don’t pay for those channels. Like sports, but only certain ones? Build your own menu that includes, say, football but not golf.

The industry has fiercely resisted a la carte, insisting that customers really don’t want it and will wind up paying more in total by purchasing channels individually rather than in groups. It also says going to a la carte will disrupt the existing financial model of the cable industry, which is rife with cross-subsidization.

What makes it worth our time to revisit this issue at this time is news of a real-world experiment to test all those arguments for and against a la carte. Better still, this experiment won’t be carried out in some faraway locale. You need only direct your attention 175 miles or so up the highway to see how it plays out.

The Canadian Radio-Television and Telecommunications Commission has issued new rules on pricing and bundling for TV services. As of March 1, “companies must introduce an affordable basic package that costs no more than $25 per month. As well, the companies must introduce either the option to pay for individual channels (“pick and pay”) or small packages of no more than 10 channels,” according to a backgrounder from the commission. As of Dec. 1, “channels will be offered BOTH individually AND in packages of up to 10 channels.”

As is the case with much of life, conditions and footnotes abound. The affordable TV packages don’t have to include the U.S. broadcast networks. Canadians can’t buy one or two channels; they have to buy the basic or first-tier of service and then add on. Also, the commission doesn’t regulate prices on what those add-on channels cost.

Which means the big U.S.-based outfits can put up a fight on pricing terms and by insisting that local providers and customers take all or nothing. While the Canadian market is but a fraction of the U.S. market, someone is going to decide they don’t want to forgo that customer base, even on less favorable terms.

“Canadians now have the freedom to decide the right value proposition for them,” the commission says. “That value proposition may include individual channels, small packages, free over-the-air television services and online video services.”

What a concept — freedom of choice in the marketplace, at least for consumers (service providers and programmers, meanwhile, have their freedom to tailor and price their offerings constrained). If it works in major metropolitan markets such as Vancouver, Americans living just across the dotted line on the map are likely to take notice and decide that’s an import they’d like — adding one more on an already crowded menu of selections for those scrolling through Click’s options for its future.

Bill Virgin is editor and publisher of Washington Manufacturing Alert and Pacific Northwest Rail News. He can be reached at bill.virgin@yahoo.com.

This story was originally published March 12, 2016 at 4:47 AM with the headline "Bill Virgin: Canada will be testing ground for future of TV."