Study: CRTC Should NOT Mandate Pick & Pay TV Channel Choice

TORONTO, Sept. 25, 2014 /CNW/ – A proposal by the Canadian Radio-Television and Telecommunications Commission (CRTC) to mandate “pick-and-pay” television offerings for Canadians is deeply misguided, according to a report from the C.D. Howe Institute. In “Let the Market Decide: The Case Against Mandatory Pick-and-Pay,” authors Lawson Hunter, Edward Iacobucci and Michael Trebilcock find that mandating consumers to be able to subscribe to pay and specialty services on a service-by-service basis  would be a slippery slope to still more regulation, and would become irrelevant at best in the ongoing telecom revolution.

“Attempting to regulate pick-and-pay or product offerings would launch the CRTC on a more interventionist role in the entire content and video distribution business, once again demonstrating that regulation often begets more regulation,” state the authors. “This would almost certainly require the CRTC to supervise the prices for unbundled products, as otherwise, broadcast distributors could offer larger bundles at steep discounts to discourage à la carte consumer choice.”

The report finds that bundling can better maximize company profits without pricing consumers out of the market, as buyers have different preferences, and thus different demand, for different products. “Just as diversification in a stock portfolio reduces variance in the portfolio’s return, bundling can reduce the variance across consumers in their willingness to pay.”

The authors also argue that the government should not try to support Canadian content through a “Netflix tax” or the existing Canadian content regulations. Instead, production subsidies, increasingly financed out of public revenues and maintaining a national broadcaster (the CBC in English-speaking Canada) as the main means of promoting Canadian content would be a less distortionary approach.

Read more HERE.

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