Canada's communications regulator will require cable companies to let customers choose the channels they want, one of the first countries in the world to mandate so-called a la carte pay-TV.
The decision will dismantle the system of bundling networks in packages that has underpinned the cable businesses of companies such as Rogers Communications Inc. and BCE Inc.
By March 2016, companies will have to offer a smaller basic cable service with educational and local TV for no more than $20. By December of that year, they'll have to let consumers choose the channels they want, a system known as "a la carte."
Canadians have long complained about paying for channels they never watch, and millions have signed up for Internet streaming services such as Netflix Inc.
In the U.S., the industry is also shifting toward "skinny bundles," not forced by regulation, but driven by companies such as Dish Network Corp. offering alternatives to the traditional cable package. Apple Inc. plans to debut an online service this year with about 25 channels, people familiar with the effort said this week, adding pressure on programmers that have relied on packages of hundreds of channels.
BCE and Rogers, the country's two largest cable providers, have started streaming services of their own. They said at the hearings that they were open to pick-and-pay bundles, warning costs could go up and less popular channels would die out. Smaller rivals including Shaw Communications Inc., Quebecor Inc. and Telus Corp. also will be affected by the ruling.
"There will be a transition process and a situation here where in the near-term you may see earnings impacted," said Andrew Pyle, a fund manager at ScotiaMcLeod Inc. in Peterborough, Ontario, who oversees about $300 million Canadian dollars, including positions in Rogers, BCE, Telus and Shaw. "Longer term, this is where the industry is going, and the bigger players will position themselves to be there, too."
Like in the U.S., the Canadian cable industry is grappling with a shift to Internet TV. Some customers are shutting off their traditional pay-TV services and watching video exclusively online -- the so-called cord-cutters.
"Resistance is futile, Canadians as viewers demand it. They want the choice, they want options because broadband is offering it for them everywhere," said Jean-Pierre Blais, chairman of the Canadian Radio-television and Telecommunications Commission.
SundayMonday Business on 03/22/2015