Are consumers being forgotten in talks on launch of the new digital channels?

Has the CRTC lost touch with what consumers really want? The Canadian Cable Systems Alliance fears it has. The group, which represents smaller cablecos, argues that the complexity of rules associated with the carriage of Category 1 channels is seriously impeding the industry’s ability to respond to consumer demand. Allyson Townsend, legal counsel for the CCSA, presented a paper on this issue to delegates at a conference in Toronto earlier this week. In it, she argues that distributors and new digital licensees are spending too much time and resources on regulatory feuds, rather than on the highly demanding but relatively simple tasks of giving consumers the channels they want and at price points they find attractive.The highlights from her paper are reprinted below. When I was approached to deliver this paper, my first thought concerned the complexity of issues involved in adopting digital technology and the apprehension with which distributors and programmers alike appear to be approaching the digital marketplace. My second thought was to question why this should be so. Should not the advent of digital technology, a long anticipated event which increases capacity to provide services and permits greater flexibility in the provision of services, be embraced by all in the industry as an almost limitless opportunity? The apprehension comes from the complexity. We operated in an environment of complex, longstanding regulatory structures and highly sophisticated technology. We worry about the problems associated with pricing the new digital services. We are concerned that we will not be able to bear the risks associated with a roll-out of digital technology and programming to which our customers are not yet committed. We are mired in notions of access rules and penetration levels which we can only see as becoming more complex in the digital environment. It is more natural for us to seek regulatory protection than to do what is necessary to succeed in an increasingly competitive marketplace…. As the Canadian broadcasting industry contemplates launch of a new group of digital services in the Fall of this year, it must shed its dependence on the protection currently set out in complex regulatory structures. Success in the digital marketplace will depend on the flexibility of distributors to respond to consumer demand for those services, and only those services, which the consumer wishes to purchase. Accordingly, access rules are inappropriate to the digital environment. Such rules perpetuate a tendency to rely on regulatory protection rather than to compete for customers. Worse, such rules distract industry participants from the critical task of understanding and responding to consumer demand. Canadian programmers must respond to the digital marketplace with flexible packaging and pricing approaches. If distributors are able to sell consumers only the services they desire at competitive prices, programmers stand to benefit from an overall increase in consumer demand for programming content. Programmers must be prepared to compete based on the quality and attractiveness of their products to consumers and must respond, quickly, to the need for new contracting models which support open competition among distributors. Finally, the industry as a whole must move beyond its regulated, monopolistic mindset. Participation in the digital marketplace requires competition based on fundamental commercial principles. Those principles are: attractive product packaging; attractive product pricing; and excellent customer service. Close attention to those basic principles will simplify many of the apparently daunting issues surrounding the launch of the new digital services. Close attention to those principles is absolutely necessary if today’s industry players are to succeed, over the long term, in the digital marketplace.

Are consumers being forgotten in talks on launch of the new digital channels?

Broadcast | June 21, 2001

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