What the U.S. Can Learn From Canada's New Cable Rules

In March of last year, Canadian regulators announced a huge change in their cable television law. As of March 1 of this year, Canada is requiring that the country's cable companies offer an "a la carte" or "pick-and-pay" option. What this means, essentially, is that Canadian cable providers must provide a $25 basic package and allow subscribers to add individual channels of their choosing beyond this.

This regulation signals a huge change in cable television law, and marketing, because it gives the consumer a level of control that they have not experienced in the past. Further, this law is helping to put some price caps on an industry that until now has been in a price hike war, continually raising the costs of their premium services.

The U.S. is no stranger to climbing cable rates, but the country hasn't yet taken the plunge into comprehensive a la carte channel offerings. The Canadian ruling does, however, highlight the growing pressure on the pay TV industry to offer affordable subscription options. And while the U.S. has begun making other small steps toward flexible, economical viewing options, the jury is still out as to whether the difference is substantial enough.

Current U.S. Regulations

Ever since U.S. cable companies began encrypted their broadcasts, it has become impossible to obtain even basic TV channels without relying on a provider. Of course, this isn't a problem for people that are willing to pay premium prices for the latest episodes of their favorite shows, but for those wanting to watch their local channels or PBS reruns, there may be issues.

Present American law actually parallels the new Canadian legislation on the point of basic cable offerings -- U.S. cable companies are required by law to offer packages that include certain basic channels. However, since these packages generally do not cost a lot, they aren't usually advertised very well. So while the offering is there, many subscribers may not be aware that they have those options. Indeed, current cable practices leave a lot to be desired in terms of marketing more basic and affordable packages.

Hesitations over Pick-and-Pay Packages

Since this major CRTC (Canadian Radio Televisions and Telecommunications) draft was announced in March 2015, there's been argument over the effects. Some analysts have proposed that Canadian users could save between $5 and $21 per month on services. However, those savings mean that the Canadian cable industry could see a substantial drop in returns -- up to $2 billion by some estimates. Based on those projections, it's understandable why U.S. cable companies would be hesitant to make a similar move.

Other experts have suggested that a la carte TV options in general might lead to cable customers overpaying for television services. But since the legislation has yet to take wide effect, there's no way to tell what the projections will look like in practice.

The issue is complicated further on a channel level -- many executives over big cable channels oppose the move. AMC's executive VP Jamie Gallagher, for example, argued against the legislation. "The level of investment and creative risk required to create groundbreaking original programs could simply not be supported if AMC was marketed as an a la carte service," he said.

New Options in U.S. Cable Flexibility

The CRTC decision is just the most recent threat to current cable practices. Others -- like the growing trend of cord cutting in favor of Over-The-Top (OTT) services -- have been causing problems to the industry for quite some time. But U.S. cable providers haven't balked; instead, they've actually made some substantial advancements in providing flexible viewing options to their subscribers.

One notable advancement has been that many major cable companies have started offering remote streaming services. Most cable customers now have the option to stream or download on-demand media offerings based on their current cable subscription. As a result, cable companies still hold some ground in the industry, especially for avid sports fans and network devotees. Because while some premium channels, like HBO, have also begun offering separate streaming options, cable still offers the benefits of bundling -- many subscribers won't want to manage 10 separate accounts for each channel they want to stream.

The Future of U.S. Cable

It's not yet clear how closely future U.S. cable industry regulations will follow the new Canadian legislation, but it is obvious that change is on the horizon. In fact, the FCC recently shared their proposal to lower bills for cable viewers and provide more access to Internet-based programming. As pay TV costs rise and more people start to seriously consider cutting the cord, cable companies will need to continue offering new and flexible options to subscribers in order to remain profitable.

For now, the U.S. regulatory powers would be well served to study both the reaction to and effects of the CRTC's recent decision. A la carte programming may become a viable option in the future, and if the American cable industry wants to survive the streaming revolution, major cable contenders will need to pay close attention to customer needs and concerns.