{"id":17840,"date":"2023-10-24T05:14:05","date_gmt":"2023-10-24T09:14:05","guid":{"rendered":"http:\/\/mhgoldberg.com\/blog\/?p=17840"},"modified":"2024-06-12T14:55:11","modified_gmt":"2024-06-12T18:55:11","slug":"cross-subsidies-cost-consumers","status":"publish","type":"post","link":"https:\/\/mhgoldberg.com\/blog\/?p=17840","title":{"rendered":"Cross subsidies cost consumers"},"content":{"rendered":"

Cross subsidies cost consumers real cash.<\/p>\n

Based on a number of recent CRTC decisions, it appears the Commission wants consumers to pay inflated prices for internet and mobile services in order for the CRTC to fund other projects.<\/p>\n

A couple months ago, in “Ending regulated cross subsidies”<\/a>, I wrote about the CRTC setting wholesale fees paid by Videotron to Rogers<\/a> at rates below cost, saying that the financial shortfall can be made up \u201cthrough other telecommunications services,\u201d all of which are competitive.<\/p>\n

Let’s be clear what that means. In the eyes of the CRTC, Videotron, a multi-billion dollar vertically integrated national telecommunications company, should be subsidized by Rogers consumers paying more for their mobile and internet services.<\/p>\n

Does that seem right?<\/p>\n

Last week, the CRTC sent a letter<\/a> proposing to grant special dispensation to Corus noting “Corus\u2019 unique position as Canada\u2019s largest non vertically integrated private broadcaster.” Under the proposed Order, Corus would not have to spend as much on Canadian programming. Scotiabank estimates that this could represent around $30 million in savings annually.<\/p>\n

Let’s focus on the language in the letter that characterizes Corus as having a “unique position” as a non vertically integrated private broadcaster. There are other private broadcasters that have been seeking relief as well. Bell (CTV and Noovo), Rogers (CityTV), and Quebecor (TVA) have all sought relief, but they are integrated companies. The CRTC has decided “the that it is appropriate to give immediate consideration to Corus\u2019 application on an exceptional basis”, presumably because it believes the integrated companies can sustain financial losses, propped up by profits in other segments.<\/p>\n

This makes no sense from a business perspective. Effectively, the CRTC is now depending on profits from other lines of business – internet and mobile services – to prop up money losing broadcast business units. It is an unsustainable business model, punishing shareholders and consumers alike. As I have written before<\/a>, “A rational business will restructure, or shut down those units that have no opportunity to climb out of the red.”<\/p>\n

Bell has filed an application with the Federal Court of Appeal<\/a> over the CRTC’s automatic broadcast license renewals, concerned the Commission will delay hearing broadcasters appeals for regulatory relief on Canadian program expenditures.<\/p>\n

This Commission has now provided numerous instances where it indicates a belief in a system of regulated cross subsidies from unregulated business segments. At the end of the day, these cross subsidies cost consumers real cash.<\/p>\n

As Dvai Ghose wrote in the Globe and Mail<\/a>, “While the CRTC may have good intentions, it demonstrates naivet\u00e9 when it comes to the private sector, and the consequences could be incredibly destructive for wireless investment and quality in Canada, risking our ability to compete globally.”<\/p>\n","protected":false},"excerpt":{"rendered":"

Cross subsidies cost consumers real cash. Based on a number of recent CRTC decisions, it appears the Commission wants consumers to pay inflated prices for internet and mobile services in order for the CRTC to fund other projects. A couple months ago, in “Ending regulated cross subsidies”, I wrote about the CRTC setting wholesale fees …<\/p>\n

Cross subsidies cost consumers<\/span> Read More »<\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_uag_custom_page_level_css":"","two_page_speed":[],"footnotes":""},"categories":[1],"tags":[],"class_list":["post-17840","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"yoast_head":"\nCross subsidies cost consumers • Telecom Trends<\/title>\n<meta name=\"description\" content=\"Cross subsidies cost consumers real cash. 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