Clueless about cable

Jessica forwarded me a letter to the editor appearing in the Toronto Sun, and it’s a peach:

WE PAY … AGAIN

Rogers Cable will be adding a new item on my bill, called the Local Programming Improvement Fund Fee. It adds 1.5% to my cable bill to go directly to the CRTC’s LPIF fund. I recall the local broadcasters all whining that the cable and satellite companies were not paying to re-broadcast the signals of the local TV stations. Guess what? They still aren’t. The entire fee has been passed down to the consumer. This wouldn’t bother me so much, except that these same local broadcasters charge advertisers huge fees based on the number of viewers. If not for the cable and satellite companies, local broadcasters wouldn’t have nearly as many viewers and would not be able to justify their ad rates. So, our government is forcing television viewers to subsidize them with this new tax. Sounds like yet another gouge to me.

DAVE BOTTOMS

SCARBOROUGH

Where to start?

Seriously, is anyone (besides Dave) naïve enough to really believe that the satellite and cable providers would happily take 1.5% of their gross broadcasting revenues from their profits and hand it over to these local stations? The phrase “1.5% of their gross broadcasting revenues” simply defines how the LPIF contribution is calculated, not where it comes from. For goodness sakes, all of the providers’ expenses are paid for by the customers. Why would the LPIF be any different?

Local broadcasters were whining that cable and satellite broadcasters were not paying to rebroadcast local signals. That’s called fee-for-carriage, and I’d hate to be the one to tell Dave, but this 1.5% charge for the LPIF has nothing to do with fee-for-carriage.

The CRTC directed the rebroadcasters to sit down with the the owners of the local stations and agree to a fee-for-carriage charge. If they can’t agree, the CRTC will enforce binding arbitration to make them agree. As far as I’ve read, these discussions haven’t even started so there’s another increase coming to your cable and satellite bill. I’ve heard some estimates that fee-for-carriage could increase monthly fees by as much as $7.50 in large markets. It’ll certainly be more than 1.5%. Dave’s going to be upset.

I have to hand it to the rebroadcasters, though. Breaking the LPIF contribution out into a separately itemized fee on their bills allows them to explain that it’s the CRTC’s doing. “We’re charging more? Oh no, it’s not us. We don’t want to increase your bill but the CRTC is making us!” They don’t want to get blamed, and getting people pissed off at the CRTC is a nice bonus.

Something doesn’t make sense though. Take Rogers for example, they have a notice about the LPIF stating:

Starting on your first bill after August 31, 2009, you will see a new line on your invoice called CRTC LPIF fee, and a corresponding charge of 1.5% of your recurring TV monthly service fee. The 1.5% fee that is collected goes directly to the CRTC’s Local Programming Improvement Fund (LPIF). Rogers Cable receives no financial benefit from the LPIF fee.

The implication is that your bill is going to increase by 1.5%. Seems straightforward, right? Wrong. The CRTC increased the mandatory LPIF contribution by 0.5% this broadcast year. It’s been 1% since October 2008, when the LPIF was created. I’d encourage you to examine your bill closely when this charge appears to make sure the pre-tax total does not increase by 1.5%.

I’m no-longer a Rogers customer, but that wouldn’t stop me from writing to them, would it? Of course not.

I’m curious. I’ve heard about your cable billing increase of 1.5% because of the Local Programming Improvement Fund. My question is about the reasons you’re increasing cable customer rates the full 1.5%. Last year you gave 1% of your gross broadcasting revenues to the fund and the CRTC has mandated that you must increase your contribution to 1.5% for the next year. That’s an increase of 0.5%.

So why are you increasing customer rates three times the amount the CRTC requires?

Perhaps they will reduce the total by 1% and then adding a separately itemized charge of 1.5%. This could be their plan but it’s not what they describe. Their notice explicitly states that the LPIF is a new fund, which is certainly is not. They want everyone to believe this is an entirely new charge. My experience with Rogers would have me check the numbers on the bill anyway.

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2 Comments

  1. Shawn
    Posted August 11, 2009 at 07:48 | Permalink

    I do commend Rogers for itemizing it, but I am wary of how much the increase will be. They do mention it will be on your reoccurring monthly charges, which will make it confusing to calculate as this is the magic number they use for their bundle discounts and seems to be somewhat random in application ( my bill is a mess).

  2. Jessica
    Posted August 11, 2009 at 10:21 | Permalink

    You write: “Their notice explicitly states that the LPIF is a new fund.” That’s not what the excerpt above says, though! Rogers states: “you will see a new line on your invoice called CRTC LPIF fee.” So the line on the invoice is new; the fund is not. Rogers never says that it’s a new fund, or even a new charge, just that it will now be showing you exactly what you’re paying for the fund every month.

    OK, I just clicked on the link to the full notice, and Rogers does in fact say that it’s a new fund. Well, it is still less than a year old; maybe that’s new enough? It is misleading, though; you’re right. Also, maybe Rogers wasn’t passing the 1% charge directly on to customers before, and now it is. If that’s the case, I wonder where the 1% was coming from before….

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