If you are a customer of Rogers Cable, get ready to pay more to watch TV. Rogers has sent out letters notifying customers that starting next month, it will levy a Local Programming Improvement Fund (LPIF) fee of 1.5% of their cable TV bill. Rogers helpfully points out that the fee is a direct result of the CRTC requiring cable and satellite TV providers to fund local programming in smaller markets. When the CRTC mandated that cable and satellite providers pay for local programming, it naïvely hoped that the cost will not be passed on to consumers:
In establishing this new fund to support local programming, the Commission [CRTC] is conscious of the impact that it will have on licensed BDUs [Broadcast Distribution Undertakings such as cable and satellite TV providers]. While the precise impact will vary from undertaking to undertaking, the Commission estimates that the aggregate impact on BDUs will be to lower their overall operating margins – currently at approximately 35% – by no more than 1%.
In light of the performance levels of the BDU sector and the benefits accruing to BDUs as a result of other changes being made to the regulatory framework, the Commission is of the view that there is no justification for BDUs to pass along any increased costs relating to the LPIF – estimated to be on average approximately $0.50 per month – to their subscribers.
It is interesting that Rogers chose to break out the LPIF fee separately instead of incorporating it into the next round of price hikes. After all, a 1.5% fee on a $29.99 monthly cable bill works out 45¢ and Rogers is already in the habit of regularly increasing prices by a dollar or two every year. Today basic cable in Ottawa costs $29.99 excluding taxes and a digital service fee of $2.99 — up from $28.49 in 2008, $27.49 in 2007, $25,99 in 2006, $24.99 in 2005, $23.99 in 2004 and $21.99 in 2003 — an increase of 36% over a 6 year period. So, why would Rogers break out the LSIF fee? Informed speculation is welcome.
