Canadians are paying exorbitant amounts while American regulators move to ban the practice.
Hardware Rental Fees:
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Imagine buying a car and then paying a hefty extra fee to get the engine. Or purchasing a house, only to face a big charge for the keys that let you into it.
That’s what’s going on with TV service: providers are demanding substantial fees for the hardware needed to access it. They’ll sell you the service, but the box needed to unlock it… well, hold on a second. That’s going to cost extra.
In a properly functioning and competitive marketplace, it’s the sort of thing that would be illegal.
The fees are completely arbitrary, too. In Ontario, Rogers charges $12.95 a month for a high-definition terminal and $24.95 for a PVR. Customers can opt to buy the boxes instead for $319 or $499. In Western Canada, Shaw rents similar devices for $5 and $15 a month, respectively, and sells them for $138 and $348.
Why are the prices so high and why do they differ so much across regions? The official reasons are “keeping up to date with the latest technologies,” but really it has everything to do with what the closest competitor is charging. The consumer has little choice and little power over the final amount.
Americans pay an average of $231 (U.S.) annually for such hardware. There are no official stats for Canada, according to the CBC, but the amount is likely similar. An HD PVR rental from Rogers, for example, would total nearly $300.
Regulators in the United States have taken cable providers to task for this. Earlier this month, the Federal Communications Commission agreed to new rules that will finally kill hardware rental fees.
Providers will have to make their services available as apps that run on widely available third-party set-top boxes, such as Apple TV and Roku. Such services will also have to include recording capabilities. The FCC is set to vote on these rules at the end of the month.
Here in Canada, the issue doesn’t even appear to be on the regulatory radar. Back in February, I asked the Canadian Radio-television and Telecommunications Commission why TV providers were allowed to charge exorbitant hardware fees. Its response couldn’t have been more different from the FCC’s position.
“There will be no restrictions on surcharges. The Commission has never regulated these costs,” a spokesperson replied. “It would be very complicated to regulate the cost of equipment because everyone has different equipment and different business models associated with it.”
The CRTC did touch on hardware rental fees during its recent grilling of TV providers on their skinny basic offerings. But the focus seemed to be more on other extraneous charges, like why some providers weren’t giving skinny basic customers bundle discounts or why they were requiring them to also sign up for internet service.
The FCC clearly doesn’t think getting rid of hardware rentals fees is too complicated. Neither does VMedia. The Toronto-based television provider launched a Roku app this weekend that delivers its channels to any Canadian with an internet connection.
Again, if Canada had a functioning and competitive television market, VMedia’s move might be matched by the likes of Rogers and Shaw. But VMedia has 20,000 customers while the big players have millions. They’re not going to give up all that sweet hardware rental dough in response to a relative minnow without regulatory action.
In the United States, the FCC is clearly willing to put an end to TV hardware rental fees. In Canada, at least one small provider is able to. What’s the CRTC’s excuse again?