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Why are Domestic Internet TV Providers Expensive?

There are now two competitive companies that deliver live streaming TV-over-the-Internet that is essentially the same as Cable TV.  They are Zazeen, and V-media.  One is partnered with Acanac, and one with Distributel.  These are the two largest competitive Internet Service Providers after the monopoly providers.

And of course Bell has Bell Fibe TV. Bell has priced it to avoid undercutting their Bell ExpressVu Satellite TV  business. 

All these TV-Over-The-Internet companies were licenced in January 2014 by the CRTC.   They offer packages of channels very similar to the Cable-TV packages now available, but slightly less expensive.  But they are only less expensive if you already have unlimited usage internet in your home. Bell uses this as a lever to encourage homeowners to buy bundles and get locked in to long term contracts.   

For both Zazeen and V-media, they offer a basic package of channels for $25, or an improved starter package of channels for $40 a month.  

One nice feature is you can buy optional add-on bundles with incremental price increases. In this way you purchase just what you want. 


Both of these domestic TV-Over-The-Internet providers deliver a service that looks and feels just like watching Cable-TV.  It comes with  program guide on screen.  When you switch channels the new channel is playing on-screen in about 2 seconds.  The quality is very good.

The downside is you must purchase your internet service from an Internet Service Provider that has a business relationship with the TV-Over-The-Internet company you choose to deal with.
 
This is not a technical constraint, it is entirely a legal restriction imposed by the CRTC.  The impact is to prevent a consumer from simply ordering a package of TV channels from a 3rd party company that has a large server, like Google or Amazon.   Instead, Internet-TV can only be purchased from the ISP you deal with for your internet access. 

For instance, V-media sells internet access but we observe it has a higher price than other competitors for the same speed of access.  Then a client must purchase the Set-top Box (the VBOX) for another $100.  Overall it presents a high one-time cost barrier before you can get started with either V-media or Zazeen.

This means if you decide you want to get the package from V-media, then you have to get Internet from V-media also (or one of their partners).  This means you must  cancel your current internet, pay a fee to get new internet, buy a new modem, buy a new set-top box, and wait 2 weeks for a Bell or Rogers technician to arrive at your home to plug it in  (Note they are never in a rush to lose a customer).

This decision to limit the provider of Internet-TV service strictly to the ISP is a deliberate policy to ensure there is no meaningful competition by erecting barriers to new customer acquisition that are so high as to be almost insurmountable.  This keeps Bell and Rogers happy and safe.

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