And at least one service provider suggests the move could jeopardize small stations that are teetering on the financial brink.
The Local Programming Improvement Fund will be phased out by August 31, 2014, the Canadian Radio-television and Telecommunications Commission announced Wednesday.
The regulator will also require cable and satellite companies to show by this fall how they intend to remove the fees from customers' bills, and to prove that customers have been made aware that the costs have been eliminated.
"The fund was created to ensure television stations had the resources to meet Canadians’ needs for local programming," Leonard Katz, the CRTC's vice-chairman of telecommunications, said in a statement.
"We are satisfied with the support it has provided during a difficult economic period."
But Bell Media calls the decision "a major concern."
Conventional television is still under tremendous financial pressure, Bell vice president and chief legal and regulatory officer Mirko Bibic said in an email.
"We’re analyzing the new model and its financial impact on Bell and Bell Media," Bibic said.
"There’s no doubt, however, that local stations in small and medium-sized markets will receive significantly less revenue."
Bell executives have warned recently that at least six of the company's smaller stations could be on the chopping block if the local programming subsidy were to shrink.
The $100-million fund was established in 2008 to support small-and mid-sized local stations as they dealt with the recession while spending millions to make the transition to digital television.
A total of 78 stations received $100 million from the fund in 2010, and 80 stations received $106 million last year.
But the CRTC said the fund is no longer needed, because a recovery in the advertising sector is in full swing and the transition to digital technology is now complete.
The plan was paid for by the cable and satellite companies, which promptly passed on the cost of the fees directly to consumers, who complained in the tens of thousands.
Axing the fund will likely mean a reduction in fees of less than a dollar per month for cable and satellite subscribers. Bell estimated that customers taking its "good" service package currently pay 67 cents on a monthly charge of $45.10.
Cable and satellite companies will be required to prepare reports by mid-September of this year, outlining how they will stop charging the fees. They'll also have to prove that customers have been told either that the fees are being eliminated or that they were never required to pay them.
CBC/Radio-Canada president Hubert Lacroix said he was "astonished" by the decision.
“Local television is a priority under the Broadcasting Act, yet this decision suggests that it is not important to the commission,” he said in a statement.
He warned that the decision could reverse many of the local programming improvements that the fund achieved.
The CRTC said it's confident that small and mid-sized local stations will be able to maintain quality programming without the fund.
At the same time, the regulator hinted Wednesday that it may be open to some other support mechanism for a number of CBC-Radio-Canada television stations in official-language minority communities.
The commission said it will hear from the public broadcaster at its licence renewal hearing in mid-November.
Small consolation, said NDP deputy heritage critic Andrew Cash, considering the cuts to local programming that are already coming at the CBC as a result of the last federal budget.
"It's a major blow," Cash said in an interview.
"And you've got to put it in the context of some of the other issues that have affected broadcasting."
There was disagreement over the decision among CRTC commissioners. Elizabeth Duncan noted a lack of evidence that the viewing needs of Canadians living in small centres were being met, and said eliminating the fund would be "premature."
Another commissioner, Louise Poirier, said she would have preferred that contribution rates be lowered, but that the fund continue.
And commissioner Suzanne Lamarre said the decision was made "without regard for the Commission’s obligations under the Official Languages Act or the objectives of the broadcasting policy for Canada."
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