Get Smart about Business Spending
You don't need satellite TV when times get tough
Editor's note: This is part of a series of stories about the recession's effect on the tech industry.
A year before the U.S. economic crisis came to a head, Debra James of Oakland said she saw the writing on the wall and decided to trim the household budget. Topping the list were things like satellite television.
Debra and Mervin James
(Credit: James Martin/CNET News)"I could tell the economy was getting sluggish in the summer of 2007," she said. "So I decided we needed to make some cuts, so that if things got worse, it wouldn't be so painful."
Indeed, things did get worse. The U.S. economy has technically been in a recession since December 2007, according to a recent report from the National Bureau of Economic Research, a nonpartisan group that officially tracks recessions.
Workers in the U.S. have steadily been losing their jobs all year as companies slash headcount to cut costs. The worst month so far has been November, when U.S. companies shed a whopping 533,000 jobs, according to the Bureau of Labor Statistics. This was the worst single month of job losses in the U.S. since 1974, when the economy was coming out of another severe recession, a recent New York Times article reported.
The big difference this time around is that the current recession seems to be picking up steam, with even more companies announcing layoffs in early December.
While Debra James, 45, and her husband Mervin James, 40, have kept their jobs so far, Mervin, a heating and air conditioning technician for new construction in the Bay Area, has had his salary cut by 20 percent in the past year. And his company has stopped paying for vacation time.
James said the pay decrease has taken a toll on the family finances. She and her husband are putting less money into their savings every month. But because they've been able to eliminate a significant chunk of their monthly expenses, they've had more wiggle room than they would have had if they hadn't started cutting back.
"If we were living the lifestyle we had been living before we made some changes, the salary cut would have definitely had a negative impact on us," she said. "But we were ready for it."
Top on the list of services to cut was the satellite TV package. James said she and her husband were spending $115 a month for their Dish satellite service, which gave them about 250 channels of programming. But when she sat down and listed what she and her husband actually watched, she discovered that they only viewed about 25 of those channels.
"I just couldn't justify watching only 10 percent of the channels I was paying for," she said. "I would have felt a lot better about keeping the satellite service if I could have thrown out the extra channels and only paid for the channels we watched. It's just like buying a whole loaf of bread and only eating two slices--such a waste."
This idea of a la carte pricing for TV channels or allowing people to pick and choose which channels they want to get has had strong support for several years from Federal Communications Commission Chairman Kevin Martin, as well as from many parent and consumer advocacy groups. But the cable TV industry has long argued that pricing individual channels would result in higher prices and fewer choices for all consumers.
After a few Google searches, James said she found a wealth of legitimate sources for TV programming online. Sites such as Hulu, Fancast, Joost, YouTube, and most major TV networks' Web sites offer TV shows and other video content for free. Using an existing rooftop antenna, James plugged her TV into the hook-up to get more than 50 high-definition TV channels over-the-air. The cost for these HD channels: zero.
And instead of spending an extra $20 a month for HBO or any other premium movie channels, James subscribed to a $17-a-month Netflix service, which allows her to rent three movies at a time and download some movies right to her computer.
In order to view the online programming on her TV, James spent about $600 on a new computer, an HP Pavilion Slimline. The Windows Vista computer came with an integrated TV tuner, a High Definition Multimedia Interface cable for carrying high-definition video, and an embedded Blu-Ray/DVD player. The PC, which is only about the size of an old VCR, hooks directly to her TV and can be programmed to act as a DVR recording over-the-air programming that is received from the rooftop antenna. And because most of the Web content is on-demand anyway, James said she can watch whatever she wants, whenever she wants it.
She invested another $50 for a wireless mouse and keyboard, which she uses to search for programming on her hard drive and on the Net. To make finding the shows she likes easier, James said she simply bookmarks her favorite Web sites like the Discovery Channel, which offers full-length documentaries online.
Because she and her husband are watching more video online, James upgraded their DSL service from the $25 deal, which gave them 1.5 Mbps downloads and 384 Kbps uploads, to the $30-per-month service, which offers up to 3 Mbps downloads and 512 Kbps uploads. All told, she is saving about $93 a month after the $17-a-month Netflix subscription and the $5-a-month extra for higher-speed broadband. The cost of the new computer was paid off in about six months.
The James' setup
(Credit: James Martin/CNET News)Instead of feeling deprived, James said getting rid of the satellite TV service has been a huge improvement.
"We definitely watch more TV now than we did with Dish," she said. "And because most of the shows online through services like Hulu.com don't have commercials, I can watch them much quicker too."
And because some TV channels actually offer additional video content online than they do on regular TV, James said she and her husband are able to get more variety and choice than they were getting with their Dish package. For example, AT&T, her broadband provider, offers a special broadband channel called ESPN360.com.The site offers a wide variety of sports programming from college football to international soccer matches to Nascar, which aren't always shown on the cable or satellite ESPN channels. The events are often aired live and replayed at a later time. And it's all free.
James said she has even been able to find plenty of kids programming on some Web sites, such as Nickelodeon.com and Disney.com, for when her young niece visits.
Setting up the new entertainment system wasn't difficult either, she explained.
"I would say I am a proficient computer and Internet user," she said. "I can follow directions when it comes to plugging cables into something. But I don't know anything about programming or uploading or streaming movies or music."
But James did say that searching for TV shows using a mouse instead of a remote control means she and her husband have to make a few more clicks to find what they're looking for. And she admitted older TV viewers might not like the new interface. But she added it didn't take long for her and her husband to adjust to the change. Besides, she said the amount of money they save every month is worth it.
"I enjoy my extra $93 a month," she said. "In fact, we just came back from a vacation where we spent a good deal of money, but it was nice to know we were spending money that we had saved from cutting back."
Marguerite Reardon has been a CNET News reporter since 2004, covering cell phone services, broadband, citywide Wi-Fi, the Net neutrality debate, as well as the ongoing consolidation of the phone companies. E-mail Maggie. 
Like the people in this story, I was forced to buy a large package of channels when I only wanted and only watched a few specific ones. In particular, the sports channels such as ESPN are extremely costly (someone has to pay for all those mega-million dollar salaries), so it's no wonder that the industry wants to force all subscribers to contribute. Every year dish sent me a letter saying that they were "forced" to raise prices because the cost of the channels was going up (translation: sports stars needed even more millions), so I unsubscribed and told them to call me back if and when they were willing to offer only the channels I wanted a-la-carte. Now I get most of the channels I need off the air - for free - AND in HD, also for no extra charge. With an inexpensive supplemental Netflix subscription, I'm all set.
(Back in the old days of satellite TV - when dishes were 10' big - you actually could buy channels individually, but the virtual monopolies who control this figured out they could milk much more money from their customers buy forcing people to buy bundles.)
If more people complained about this situation and voted with their money, things might change. Otherwise the greed of the entertainment industry will continue unchecked. I voted.
I agree that the timing of the Grumpypaul's comment might be a bit unfortunate, but the American Auto industry is not in peril because of forced adherence to emmisions and safety standards, but instead due to out of date business practices including ignoring alternate fuels and more economical vehicle types.
When consumers started to vote with their wallets for more fuel efficient, eco(nomically) friendly cars, Detroit's response was to continue building the same things they were used to. By the time they started to listen to the consumer demand, it was too late: Hence the "need" for a bailout.
If you buy a $600 computer, a $17-a-month movie service, and a $30-a-month broadband service so you can watch more TV, you are not GETTING an "extra $93 a month." What you are doing is SPENDING $47 per month, plus the cost of the computer, to watch TV.
If the people in the article had decided to limit themselves to their 50 (!) free over-the-air channels and start using their library cards, I might be a little more impressed.
Still, saving $93/mo is a significant savings, and the PC will last far longer than the 7-month repayment period
I think the point is that if you are spending money, you are not saving money; you're just spending less. This is how retailers have sucked people into their stores for decades by telling everyone how much money they'll save at the upcoming sale. What they invariably fail to mention is that you can not save money while your spending it.
That being said, if there is programming you want to watch on your TV, then it is smart to figure out the least expensive way to do it. My wife and I did pretty much the same thing, and we are now spending $35 less per month on cable. I also reduced our Netflix plan to the one at a time unlimited plan because we use it more for streaming than for the DVD by mail service.
At this point, with all that is available on the internet, I'm not sure why anyone would continue to pay a large cable or satellite TV bill; maybe for live sporting events or if you do not have access to broadband internet.
Furthermore, a lot of people are finding various part time gigs to earn a couple bucks off Craigslist. While not many people are finding new full time jobs right now with the economy when the economy does start rebounding I can guarantee you that the vast majority of hiring managers are going to putting their money into various online job listings. Classified ads in traditional print media have been in long decline and that isn't changing anytime soon. Sure there is no guarantee that the Internet will save/earn you any money, but there are a lot of people who earn/save more money thanks to the internet than they spend on the connection. Most people aren't going to get rich off the internet like the legends of dot com era told us, but in the long run getting rid of your internet connection would probably cost you more than you would save by getting rid of it.
It is little surprise that while most Americans are willing to shop less, drive less, and go out to eat less that getting rid of broadband internet was the least common place that Americans listed as a place that they were looking to cut their spending. While I don't think of most Americans as smart, in this respect they realize that in most cases that Internet access provides a lot of benefits relative to the cost.
Can you get away with spending even less than this couple? Certainly. And if further belt-tightening is necessary later on, they still have room to cut. But they've trimmed their budget while getting more actual entertainment; that's not a bad thing.
So as more articles like this hit the wire, many more end users will seek to replicate what has been described and that will simply speed up the cable co's and others to change policies and lobby for restrictions to keep their gravy train flowing.
So please Ms. Reardon, you and your media cohorts need to also stay on top of this side of the equation as a means for the consumer to enjoy the content they want, at a fair price.
I don't have cable or satellite, only over the air (OTA), online web shows. We do have a rental card, but prefer to buy media (200+ DVDs to choose from ... half of which are for kids).
Ok, they save 93 a month.. Let's check on some math.. First, they have DSL.. that means they have a phone line, they probably also have cellphones.. why not whack out the phone line which is costing them an arm and a leg? That's how I save money, I don't have a landline. The basic plan from Verizon, after all the taxes and fees, is $40 a month in Michigan. so, by not having a phone line, and not buying all the premium movie channels, I save nearly the same as they do, and can still watch the majority of the TV shows I want, due to them not being online, or not being able to get HD feeds due to my slower internet speed.
Other people were talking about companies letting people pick the channels they want to watch and that makes sense. They don't have to let you pick every channel, they can have the basic line-up but then have packs like the shopping network pack which would cost $5 mo extra, and sports which would cost $20 mo extra, spanish channels and religious channels cost so much extra...etc. I hide a ton of channels so I don't have to see them and i wish I didn't have to pay for them. I think if the cable, sat and FiOS companies did this it would save people money.
I used to be a consultant, and worked from home frequently. So, I had a second telephone line with call waiting, voicemail, etc. At my current job I don't work from home very often. We have a lot of friends and family that live out of the country, and on the house phone we paid a fee for "discount" international dialing rates (whether we dialed internationally or not for the month), caller ID, call waiting, 3-way, etc. After reviewing our phone usage, we made these changes: the home office phone had to go, reduce the house to metered rate service for $5.70 per month, and remove all long distance. We use Jajah, Jaxtr (VOIP services that can be dialed directly from a handset) or Skype for international calls (and only get charged for what we use at better rates than the telcom offered). For domestic local and long distance, we use our cell phones, which is on a family plan, and never go over the minutes.
Even though, they are not quite as sharp as HD broadcast programs, I don't miss the lower quality when I watch programs through the internet on my 40" HD TV. If you have a much bigger screen, you might notice the quality difference more. I think it's definitely worth the trouble to try it if you currently have a capable computer and a compatible TV.
For now though I use ATT Uverse 200 channels, HD, DVR for $84. Cox is a ripoff.
http://www.bbc.co.uk/info/licencefee/
You're totally missing the point. Granted, the BBC licence fee is completely archaic and needs to go, but even if you factor in the 139 pounds ( $210 a year by current exchange rate) which is around $18.00 a month, I can guarantee you that with the amount of programming Freeview offers and with the ability to combine it with a DVR recorder; a good amount of people would dump their cable services like a hot potato because when you look at what Freeview has to offer and the fact that it's all free, it's a great deal. There is no way in hell that the cable companies would allow something like Freeview in the U.S. They're too damn monopolistic and greedy, so the licence fee might be backwards in the U.K, but Freeview is way ahead of the curve and would take off like a Rocket if it was implemented into the U.S system giving people turned off by huge cable bills decent programming.
http://www.freeview.co.uk/
Please remember that there are people at many different economic levels in the world: some people are rich and can get whatever they want with little or no worry; some are poor and can afford no luxuries at all; then there is the vast majority of people who are somewhere in between those two extremes who need to pick and choose what they really want and be smart about how they get it.
This article isn't about completely going without anything nice. It's clearly about finding smarter, less expensive ways to have the things you want. Like I said in an earlier reply, my wife and I have done many of the same things, Plus, we do unneeded shopping less frequently; we dine out less; and we travel less. Now, even though our income is lower right now than it was a year ago, we are actually saving more money every month than we were then, but our level of in-home entertainment is at least as high as it was then. Why, because we found smarter, less expensive alternatives to get the things we really want.
For people who have tight budgets but don't want to sacrifice all of their TV/movie programming, this article could be helpful.
keepntabs, thanks for sharing.
- by shurygin December 19, 2008 10:19 AM PST
- Looking at the picture, they are about to finish their receiver. I have the same model and it is running very hot. Putting it inside a cabinet is a sure way to disaster
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