Get cable TV on the cheap

This post comes from Kelli B. Grant at partner siteSmartMoney.

Analysts project food, airfare and gasoline will all cost more this year. But consumers may be able to shrink one bill: cable TV.

While subscribers to fiber-optic service and satellite saw last year's average monthly bills jump 15% and 12%, respectively, research firm Centris found that cable subscribers are now paying 1% less -- an average of $69.70 per month. (Which is also cheaper than the average $76.80 for satellite and $99.67 for fiber-optic.)

Experts say it's the start of a shift as cable companies introduce new, lower-cost plans with a more limited selection of channels to grab market share from other pay-TV providers -- and to keep budget-conscious customers from cutting the cord altogether. "They need to upgrade their overall offering to compete," says Bob Harris, chief executive for utility comparison site WhiteFence.

Among the new offerings: Cable provider Cox Communications recently announced it would roll out a $35 "TV Economy" package with a smaller selection of channels in all of its markets. After testing a similar $30 "TV Essentials" deal in 2010, a Time Warner Cable spokesperson says it now offers the 12-month promotion to all subscribers, with a jump after the first year to roughly $50 a month, depending on the region. "Folks are still making decisions with their wallets in mind," says a spokesperson. "Obviously, anything that appeals to customers makes us more competitive." And in select areas, Comcast is testing a basic "MyTV Choice" plan that costs $25 a month, plus $10 apiece for extra channel bundles.

Such plans aren't a perfect fit for all subscribers. Favorites such as ESPN are notably absent from the scaled-back channel lineups, and so are now-commonplace features such as DVR and video-on-demand, says Dan Rayburn, a principal analyst for Frost & Sullivan. "For some people, that will be OK, but it's not going to satisfy the majority of users," he says. "I don't know that those are really packages that will go mainstream."

It still may be worth a look. By comparison site BillShrink's estimate, the average consumer could shave as much as $800 off his or her pay-TV bill over the course of a year.

Assess supplier options

There's usually just one cable provider in a given area, but with telecom and satellite companies continuing to branch out, consumers generally do have at least three choices for where to get their content, says Harris. (WhiteFence details options by address, as does BillShrink.) Post continues below.

Prices can vary substantially, and even if you're not ready to switch, mentioning a competitor's offer can often trigger a better deal. The catch: getting a provider's best price often requires bundling in Internet and home phone service, too. Experts suggest checking for reviews of service in the area to ensure you're not switching to tortoise-speed Internet or a spotty phone connection. Providers may also offer different deals to consumers who sign up via phone or online, so it's worth calling after crunching the numbers online.

Slim channel choices

Cable providers are on to something with their new plans: Most households don't need nearly as many channels as they subscribe to, says analyst Rayburn. Customers should ask their provider if there's a smaller bundle they can shift to -- for example, a Time Warner Cable spokesperson says the new "TV Essentials" is actually a mid-range plan offering 38 more channels than the $20-a-month basic offering. Although Comcast's $25 offer is currently only in select markets, all subscribers have access to a 50-channel plan for $30, says a spokesperson. "Our goal is to have something for everyone," she says.

Online offerings such as Hulu and Netflix could help make up for missing channels. But scale back carefully. Some packages aren't eligible for those cheap home-Internet-TV bundles, Rayburn says. That, and the subscription costs for an add-on video service, could actually make it cheaper to stick with more channels.

Cut the cord

Just 5% of households have a broadband Internet connection and no pay-TV option, according to Nielsen. "Realistically, there haven't been that many cord-cutters," says Rayburn. But he says that thanks to growing options for streaming via Amazon, Netflix, Hulu and other sites directly to a television, going without pay-TV can be an option.

"If you don't watch that much TV, you don't need cable," he says. Depending on their viewing habits, however, cord-cutting consumers may need to cobble together a workable solution using a few subscriptions and an over-the-air antenna for broadcast stations.

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