TV Latecomers Looking for a Bargain

Shelley and Harvey Smith of Granada Hills pay Time Warner Cable more than $40 a month for the privilege of watching cable TV. That’s steep enough for the retired couple to wonder whether they could get more for their money.

The simple answer is yes.

Each of the two small-dish satellite TV companies offers more channels than cable does for fewer dollars, and the picture quality is better to boot. Beyond that, the start-up cost of satellite TV is lower now than it’s ever been, with basic DirecTV equipment selling for less than $80 and DISH Network offering free gear to some customers.

So what’s to stop the Smiths--or anybody else--from rushing out and buying a dish? More than anything else, it’s the burden of owning another piece of equipment that can break or become obsolete.

That’s no big deal to those who compulsively spend hundreds of dollars every few years on a new computer or mobile phone. But the Smiths like the convenience and familiarity of Time Warner, so the savings weren’t enough to entice them to change.

The couple don’t have an ax to grind with their cable company, unlike many consumers across the country who chafe at the industry’s annual price increases, belated upgrades and spotty service.

Shelley, 69, a retired high-school teacher, and Harvey, 71, a former aerospace engineer, were latecomers to the joys of passive entertainment. “We grew up without television. We didn’t have time to watch it much while we were working,” Shelley said.

Now they’re suckers for reruns of the shows they missed, such as “Night Court” on A&E;, “Murphy Brown” on Lifetime and “Nash Bridges” on USA Network. They also watch a lot of news, including world news on KCET and local broadcasts on KCAL.

They don’t have much interest in premium services. And even though they have three TVs , they have only one connected to cable.

The Smiths, like half of the cable industry’s customers, take the two basic packages of channels and nothing else. In the western San Fernando Valley, that’s 67 channels for just under $39 per month, plus $4.40 per month for the converter box and remote control.

For $26 to $28 per month, DISH Network and DirecTV can deliver most of those cable networks and a handful of the most popular local stations. The basic satellite packages don’t include three of the Smiths’ favorite channels: Turner Classic Movies, American Movie Classics and Animal Planet. Those networks are tucked into the intermediate packages, which cost an extra $10 per month and deliver dozens more channels.

The satellite services don’t deliver many of the local TV stations yet--just the local CBS, NBC, ABC and Fox stations, plus one or two of the bigger independents--but Shelley said that’s fine with her. Federal law requires DirecTV and the DISH Network to add the remaining local channels by 2002, but both companies are fighting to eliminate that mandate. In the meantime, DirecTV is a better fit for the Smiths because it carries KCAL, a station that’s missing from the DISH Network lineup.

The satellite services broadcast in digital, pumping out a TV signal that’s richer in detail and cleaner than standard cable service. Viewers need a special receiver and an 18- to 20-inch dish with a clear view of the DirecTV or DISH Network satellites. If they want to watch more than one TV and more than one channel simultaneously, they’ll need to buy a receiver for each TV.

Although the more feature-laden receivers can cost $400 or more, a basic DirecTV unit sells for about $80 with free installation. A basic DISH Network unit sells for $199, but new subscribers can get a free one, installed at no charge, if they take at least $40 worth of programming for one year.

For the Smiths, who want only one receiver and basic programming, the switch to satellite would pay for itself in 16 months or less.

The more you spend on equipment, the longer you have to keep it to get the full value. The risk is that a service will come along requiring different hardware, forcing you to upgrade. Cable companies don’t generally charge for new equipment.

For the Smiths, the only motive in checking out the satellite services was to see how much money they could save. If they went for the DirecTV packages that included all their favorite channels, they’d save a little over $5 per month--starting in 2001, after they recouped the cost of the gear.

The Smiths had hoped for something much more dramatic, say, in the $20-per-month range. “For $10 a month,” said Shelley, a former economics teacher, “I’m not going to get real excited about it.”

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This Week’s Make-Over

Current service

* Carrier: Time Warner Cable

* Plan: Standard Service Plus, no premium channels

* Price: $43.24 per month, including tax and fees

* Features: 67 channels, including 19 local stations, 36 advertiser-supported news, sports, entertainment and shopping channels, and four movie channels

* Equipment cost: $4.42 per month for one converter box and remote control--included in total plan price

* Annual total cost: $518.88

Recommended service

* Provider: DirecTV

* Plan: Total Choice with local channels

* Price: $37.98 per month

* Features: 81 channels of digital video, including six local stations, 67 advertiser-supported news, sports, entertainment and shopping channels and six movie channels, plus 31 channels of music

* Equipment cost: $79.99 for a basic receiver and dish, with free installation

* Annual total cost: $535.75

Key factors to consider

* Number of TV sets. If you want to watch more than one satellite channel simultaneously in different rooms, you’ll need to buy a more expensive dish and extra receivers. Your monthly fees will also rise by $4.99 per additional receiver. Time Warner’s monthly fees don’t rise when you have more TVs hooked up, although you’ll need to rent a converter box for any TV on which you’d like to watch premium channels.

* Payback period. Satellite subscribers need to keep their service long enough for the monthly savings on programming to equal or exceed the upfront cost of equipment.

* New services. Satellite customers probably will see interactive TV and other new services before cable subscribers do, but they risk having to buy new receivers to enable the latest gee-whiz functions. Two-way services may also tie up a phone line on satellite, but not on cable.

* Favorite channels. The satellite services don’t offer most of the local broadcast stations.