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Cord Cutting 101: Four Easy Steps to Cut the Cord

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How much are you paying for cable or satellite service each month? According to a study conducted by the NPD Group earlier this year, the average American household spent about $86 per month on a pay-TV television package with premium movie channels during 2011. That doesn’t include bundled services like broadband Internet access or a telephone line. That rate is expected to climb significantly each year reaching $123 per month by 2015 and an astounding $200 per month by 2020. Looking at the growth rate from a more comprehensive standpoint, that means the average American household could spend roughly $4,000 on standard pay-TV service and premium movie channels over the next three years.

Fortunately, there are plenty of options available to anyone who wants to trim their monthly budget and quit paying for tons of channels that are never watched. “Cutting the cord” is a term for anyone that walks away from their premium cable or satellite service for more affordable options like Netflix, Hulu Plus, Amazon Prime and other streaming video services. This guide will walk you through the basic steps to transitioning away from pay-TV services and help you get started as a fledgling cord cutter.

Step 1: Antennas = Free HD Content

As more people have embraced cord cutting over the past five years, there has been a clear resurgence in the antenna industry. This is also attributed to the significant amount of free, gorgeous high definition content that’s being transmitted over-the-air by the major television networks. While reception is dependent on your physical location, most populated areas can pick up a handful of high definition stations with just a cheap pair of rabbit ears.

mohu leaf indoor tv antennaHowever, there are many excellent solutions for high definition antennas, both indoor and outdoor. A favorite indoor solution is the Mohu Leaf ($40). This is the perfect antenna for anyone that hates the ugly designs of traditional indoor antennas.

The razor thin design allows consumers to mount it behind a television or a picture frame while still picking up a large amount of high definition stations in the area. If the 35-mile range of the original Mohu Leaf isn’t enough for you, there’s an amplified version ($90) with a 50-mile range. Other solid indoor options include the Terk HDTVa ($40) and the Antennas Direct Clearstream Micron-R ($75).

If you prefer to purchase a stronger outdoor antenna solution, check out the Antennas Direct Clearstream 4 ($150). It has a 65 mile range and consumers have even reported that it picks up stations in other nearby cities. If you don’t want to mount it on the roof due to the look or can’t due to homeowner’s association restrictions, you can also set it up in the attic space of a home and still pick up a tremendous amount of high definition television stations. In order to get a better idea of the stations in your area, head over to AntennaWeb to check out a complete list based off your physical address as well as the likelihood of picking up those stations from your location.

Step 2: What do you really want to watch?

Beyond free over-the-air content from the major networks, take a hard look at your current television viewing habits on pay-TV and premium stations to understand what you truly love to watch. A simple way to accomplish this is to make a short list of all the shows you enjoy and mark each show as “Watch” or “Wait.”

hulu-plus-new-designIf you have a show that you feel like must view immediately, you could watch it on a service like Hulu Plus ($8-a-month) the following day. For instance, fans of The Daily Show can view it on Hulu Plus the day after it airs.

If it’s not available on Hulu Plus or there’s a longer waiting period to get access on the subscription service, you can legally purchase the episode ($2 to $3) the day after it airs on services like iTunes, Amazon or Vudu. You can also purchase a season pass for a current season of a show at a discounted rate (usually 5 to 10 percent off).

If you can handle waiting on watching new episodes of a television program, look into subscribing to a service like Netflix ($8-a-month) and/or Amazon Prime ($7ish-a-month). Both companies are actively adding the most recent season of new television shows after the season finishes airing on television, but before the next season begins. In addition, Amazon often discounts the digital version of the most recent season of a television show by 20 to 50 percent compared to the per-episode price.

A great streaming video combo for many cord cutters seems to be the Netflix / Hulu Plus one-two punch for online video content. However, adding Amazon Prime into the mix may be in your best interest due to exclusive deals on specific shows.

At less than $23-a-month for all three services, you have a massive amount of network television programming to watch as well as original shows being developed by Netflix and Hulu. Even if you are spending an extra $20 to $30 a month on episodes of a few premium shows you marked as “Watch,” the monthly total cost is still going to be half the average cable bill in a typical American household.

Besides television programming, movie fans can find premium rentals on services like iTunes, Vudu and Amazon. Vudu is particularly good about discounting the cost of renting older titles as well as running 99 cent deals on a daily basis. For the sports fanatic, there are plenty of options to pay for season passes such as MLB.TV, NHL GameCenter and NBA League PAss. While paying for a full season of access may seem expensive upfront, it will still be significantly cheaper than the total yearly cost of a pay-TV service.

Step 3: Choose Hardware Wisely

According to Nielsen, the average American household has about three television sets. If you purchased a television within the last few years, you may already have access to services like Netflix and Hulu Plus through the user interface of the set. Many streaming video applications are also available in gaming hardware like the Xbox 360 and PlayStation 3 as well as Blu-ray players and DVR set-top boxes.

roku 2 xs digital streaming boxHowever, if you have older televisions in the home that don’t have access to these streaming video applications, you can look into purchasing small set-top boxes to stream video over your home’s wireless network.

The undisputed king in this product category is the line of Roku players, specifically due to the low cost of entry and the vast amount of content accessibility. The hardware starts at $50 and ranges up to $100 depending on processor power, video output resolution and input ports like USB.

A solid pick for secondary televisions in the household is the Roku HD ($60). Specifically, 720p resolution is perfectly fine for older high definition and standard definition sets. In addition, the processing power (speed of the user interface, compatibility with future apps) is significantly better than the Roku LT. You could outfit three extra televisions in a home for approximately $180. In addition, the Apple TV can be a decent streaming video solution for consumers with several Apple products in the home.

Beyond setting up all the televisions in your home with access to streaming services, it’s also a great idea to invest in a DVR solution to record all of the free content bring picked up by your antenna. TiVo is a good transition product for someone that’s used to the DVR supplied by your cable or satellite provider, but it’s also a costly solution.

A TiVo Premiere 4 with four tuners costs $250 and service to the device costs $15-a-month ($180 a year). In addition, streaming the content recorded on the main TiVo in the living room to other televisions in the home requires the purchase of another TiVo Premiere box (at least $99). On top of that, streaming DVR content to mobile devices requires the purchase of a TiVo Stream ($129).

If you are more adventurous, look into new products that are just starting to disrupt the DVR space; specifically the Boxee TV and the Simple.TV. For example, the Boxee TV is priced at $99 and comes with 2 tuners. However, the key selling point is Boxee TV’s cloud storage has no data limits. While a TiVo is limited to the hard drive size when recording shows, there’s no limitation with the Boxee TV. Each Boxee TV that’s added to the home can access this cloud content and adds an additional two tuners to the home for recording even more over-the-air shows. However, there’s a $10-a-month subscription cost for the service for each account and it’s only available in eight U.S. cities at this time.

Step 4: Cut the Cord!

Easily one of the most satisfying steps in the process, it’s time to call up your pay-TV provider and cancel your service. The first customer service representative may offer you a slight discount on your current service or one month of free HBO before transferring you to a secondary representative.

Cable guyThe second customer service representative works for the company’s retention department and their only job is to get you to continue paying for the pay-TV service. They will likely offer you a significant discount over the next few months or a free movie package for a limited time.

They could also offer discounts on upgraded DVR hardware in order to get you to continue subscribing  These tactics are designed to keep you on the hook for another few months before the monthly bill bounces back to the original price or shoots up even higher if you forget to cancel the movie package. Simply state that you are going with a cheaper alternative until the customer service relents and cancels the pay-TV service.

If you were utilizing a bundle deal with Internet service, it’s likely that you will pay slightly more for an Internet-only service package. However, the increase in cost is likely between $10 to $20. You can also negotiate a discounted rate by mentioning other services in the area. It’s best to arm yourself with research on the prices of competing services before even making the call. Your service provider will want to continue retaining you as a customer, so it’s obviously in their best interest to adjust prices accordingly. 

At this point, remember to visit your local cable office to drop off any rented hardware like set-top boxes and get ready to start saving money each month with your new cord cutting lifestyle! Beyond the television set, don’t forget to download apps to your mobile devices to stream video from Netflix, Hulu Plus and Amazon Instant Video. If you invested in a DVR solution to stream recorded over-the-air content, setup those applications on your mobile devices as well.