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Telecom services

Telecom services buying guide

Last updated: March 2014

Getting started

Home telephone, cable television, and Internet started as separate services, but have evolved over the last two decades into a "triple play" of technologies that are often bundled together by providers. That evolution has also blurred the distinction between providers that historically were telephone companies or cable companies, and also forced overlap amongthe functions of the services. As a result, you can now buy television from your phone company, telephone service from your cable company, and even Internet service from a satellite television company. Or you can buy Internet service from any one of these types of providers and use third-party VoIP and streaming video services to replicate the home phone and much of the entertainment content you expect from a triple-play bundle.

It can become confusing in a hurry. Telecom companies use package pricing as an incentive to buy bundles of all three services. Remove one element of the triple-play, and the price of the other services can go up. Likewise, TV channels are bundled into channel packages that can range from low-cost basic cable (which combines local broadcast channels with a few select cable channels) to pricey packages with hundreds of channels, including premium channels such as HBO and Showtime.

And telecom customers don't seem to be too happy with their providers' pricing. In our latest survey of home telecommunications subscribers by the Consumer Reports National Research Center, respondants gave almost universally low ratings for value across services--especially TV and Internet. Even providers that are rated high in service satisfaction rate middling or lower for value.

Our survey respondants have found plenty of success when negotiating with their telecom providers. Yet there are signs that those providers may be cracking down on serial negotiators. Still, our advice is that when your telcom company gets tough, bargain even harder.

Types

Television service

Television service can be purchased from cable companies, satellite providers such as DirecTV and Dish, or fiber-optic providers such as Verizon FiOS and AT&T U-verse. TV packages from all three types of providers are similar. Broadcast basic channel packages can start below $20 per month, while high-end bundles that include premium channels such as HBO, Showtime, and Starz can approach $150 per month. Sports channels have become increasingly expensive for TV providers to carry, so many of them now assess a monthly sports surcharge that passes the cost of regional (and sometimes national) sports channels on to customers. Some TV providers now offer sports-free economy packages that let users avoid that cost.

Expect to pay a variety of monthly taxes and fees, equipment costs, and one-time setup fees.

Broadband Internet service

Consumers increasingly prize broadband Internet as the most important information pipeline into the home. According to the cloud service provider Akamai's 2013 third quarter report "The State of the Internet," the average broadband speed in the U.S. is 9.8 megabits per second, but the speed of broadband packages from Internet service providers varies widely by provider and technology. (You can check your connection's speed at speedtest.net) There are four major broadband technologies in the U.S.

DSL. Digital subscriber lines use the existing copper wires of local telephone companies. DSL has traditionally been one of the slowest, but also least expensive, broadband connections available. Basic DSL service typically tops out at about 1 Mbps and costs about $20 a month (plus the cost of home phone service). Improvements in the technology have boosted speeds for some providers up to 15 Mbps, although that also boosts the price. Lower-speed DSL is sufficient for e-mail and casual Web surfing, but can make streaming HD video painful. DSL connections typically require a modem and filters to keep the digital signal from interfering with the existing landline phones in the house.

Satellite. Satellite broadband can offer download speeds ranging from 5 Mbps to 15 Mbps, depending on the plan you choose. For those types of speeds, satellite can be pretty expensive (ranging from about $50 to more than $100 per month). Satellite broadband can also be subject to latency issues that can cause a lag between requests and downloads. Nevertheless, satellite Internet is sometimes the only broadband option in rural areas.

Cable. Cable companies typically offer multiple tiers of broadband service. Starter broadband plans typically offer speeds between 2 Mbps and 15 Mbps for $15 to $50 per month. Higher-priced "boost" plans can bump up download speeds from 50 Mbps to more than 100 Mbps. Unless you are downloading huge files on a regular basis, these superfast speeds are overkill, as even HD video streams can work seamlessly at 6 Mbps.

Fiber. Fiberoptic broadband technology has the capability of delivering very high download speeds. Google is rolling out a gigabit fiber service in several cities in the U.S., and Verizon FiOS offers a top-tier broadband package in some areas that promises up to 500 Mbps. But most starter fiber broadband plans deliver between 3 Mbps and 15 Mbps and cost between $30 and $50 a month.

Home telephone service

Home telephone service is available from traditional local telephone providers, cable, or fiber providers, or from third-party over-the-Internet services such as Ooma and Vonage. Cable, fiber, and Internet-based phone service providers use a technology known as voice over Internet protocol, or VoIP. Our survey respondants gave several VoIP providers high marks for value. That said, more telecom bundle customers said they were considering dropping phone service from their triple-play package than Internet or TV.

Shopping tips

Shopping for telecom service can be tricky business. Cable and fiber providers are regional, and many won't even give you information on pricing until you enter your address. Although competition has increased over the last two decades, prices have continued to rise, and many consumers don't have access to more than one provider. The good news is that, according to our survey, there's no downside to negotiating. You can get big discounts, or maybe get a few freebies thrown in. Here are some smart ways to save.

Do your research. If you have multiple telecommunications providers in your region, check out any promotions they might have, then shop them against each other. You can use their online calculators, or better yet, call and request a quote in writing that includes all taxes and fees, then present that to the competition and see if they'll beat it.

Play the promotions. Many of the best deals are promotional rates that expire after six to 24 months--some require a contract, some don't. Some of these temporary promos involve free premium channels or equipment. Pay attention to the post-contract price, and if you take advantage of any of these promotions, mark the expiration date on your calendar as a reminder to cancel or renegotiate. Otherwise, you can get a surprise increase in your bill.

Watch for data caps. Some Internet service providers have started to limit monthly broadband usage--depending on your provider or plan, caps can be as low as 50 gigabytes per month. If you're a heavy downloader, you can either be charged overage fees or simply cut off. Check the details on each ISP's website, or call and ask if they have caps.

Eliminate sports channels. Many TV providers levy a sports surcharge on channel packages that include ESPN or regional sports networks. If you don't watch sports, then see if your provider offers a sports-free "economy" package.

Go bare bones. If you don't care about premium channels, ask for the most basic TV package your provider offers--our recent analysis of two similar bills showed a savings of almost $50 per month between a midtier and basic TV package.

Don't buy unnecessary gear. Each set-top box and DVR costs money, so for lightly used sets in secondary rooms, consider an over-the-air antenna, which can pick up digital HD broadcast signals from most major networks if you are within range.

Lean on the Internet. Maybe you can ditch your pay TV service. Online services such as Netflix, Hulu Plus, and Amazon Prime Instant Video are rich sources of TV and movie content, and an antenna can pick up local channels.

   

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